Pretty slow week, all things considered. Dow managed to close above 10,500 and the NASDAQ held 2100-by a mere 1 point–both psychological wins so I’m told. The sentiment indicator–the VIX –is below 13 and approaching 9-year lows. That means that volatility is benign and, if the indicator stays around here, the market could perk up nicely over the next while. Watch for a spike from here; if the VIX cruises quickly back up to the 15 plus level, it could get a bit dicey short term.

Couple of nice moves in stocks we’ve looked at both here and in the SmallCap Digest. (You really should subscribe–it’s free and all that).

Over there we looked at biotech Thermogenesis at $5.80 a week ago and the bon temps in the market picked up the volume and the price rose through $6–a resistance level –and ended the week at the high of $6.40. Next week should be interesting.

As well, Tuesday last we did a profile on Bottomline Tech, a nifty payment processor and related solutions concern. The shares were also light of news, but managed to run up 13 percent from our profile price of $10.85, Tuesday, to a close of $12.25, Friday. Volumes on this one are also rising and it hit a high of $12.48 during Friday’s abbreviated session. I noted previously that a run through $13 could begin a new upleg. The company has a nice whack o’ cash ($30 mill), decent projected earnings and no debt. Again, a worthwhile watch for Monday.

Why was the market even open Friday? There is some ancient regulation that the markets can’t be closed for more than three days in a row. Expect the traders sent their chimps in for Friday’s session as they likely continued their holiday on the Jersey shore.

Exit polls from the shopping season watusi which actually began a few days ago shows that conspicuous consumption (also known as holiday shopping) is up and began earlier than last year. A bag check by some group with way too much time on its hands showed that 40 percent of bags looked at had gift boxes in them. Last year? a mere 10 percent.

Big screen TV’s and iPods (seen Apple shares lately? Baby. Gimme them iPods…) are da bomb this season. We profiled Apple in January 2003 at just under $15. We sold it too early, somewhere in the high $20’s low $30/s for about a 100 percent profit as I recall.

Guess it paid not to listen to us. It happens. Not often, but it happens.
Remember, no one ever went broke selling a winner too soon.

Keep the comments coming. Click the comments button just at the lower right. It’s so simple, even I could figure it out. If I had too. Which I don’t.
See y’all next week.

Think about Howard Stern. I’ll wait.

Satellite radio, specifically Sirius and XM Radio are definitely the flavors of the month. Howie has signed on at Sirius for a budget of $500 mill. The company needs over a million subscribers (currently at 800k) to make a go of the deal. For its part, XM has 2.5 million paying devotees. For the uninitiated, with Sirius’ and XM’s market caps of $8 billion each, that’s a slug o’ market value per subscriber. Each company has whacking debt and is locked in an expensive and less than subtle battle for dominance. And not making anything close to a profit. As a matter of fact, analysts’ estimate for fiscal 2005 is a per share loss of nearly 50 cents for SIRI and a whopping $2.55 for XM.

While the Howard effect helped both stocks, long term investors should be wary of diving in unless they share the vision. And that vision needs a lot of tweaking– fast– to justify the valuations. The battleground will be subscribers and the currency will likely be ever decreasing monthly costs. And, hopefully, no more competitors.

These babies are one of those types of sectors that were mo-mo a few years ago. Over the very long term, could these go the way of major entertainment networks? Possibly. Likely, in my opinion, as valuations become less ridiculous, they could be bought by conglomerates that want the exposure. And that’s about all anyone would buy them for. And I doubt that any market premium would be overly generous.

If you are a trader, there will likely be further corporate moves by each that will be solely an attempt to trump the other. In that there could be some trading opportunities as long as you’re as fast as a school of tuna scared by a shark.

If you share the vision of satellite winning over traditional radio, dip a toe in. Just be on the lookout for sharks. One wrong move and that metaphoric toe will be gone.

For the record, I’d take Howard’s place for less. A lot less.

Here’s some fun. Boring is good. And not without surprises. Did you know chocolate is now being hailed as a cough remedy? In that vein, investors looking to walk on the less than wild side, but make some serious coin should look at dull, old Hershey’s. The chart below is short term, but be aware that since 1994, Hershey’s is up 6-fold and with the S&P up 500 percent in the same period, everyone’s favorite caloric purveyor rocketed over 1200 percent. Boring my derriere.

Is the run over? Well, since growth has been virtually nonstop over the last decade and it cruised, profitably, through the bubble, I’m guessing no. Do I feel a cough coming on?

Hershey just grabbed most of the macadamia nut market by scooping Mauna Loa of Hawaii for $130 mill. The company makes $80 mill and owns 40 percent of that specialty nut market. I’m still waiting for the boring part. Hershey trades at a very respectable 23 times earnings and looks to stay at about that level for the next couple of years.

The point is this. By overlooking the obvious, Hershey-type stocks, for the go-go mo-mo flavor of the month debs like the satellites, we might make less money in the short term, but the tortoise tends to win in the long run.

And this is the best part. If you want a wake-up call to get an early shopping start on Friday, as well as pertinent shopping tips, you can call Hershey at 1-800 8Go-Nuts and arrange.

Now that’s marketing. And definately not boring.

Some housekeeping: if you haven’t subscribed to the SmallCapDigest–it’s free and you info is secure, promise–click here. Our twice to thrice weekly newsletter, plus this blog, we feel make up a nifty package for those interested in our personal opinions and pithy commentary.

And have yourself a Happy Thanksgiving. As I’ve said before; a moment Thursday for the Troops. They deserve that and much, much more for their bravery and commitment.

Hey: The little button at the bottom of each article is for comments. Leave one. Or two. Helps focus my thoughts. And ultimately yours.

Some bright spark(s) bought Google at $201.60 on November 3. Today, the shares are $163.60. Good miss for those who resisted the temptation. I read one piece that said the lockup releases would be met with institutional buying, rendering them impotent. Yeah, right.
There are 127 million shares in the public float.273 outstanding. With, I think two lockups released to date, there are three more; Dec 16 for 25 million shares, Jan 15 for another 25 mill and, Happy Valentines–Feb 14 for a whopping 177 million. That’s not to say that they’ll all get sold, but the form 144 filings are about the longest I’ve ever seen. A 144 filing is necessary for insiders and employees to facilitate an eventual stock sale. You be the judge. Looks like the institutions, which I was intrigued to learn only own 11 percent of the shares, will wait a while longer. See? As I said, a good present and future miss.

As well, have a look at the other double OO TravelZoo–another “winner”. A few days ago it breached $100. Today? under $80. Looks like it got Taser’d too.’nuff said. You can go look at the charts if you wish. I’m done with these two. Unbelievable.

Mutual Funds are getting spanked by Exchange Traded Funds (ETF). Scandals, crappy performance, charges and the rest are souring the public on managed funds to a growing degree. There are now dozens and dozens of ETF’s that trade billions of dollars a day. BTW, I noted the gold ETF GLD the other day and, while it continues to be popular, investors should note that IF a capital gain is realized, our very good friends at the IRS view this vehicle as a ‘collectible’ with the attendant 28 percent tax rate. Make sure you check with a tax expert to get the straight goods on trading this thing, because depending/relying on me for tax advice would be just plain goofy.

ETF’s are way cool. There, I said it and I’m glad. Some of the industry ‘intelligentsia’ have opined that ETF’s are for people too stupid to pick their own stocks. Au contraire. Let’s talk Japan. The Japan ishares trade, on average, 5 million shares a day and has net assets of over $5 billion. Over the last year, the Japan ishare is up 20 percent while the NASDAQ is up about half that. Yeah, that’s stupid…

EWJ is trading well in a nice channel as shown in the chart, great trading opportunities if one pays close attention to the channel. It becomes pretty obvious when to buy and sell–at least at this juncture.

Check out the top holdings and you’ll find names like Canon, Honda, Sony etc. Hardly duffer companies. The good folks at Morningstar have all the goods on ETF’s. Learn about them. Whether you want country, sector, industry or index specific exposure, there will be an ETF for you. They’re here to stay. Get used to them.

Surprised the hell out of me that the Gold ETF actually opened this am to much fanfare. Two years in the making and the price is simply representative of 1/10 of an ounce of gold, hence the price currently of roughly $44.50. That means, unless you are way ahead of me, that with Gold at say, $480, you’ll make a snappy $4 a share before costs. Seems pretty simple. Why did it take two years to come up with that? Sure, a few shares would diversify a portfolio, but you’re jumping in at a 16 year high. By this am, it had already traded millions of shares. The ETF goes by the name StreetTracks GLD. Let’s hope it doesn’t end up as StreetPizza in your portfolio.

Gold shares don’t appear to be much better value as a behemoth such as Barrick is trading at 76 times trailing twelve month earnings and almost 60 times the projected 42 cents analysts are predicting for 2005.

Two years ago it was $15, now $24-ish. Nice 60 percent move. I tend to avoid things I don’t understand, but I’d be interested to hear from goldies as to why either the GLD or ABX make sense. Tease me…

Appears Forbes mag has followed our lead on EMS firm Flextronics. Well, actually it’s reporting that S&P has raised its target to $18 from $14. Cool. Better late than never, I guess. The shares are currently flirting with $15.

Today’s wild card is Nortel. AT SmallCap, we rode it from $1.83 to around $6 on the last run, and since even with all the goofy news regarding “today we’ll report numbers or maybe not” the shares don’t seem to want to go below $3. That said, I’d use a stop loss at $2.90 or so if the apocalypse appears, so it’s only a 10 percent risk.

Analysts are looking at earnings of maybe 15 cents a share for next year which, at $3.36 means a projected p/e of 22 times. That and a nickel will buy you a beer as the numbers seem to change hourly. The reality is that the company seems to be surviving, there’s always the chance somebody will buy all or a chunk and there’s that $3 support.

Believe it or not, the shares are still optionable with the Jan 2006 $2.50 calls trading at about $1.30. That means if the shares go to $5, those options should be worth at least $2.50 or almost a double. Shares purchased here would yield about a 50 percent return at $5. Might be fun for those who can stand the heat and like to take a contrarian punt. You can lose the whole $1.30 as calls run out, but the shares would be in the tank anyway if that happened. Pick your poison if you want to have a go.

Finally, Informatica has made a couple of runs to $8–our resistance point– only to fall back slightly. Seems reasonable to assume that it will eventually leap that rampart with markets looking–at least for now–buoyant. Appears the resistance gods want INFA to do a bit more penance in the $7.50-$8 range.

So be it.

Hate me cause I’m Conrad Black. Wannabe brit Conrad got the pipe from the SEC alledging all manner of nasty stuff when his hand was on the tiller of conglomerate Hollinger. The DOJ is considering criminal charges. If proven, this could be a re-run of Marie Antoinette’s let ‘em eat cake travails in the 1790’s. Read all about it here. This guy is about as arrogant as they come and if he tries for public sympathy, this ex-Canadian (cause they wouldn’t let him be a British Lord) is further out there than Pluto. At least the allegations will keep him busy and out of our faces for a very long time. I actually feel sorry for his lawyers. Pride or arrogance does apparently matter and goes before a (alleged) fall.

Speaking of Gold digging, there’s a rumour that the bullion-heavy Equity Gold Trust ETF–often promised and as yet not delivered by the NYSE–is to be opened Thursday under the symbol GLD. Here’s more than you’ll likely need to know. I’m always amazed at the timing of these products as gold roils around a 16-year high. As well, there is speculation on both sides; will the GLD ETF help gold or is it already priced into the metal? I smell hype, at least initially. I’d wait on this one before betting the farm. Gold is really only a bet anyway, isn’t it? Goes up when you least expect it and vice versa. The best gold site for my money is here at Kitco. All the bugs and cultists hang out there and it has a web page that those who have motion sensitive epilepsy should likely avoid. But it does deliver just about every stat, opinion and commentary on Gold. And for that we should be grateful, I guess.

On a more interesting note, some of our recent stocks are doing ok. Flextronics one of the best electronic manufacturers has moved up nicely since we called it a buy at $13.55 in October. Up a $1 to $14.60 in a month and looking good as OEM outsourcing increases–although these firms don’t like the politically incorrect word anymore–and corporate spending increases. Volumes are increasing and the company seems to be getting more and more press. Keep an eye on it. I will be. Feel it could get back into the $15-$20 trading range on this run.

Recent pick Informatica also acting well as volumes swell and the shares up around 10 percent in a week. Stock punched through $8 with a whimper, Tuesday. Closed at $7.93. A break above $8 looks to be the start of a new technical uptrend.

One of my fav specs–the never dull Spectrum Sciences–appears to be winding back up from its debacle a few days ago. Numbers were out and the shares took out $1.50 on decent trade. Potential here for a couple of bucks, but the road won’t be smooth.

Looking at a new smallcap; Thermogenesis which has the appropriate symbol KOOL. Bit controversial perhaps depending on your leanings, but the biotech product company manufactures surgical sealants or cell therapy drugs from donor blood. The products, CryoSeal, Fibrin Sealant (FS) System, and BioArchive System include an automated blood processing device and dedicated sterile single-use disposables that customers use to manufacture surgical sealant and cell therapy products sourced from single units of blood. Including hematopoietic stem cells from placental/cord blood for bone marrow rescue transplants.

The shares trade around $5.60 and the projected earnings for 2005 look like about 21 cents for a p/e of a reasonable 26 times. The company has virtually no debt and $16 million in cash. Appears to have bottomed a couple of months ago and a run through $6 looks like a new upleg. Went from $2-$6 in 2003 and has been stuck between $4-$6 most of this year. Will do some more looking and would appreciate any comments from y’all if you know the company.

And finally Condi Rice, who’d really rather be the commisioner of the NFL–she’s a complete football nut–will be Secretary of State instead. Some things confound even me. I’ve got nothing on this one.
Stay tuned…

Don’t freak out next week when Microsoft opens about $3 lower. It simply represents the price ex-special $3 payment that we’ve mentioned before. Likely the shares will do some trade down there and make another run for $30. Maybe folks will use the money to buy more MSFT–that would make sense, frankly.

I’d love to see the Evil Empire’s share price breach $30 decisively and herald a new technical upleg. Readers of the SmallCap Digest have been on this one since $25, so already a decent capital plus cash return in a few months.

And for those who think MSFT is an also ran, on the first day of release, it sold 2.4 million or $125 million worth of it’s new XBox game Halo 2. As one who can’t get past level 1 on Mario or My Little Pony, even I’m impressed. My teen son tells me Halo 2 rocks out loud. Whatever. Microsoft hopes to sell 5 million of the game initially. At this rate, that target will be reached by noon Saturday. There’s life in the behemoth yet, it seems. I’ve always thought everyone should own at least a small piece of MSFT. Just ’cause…

In the same vein, I published a couple of Trading Alerts on somewhat smaller stocks this past week. Two very cool stocks, one on an established data integrator Informatica and the other a micro cap that is gaining good hold on changing how payments work through technology that speaks to all of us. It would be Texas-based Payment Data Systems

Informatica is in a space that will likely get bigger and bigger–data capture and its manupulation into business intelligence. Without it, if your business depends on data–what biz doesn’t–you’re likely doomed. As well, the company has a nice gob of cash–around $250 million or $2.70 a share or 36 percent of its current trade price of $7.50. Data stuff has always fascinated me as it has become the currency of business. Informatica is just one of dozens of constituents of the space, but its fundamentals and interesting chart make it interesting. As well, of 100 data integration firms, trade bible DM Review chose INFA for the number 11 spot for 2004, but, more importantly, the IT folks who use this technology voted the company #1–ahead of IBM, Computer Associates and 97 others. Very cool. Wouldn’t mind seeing it a bit cheaper, but around this price it looks good.

Corporate spending comes and goes, but when the issue is lowering costs, improving profits and streamlining systems, data integration becomes more than important. It’s essential. Did I mention all the cash and no debt? Yeah, I like that.

After the close, Friday, I released a Trading Alert on micro cap Payment Data Systems. Look beyond the boring name. This little company trades for 25 cents and appears to have found a huge niche in the debit card/payment processing/check clearing sector. I’ll leave you to read the piece that was released Friday evening after the close. Looks good for a punt for those traders who can stand the vagaries of these kinds of companies as well as for risk-oriented investors who might just use a “buy it and put it away” strategy. Risky? Sure. But compelling nonetheless.

Markets have been buoyant since Bush won his slim mandate last week. No. I’m still not going to comment. It is what it is. I am however in awe of the soldiers overseas. The bravery of these folks and the sacrifice, no matter your politics, is nothing short of inspiring. I put in a call to my 84 year old dad yesterday who spent WWII in a small ship in the North Atlantic dodging U-boats. He never speaks of the war. I once asked him why he went. “We had no choice,” he said. I guess there’s nothing else to say.

Would that my kids could be as proud of me as I am of him.

It seems like a lifetime ago when I mentioned that I liked the action on Spectrum Sciences. The ink had hardly dried on my ruminations and the shares got pounded for no apparent reason. There was a rumor of a seller who marched into the market at the opening, Monday, with a couple of hundred thousand shares and proceeded to sell them at what appears to be any cost. $1.68 to $1.17. Boom. Bounced like a red rubber ball back to $1.30 level where it currently idles. Here’s the chart: don’t blink.

There’s a good lesson here for traders and interested others–especially in SmallCaps. Even if the market doesn’t sneeze, individual stocks can get pneumonia. And it can be quick and nasty.And it can be for no discernible reason.

The numbers will be out for Spectrum next week, so we’ll see then. I doubt that this is anything untoward, especially since the shares rebounded nicely after the initial dump. Hence the need for stop loss orders. Around $1.05 for Spectrum would be smart.
SmallCaps tend to have shares concentrated in a few hands and by their nature can react more violently than big stocks. Now you know.

Looking at a couple of good situations for later in the week. One’s a very cool stock in the financial services industry and one is a data integration firm. Plus we’re expecting some decent news on one of our stable of followed stocks. More later after we’ve published on SmallCap Network –you can sign up for our free newsletter here in the upper left corner. We won’t do anything else with your email address. Promise.

I’ve put up a couple or three links over right yonder. All are critical to my looking at stocks that scoot onto the radar as well as the CBOE Volatility index or VIX. Very cool contrary indicator as the ebbs and flows almost mirror and precede market moves. Check out this comparative VIX vs QQQ chart. Cool, no? As the sentiment of the VIX drops, denoting investor complacency, the market rises and of course, vice versa. It’s not completely definitive, but what is? A great snapshot to guage market sentiment.

The other two give good reads on the Biotech and natural gas sectors–two of my personal favorites. Noticed that one of our past friends Cel-Sci has bounced of a nasty decline from $1 and change to 50 cents. No news on this one, but after idling at the low for months, volumes are increasing and the price is edging up. The company has a number of potential drugs, including multikine which is a therapy that potentially has a myriad of uses including increasing the effectiveness of traditional cancer therapies. I’ll keep an eye on it as although the company’s been quiet, the stock seems a bit perky.

Seems the gene switching off I mentioned the other day has evolved into a pill that will stop smoking lose weight, lower cholesterol and likely bring George Burns back to life. Leave it to the French to come up with a drug that does all that.

And I have no idea as to Arafat’s condition. Neither does anyone else. Mrs. A’s a real peach it seems.

On to more important matters. Stay tuned and keep the comments coming.

Even though Google has declined today, there’s likely no end of the faithful that will follow it, buy it and short it. As I’ve mentioned I thought the whole thing was a crock since $85, so what do I know? Wouldn’t touch it, and noticed with interest that it tends to backup at warp 6 if it nears $200 a share. I wouldn’t short it either, as the trading tone is just too goofy. GOOG’s market cap is about the same as GM and Ford combined. You’re on your own, bucko.

Speaking of goofy, here’s another enigma that will likely lose you money: Travelzoo. In January 2004 it was $5. Today it’s $91. Market cap of $1.5 billion. Trailing 12 month revenues of around $24million. Price to sales ratio of a mind-boggling 52 times. The chart will make your eyes water.

Forgive me if I have offended the cultists here. I’d have sold it a $10. Happy to hear any comments on this one. Trying to change my mind about this one would be entertaining to say the least.

My purpose here is to help you make money. It is also to help you not lose money. If I see situations that make my hair go grey and fallout, of course I’ll bring them to you. Will I/we always be right? No. But there is always a place for rational discourse.

And I’m all about rational discourse. And making/saving money.

The market looks strong. On the DOW, we are flirting with 10500 which we haven’t seen since spring. I do believe that when the bon temps wears off, soon, the market will stagnate somewhat as we see what the new Cabinet looks like, put another rate rise–likely a 1/4 point in December–under our belt and digest the ever-changing geo-political challenges in Iraq et al.

But that doesn’t mean there won’t be interesting opportunities in the SmallCap market–there always are. We are searching through some interesting names in sectors you might not have thought of. And some you have.

Our parameters are quite simple: we like cash, no debt, a product/service that has legs and a pretty chart. Valuations are always tricky in SmallCaps, but vision and smart management go a long way to making profitable waves as the fundamentals eventually kick in.

And of course I’ll keep you updated on the interim goings on of our stable of current favorites on SmallCap Network.

Glad I said reports of Arafat’s death were inconclusive. Apparently he is in a reversible coma. Now there are two words I’ve never seen in the same sentence.

And I was concerned to learn of Elisabeth Edward’s pending fight with breast cancer. She’s a class act. This scourge has touched my family, as it has many others. The best to her, truly, and all the others who are in the battle.

Speaking of Cancer, it appears the smokers’ plight may be a switched off gene away. Let’s hope.

Keep those comments coming and don’t forget to subscribe via the RSS feeds over yonder. Stay tuned.

The election’s over. I have no comment. It is what it is. Bush has hit the ground running with a cabinet meeting and his 16th solo press conference. Likely there will be some shifting of the Cabinet players, but that’s to be expected. We’ll see how sincere his ‘reach-out’ platform is.

I talked about electronic manufacturer Flextronics a couple of weeks ago, and it appears Morgan Stanley agrees with our positive assessment. While not a smallcap, prospects appear good and the stock and the sector bear watching.

One of the areas that will and has seen some bump from the Bush re-election is the security area. Two that we follow, Force Protection, a maker of bomb-proof ballistic vehicles, appears to have stabilized in the 18 cent range after getting pounded by a personal tax matter with the CEO–who has since stepped aside–which has nothing to do with the company, as well as the specter of a potentially lowered military funding focus under a Kerry presidency. With all the insurgent activity and the inability of the current Hummer vehicles to protect the troops, there should be renewed interest in companies such as FRCP. It’s apparent that the US military likes the company’s products and will likely buy a slug more as the war in Iraq continues.

As well, Spectrum Sciences a defense contractor, has seen its shares move nicely to the $1.67 level from our Trading Alert a couple of months ago at $1.26. While news has been slim out of the company, I believe that, like other companies that were waiting for the election outcome, news will be forthcoming. Investors obviously like the shares as the measured advance continues. My feeling is that the next technical resistance is at around $1.95 with a short-ish term target of $2.25. I’ll keep an eye on it as events unfold.

Apparently there are reports that Arafat has died. Inconclusive at this point, but certainly another set of challenges for Bush et al. As well, the world has weighed in on his re-election.

There is much work to do, both at home and abroad. But we knew that already. Stay tuned.

Oil is down to around $50, the polls are open and all I ask is that come this evening, the Presidential win is decisive. For months, the markets have been second guessing just about any eventuality and, the only thing looming now is a protracted election challenge.

I say again, just let it be over.