“Four stores and seven more to go, our founders brought forth to this continent a new restaurant…”

Sorry - I couldn’t resist paying a little homage to Abraham Lincoln while at the same time describing what’s going on with one of my newest favorite companies.

More good news from Spicy Pickle (SPKL) yesterday…they now own four more of their own restaurants, with all the rights and privileges (i.e. sales and profits) thereof. That brings the total owned units up to five, and two more are under construction.

Say what? What happened to 123 stores we were talking about a couple of weeks ago? Relax - that number is still valid. Most of the 123 restaurants were franchises owned by franchisees; their owners pay royalties to the Spicy Pickle corporate office. The five stores (plus two more on the way) we’re talking about are outright owned by the company. Hence the title of this blog entry…though technically as a franchising company Spicy Pickle is the lessor instead of the lessee.

The motivation here is simple…money. Rather than collecting about 7% worth of royalties on the average store’s 700K in annual sales - about $50K per store - the company now collects 100% of the sales, and benefits from 100% of whatever profits are generated. With the upside comes more responsibility too…the company also has to run and manage the stores. Clearly the trade-off is worth it to them.

Let’s do some simple math here. With owning five of their own stores, each of which is doing about $700K each, the company’s top line is improved by a net of about $3.2 million per year (we’re deducting the franchise fees they used to receive from these stores, but won’t anymore). That’s a pretty nice improvement compared to the current annualized sales of about $1.7 million (based on 35 operational units).

This also advances the company towards the end-goal of profitability. I don’t think the four-store acquisition will carry then all the way into the black. However, with 88 more franchises signed, sealed, but so far undelivered, I do think the swing to profit is in the foreseeable future.

So does ‘four stores and seven more to go’ mean we can expect seven more company-owned stores to soon pop up among the 88 remaining franchised units? Actually, yeah, something like that. The $6 million fund-raising they completed back on December 15th was enough to open somewhere between 12 and 15 new company restaurants. Five are up and running, so I think there’s room for at least seven more.

As for the stock, the chart is as triangular as one the restaurants’ diagonally-cut sandwiches…as it has been for weeks. That’s not a bad thing or a good thing, but it does put any short-term trade on the backburner.

The support and resistance features of the wedge shape are currently trapping SPKL between $1.12 and $1.26, but the range is shrinking fast. I’m looking for a move one way or the other soon. I’d be a quick buyer if the resistance line is broken. If support is broken first, I’d also be a buyer once all the dust settles and shares start to perk up. That bottom is a little harder to define, but I think the better entry level is worth the effort.

Here’s the news release.

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We didn’t even get a chance to celebrate yesterday’s victory with our Tenet Healthcare (NYSE: THC) pick before we got another one today. THC shares are up another 7% following yesterday’s 14.5% rally. That’s a 22.5% romp in less than 48 hours.

What causes this kind of bullish volatility just a day after a giant surge? Let’s just call it the fallout from Tenet’s good news. A lot of pessimistic analysts were caught with their pants down…they were bearish on the stock, and the company embarrassed their stock forecasting skills. Like cockroaches scurrying when the lights are flipped on (sorry…disgusting analogy, but true), all these firms are scrambling to update their opinions.

Just today, Jeffries raised their opinion to a “hold’, and Credit Suisse raised their rating to a ‘neutral’ (from underperform). I suspect we’ll see a few more stragglers submit new ratings later on this week.

First of all, a rhetorical question…what good does it do you to follow Jeffries or Credit Suisse advice if all they’re doing is responding to the same news (after the fact, no less) you and I are getting? Their tardiness left their fans holding the bag - or missing the boat - yesterday.

Second, my key point…evidenced by the previous question.

Some big-name research is good; most of it is crap. Tenet Healthcare’s a great example of how worthless many of these high-profile research outfits are.

On the chart below we’ve logged most of the key ratings changes for Tenet. Upgrades are marked with green arrows; downgrades are marked with red arrows. See if you spot the problem with the practice.

Some of the pick points were quite good. Most were not.

It’s also worth noting that the chart may be a little too deceptive in favor or the analysts. What appears to be upgrades in front of rallies or downgrades in front of plunges are actually rallies and plunges CAUSED BY the ratings change. Those weren’t actionable by the average investor - the move had already happened by the time the new rating was publicized.

Of the 16 opinion changes we see here, only eight of them were of any use to you and I. The other eight were late, or plain-old wrong.

I don’t know how you feel, but if my odds are just as good with a coin toss, I’ll do my own research and form my own opinion thank you very much.

By the way, the timing of the analyst ratings for Tenet were actually better than average. Scary.

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Time to get on the soapbox again.

For those of you who are new, every month or so I fly off the handle…deservedly so though. I have patience with everything except ’stupid’ - especially from the media. When a journalist spends time telling me something I needed to know four months ago (and has since become obvious), the soapbox gets dusted off and placed on your proverbial street corner.

Today we have the Associated Press to thank. Specifically, Martin Crutsinger’s story ‘Top Economists See Sign of Recession’ has me thinking to myself “Are you freakin’ kiddin’ me?”

I’ll put a link to the full story below. Here’s the basic message summarized by your favorite writer/analyst at your favorite small cap newsletter/website. (It helps that I’m the only writer/analyst here.)

Unemployment is up, consumer confidence is down, and we’re in a tough housing slump. As a result, a near-majority of the National Association for Business Economics members collectively think a recession is going to occur this year.  

My response: Ya’ think?

I guess those quick perceptions are what it takes to get into the National Association for Business Economics (affectionately called NABE amongst those who know the secret handshake). I don’t recall ever hearing of the NABE before today, but a friend of a friend told me they meet every Tuesday at 7 PM down at the local Ponderosa. I think they’re the ones who cut in front of the Kiwanis club members already in the buffet line.

One of the NABE’s members boldly suggested a recession started in December, but went on to say it would probably end in June once we all got our huge tax rebate checks in May. Makes sense to me - I know I plan on taking my $300 windfall and buying that house that was just a mere $300 out of my price range. I intend to write W a thank-you note just as soon as I move in.

Here’s the story. I’ll warn you before you read it that you can’t get those two minutes back once they’re gone. But, at least you’ll have an affirmation of something we’ve all known for months now.

I heard a rumor that tomorrow the AP plans to run a story about the U.S. starting to have problems with sub-prime loans. That’ll be interesting news to break.

One way or another, our Tenet Healthcare (THC) stock pick is going to get moving soon. The triangle shape on the chart is just about closed, and THC shares are getting squeezed into a pretty cramped space.

That’s not bullish or bearish yet, but could be (either one) real soon. Stay tuned to the support and resistance lines. When one breaks, we have better-than-average odds of a strong continuation move in that direction.

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Some of you may have already seen this, but I’m going to guess most of you have not yet reviewed - or even heard about - Smart Energy Solutions’ (SMGY) newest investor presentation. If you haven’t yet, you may want to take a look…it offers up some hope for a company I’d pretty much given up on.

I stumbled across it a few days ago, only because I keep tabs on anything any of our companies files with the SEC. That, however, was the odd part. Anybody can put together a PowerPoint about their company; not everybody submits it as a document to the Securities Exchange Commission. There was no fanfare or press release to go with it…just the notification of a document - a PowerPoint - being filed.

Now, it’s not one of the official documents (such as a 10Q or 10K, ‘S’ paperwork, or any insider ownership information) the Securities Exchange Commission requires, nor is the information found in the document a guarantee of any sort. The fact that it’s been voluntarily filed with regulators though….well, that carries some weight with me. Maybe there’s a reason to stay interested after all.

You can actually take a look at the document from the Smart Energy website by clicking here. You’ll need PowerPoint (or at least a PowerPoint viewer) to do so. It’s probably the best summary I’ve seen for the company and the underlying opportunity. What I really want you to notice is on page 12 - the revenue forecast. That’s largely why SMGY is still alive on our site.

That said, it’s not a reason to go out and load up the truck with SMGY shares. This stock has been getting beaten up for a while, and I’m not a big fan of trying to catch falling knives. In this case though, I’m willing to at least consider picking the knife up once it hits the ground.

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You probably recall small cap company SpongeTech Delivery Systems (SPNG) started a television ad campaign on Monday of this week. While we don’t have any early word yet on what the response has been, the company has since been featured on web-based TV show MoneyTV. You can watch the clip (anytime you want) just by clicking on this MoneyTV.net link.

The clip is an interview with CEO Michael Metter, who not only discusses the commercial but also quite a bit about the company and its future.

I don’t want to transcribe the entire segment here - I suggest you watch the video for yourself. I will tell you one thing though…the current back-order total wasn’t what I guessed. (Hint: it was more than my guess.)

In the meantime, the market seems to have renewed their love for SpongeTech. What we have with this recent rally that we didn’t have before is growing volume. Maybe it was the commercial garnering not just customers, but investors. Maybe it’s just that the short sellers are finally out of the way. It doesn’t matter really…the stock is making a strong breakout, and a move to 8 or 9 cents is a good possibility (at least as I see it) now that volume is strong. Beyond that, the next target would be 12 cents.

If you’re not currently in a position, I think you’ll want to be soon. The metrics for the company’s valuation still suggest a huge upside opportunity is in store; the forecasted price/sales ratio is about 0.5, but the average is around 2.0.

Again, click here to watch the MoneyTV.net interview.

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To my memory, this is the first time the emperor - Google (GOOG) - has even hinted that he might not be wearing any clothes. The search engine giant reported their Q4 and full year results today. And, Q4’s sales were a little light. The reason Google gave? Fewer accidental clicks.

Maybe it’s just me, but if ‘fewer accidental clicks’ can significantly impact revenue, your revenue model may not be nearly as healthy as you’d like to believe it is. Worse (or better, if you’re a Yahoo or other search engine), they think the problem may persist into Q1. It begs the question…is the average Internet user so inept or five-thumbed that he/she clicks on the wrong link a great deal of the time? Bizarre.

In my experience, the things that seem big for a company usually end up being little. The little things often end up being a big deal. This seems little on the surface, but Google saw fit to not only mention it once, but caution about it going forward. It just makes me wonder where else this behemoth is vulnerable.

Regardless, Google took down the rest of the market today (and pretty easily, I might add). It doesn’t exactly give me a warm fuzzy about any stock for the near-term.

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We’ve been following gold’s start-and-stop rally for a while now, even making a trade idea of it back on December 24th. The buy signal then was a bullish break out of a wedge pattern on the chart, and it ended up being a good signal - gold futures ran from 821.80 to a high of 940.30.

Though they’ve taken a break since hitting 940 on February 1st, the same wedge has formed again. And, we may have seen the same bullish breakout again today…the gap and high of 934.0 (so far) has taken the futures well above that resistance line.

Taking all of this at face value suggests gold is at the beginning of yet another bullish run. Using Fibonacci extension lines, we see a move to 1024.80 being likely, and a move to 1078.90 being possible.

This isn’t an official trade, and we’re probably not going to follow up on it again anytime soon. But, if you’re a futures trader - or even a gold ETF (GLD) trader - we just wanted to share our perspective.

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Like I said in Saturday’s edition, small cap company Applied DNA (APDN) submitted their official quarterly 10Q earnings report to the SEC (I found it on EDGAR), but didn’t publish a press release to go along with it. My guess was they didn’t want even bother trying to get anybody’s attention going into a long weekend. Instead, they were opting to wait until trading started again this week before making a statement.

In a nutshell, that’s basically the way it happened. They issued a press release this morning to confirm what our readers already knew - Applied DNA generated $123K in sales last year. No earnings, but no surprises.

They also wrapped up some recent highlights. To see the press release, just click here.

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We’ve briefly mentioned a couple of times now that SpongeTech Delivery Systems (SPNG) would soon be featured in its very own TV commercial. Well, the time has come. Starting on Monday, SpongeTech’s soap-filled sponges will be touted via television on some big-name stations. The relatively new (and mostly unadvertised so far) product will be introduced to millions of viewers. And, they’ll see the spot many, many times…the commercials are slated to run for the next six months.

I can’t stress enough how huge this is for SpongeTech, and by extension, its shareholders. This could mean millions of sudden high-margin revenue, where the company had basically none.

For most intents and purposes, the company just recently took flight - though sales catapulted when they did. For the last reported quarter they did $331K in sales, topping the previous quarter’s sales of $64. The comparable quarter a year earlier, they did basically nothing.

Now, size that big increase up with the 12-18 month order pipeline (meaning orders are in hand and scheduled) of about $16 million. And, that backlog was built up without television ads. I can’t imagine how much bigger the number will get when the sponges are shown directly to the consumer.

That said, I do have a little background on the ad schedule. There are six cable networks airing the ads, with a combined regular viewership of just a little under 150 million subscribers. Some of the networks include Fox College Sports, NBA TV, Discovery Military, and others. They all target the ideal audience for an auto-wash sponge - males between the ages of 25 and 54. The average TV viewer of these stations is likely to see the commercial at least a few times, which should be sufficient enough to prompt some orders.

I don’t know what kind of result SpongeTech expects, but I think even a very modest response rate of 0.5% of those 150 million consumers (700K buyers) would still be a windfall. At an average online price of about $10 per multiple-use sponge (3 for $20), that translates into revenues of somewhere around $7 million.

Considering they had no revenue last year, that’s a big deal - not to mention the $16 million backlog they’re enjoying. Is a 0.5% response reasonable? I honestly don’t know, but it actually seems low to me.

The other upside is the big margins you get with direct marketing. There’s no retailer or wholesaler to cut into the profit, since they’ll be selling the sponges directly from their own website or over the phone. Gross margins were a whopping 87% last quarter. I don’t know what they’ll look like this year, but when you have that much room to work with it’s tough to imagine margins (net or gross) not being outstanding.

By the way, the market cap is now around $3.2 million. I think that’s about as undervalued as I’ve ever seen for any company, though I don’t see the market letting SPNG stay that way for long.

Here’s the press release.

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For you Star Wars aficionados you’ll probably know the exact scene I’m talking about from Episode 4. When Han Solo’s ship - the Millenneum Falcon - unknowingly warped into the same area as the Death Star, Han Solo became concerned. The line from the movie? “I’ve got a bad feeling about this.” That’s kind of how I feel about today’s words from the Fed.

To be clear, I don’t fear something bad will be said. I fear Bernanke and the other suits will see a decent economy, which will ultimately lead them to the decision that no more rate cuts are needed. The market, in turn, may revolt.

Whether or not the economy needs a rate cut or not is irrelevant. As far as investors are concerned the Fed Funds rate could be less than zero and it still wouldn’t be low enough. The issue posing a risk to us is unmerited expectations.

So what am I seeing that might make the Fed decide the status quo should remain the status quo? Here’s the latest…

• The U.S. trade deficit declined even more than expected in December. In fact, last year was the first year in five years the trade gap declined.
• Jobless claims fell by 9000 last week. Unemployment sank from 5.0% to 4.9% last month. On the other hand, layoffs came in at a two-year high, so it’s not like this is picture-perfect. Still, the Fed has to be pleased the bleeding has been at least temporarily stopped.
• Retail sales were better than expected last month, as I heard about 9000 times yesterday. Enough already - we get it.
• Bond insurers aren’t in the dire straits most of us thought they were even just a week ago.

Personally, I think we’re in a recession (as I said on January 26th). However, I don’t think Ben Bernanke is going to see anything new in the way of numbers that says he has to add another rate cut to the 1.25% points worth of cuts he’s already made.

The problem is, 100% of traders - according to the Fed Funds futures - are expecting at least some sort of rate cut between now and the March meeting. Some things could change between now and then (for better or worse), but I don’t know if enough can change that quickly.

If the market doesn’t get what it want, or hear what it wants to hear, I’d be concerned about another round of selling. In other words, I’ve got a bad feeling about this.

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Looks like we issued this stock pick just in time. On Monday, RF Micro Devices (RFMD) unveiled four new products or technologies at the Mobile World Congress in Barcelona….a 3G transmit system, new location-based services, integrated RF shielding, and the Polaris 3 silver (a radio/phone). With the exception of the Polaris, I don’t really know what all the other stuff is - nor do I care. What I care about is whether the market liked it, which it did. RFMD shares jumped 6.5%.

Personally, I thought four back-to-back press releases was gratuitous. I would have saved some ammo for later. All the same, the fact that they came to the conference with new toys in hand confirms something I mentioned on Thursday when we issued the trade alert…

Yes, the company blew it last quarter. There’s no doubt about it. I don’t know that the next quarter will be much better. But, I have to think a company that has been highly profitable before can become so again.

Not that Monday’s news instantaneously solved all of RF Micro Devices’ woes, but I think it’s a hint they’re thinking in the right terms now.

Remember, we’re not getting married to RFMD. Our target is modestly set at $4.01. We think the company is going to have enough good news in the near future (like above) to stop the bleeding and soothe the pain. None of it is really evidence that all’s right again. If things eventually look better longer-term, we’ll revisit. In the meantime, we got a good jump on this trade.

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You don’t need me to tell you media attention can be bought. That’s what press releases are for, and they’re just one of many ways to get your company into the limelight for a few moments. However, it seems like the highest quality and most meaningful attention any company could ask for is the kind that’s free - when you’re part of ‘organic’ news. That’s why I feel Newsday.com’s discussion of Applied DNA (APDN) today is just huge…an unbiased source took a long, credible look at the young, anti-counterfeit company.

There was nothing in the article we didn’t already know. Newsday basically told the same story we have been telling for a while, focusing on the Supima cotton venture. The reason the article is so exciting, however, is that the company is being put in front of a whole new audience that may not have heard of it otherwise. (Believe it or not, not everybody reads the Small Cap Network newsletter or scours the web for small cap news.)

Newsday is one of the biggest regional newspapers in the country, centered right in the heart of it all - New York. It’s a big audience, with a lot of investment-savvy players. I suspect that’s why APDN shares are moving again today, even after a huge run over the last couple of weeks. Like I said, it’s the kind of publicity you couldn’t pay for if you wanted to.

Here’s a link to the article on Newsday.com. The chart below speaks for itself.

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Per my 2008 stock market predictions, I wasn’t a bit surprised to learn last week Microsoft (MSFT) was making a bid for Yahoo (YHOO). If it wasn’t them, it would be somebody else. Microsoft just seemed like the obvious choice, since Google (GOOG) doesn’t really need Yahoo.

As you’ve undoubtedly learned by now, Yahoo isn’t keen on the deal, and is out shopping for other suitors. AOL has been mentioned more than once, and Google is still on the board.

Based on the rejection of the Microsoft offer and the immediate courtship with AOL, I’ve come to this conclusion…one way or another, Yahoo’s getting acquired - and probably at a price north of Microsoft’s 44.6 billion offer. The fact that they’ve put themselves up for sale at all tells me they see the writing on the wall; they’re just trying to do it on their terms.

Long story made short, my prediction stands. I’m also not counting Google out at this point, as I don’t think AOL and Yahoo will make for a good fit.

Also in my ‘Top Ten Predictions’ report I said to think ’small’ and ‘mid’, and think ‘value’. I was referring to value stocks (as opposed to growth), and small caps (as opposed to large caps). Both of those groups lagged badly last year, but the economic winds changed quite a bit in the meantime. I was looking for rotation in leadership, which means small cap and value stocks were primed to outperform. Mid caps were apt to run a close second.

Though the year is hardly even close to over, so far the prediction has been very right. Take a look at the chart below. Year-to-date, value stocks are at break-evens or better. Growth stocks are in the hole. Small cap value stocks are the top performers year-to-date, and mid cap value stocks are running a close second. Large cap value names are just below them.

Of the three ‘growth’ laggards, again it’s small caps, then, mid caps, then large caps. Though still in the hole, the relative performance ranking of those three is still the same as the prediction.

Though I’m sure we’ll see more ebb and flow, my forecast still stands.

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Many of you have been asking what my thoughts were (and are) regarding the fiasco known as Titan Global Holdings (TTGL, or TTGLE…depending on the day). I tried to respond to the best of my ability, but didn’t want to permanently pass judgment until I could really figure out if the mess was real, or just perceived. After having had some time to scour all the recent filings, my official and professional conclusion is this - Titan Global is a joke…a complete and utter joke.

We’ll get to why in a second. First things first.

As far as passing out blame goes, I put myself at the front of the line. I fell for it. Though I’m one of the nicest and most open-minded guys I know (how modest of me), I’m also one of the most skeptical. I never really fell in love with Zupintra (ZUPC) or Enigma (ENGM) because there was always this little red flag waving in the back of my head. With Titan though, the pitch seemed so believable, and so well supported.

I take a little solace in knowing I wasn’t the only one. Some big institutional money got behind the company as well, proving the ‘pros’ don’t see everything either.

You know who else got fooled though? I’m being 100% serious when I say this…I think the management team actually talked themselves into believing they were turn-around artists. I never got that kind of conviction from Zupintra or Enigma, but Titan’s growth plan just seemed so ‘matter of fact’.

The only ‘fact’ left standing now is this…Bryan Chance (CEO) and his management team are dangerous because they don’t know how much they really don’t know about being a value-seeking conglomerate. Undervalued companies are good, but they have to be improvable (I know - that’s not really a word). Undervalued companies are good, but you can’t buy them for more than they’re actually worth (improved or not).  Undervalued companies are good, but you have to be sure the numbers they’re giving you are the real numbers.

Titan is guilty of all three of those things, just in the last few months.

1. Oblio Telecom - the telecom division that ’started it all’ - is now not only not better off in Titan’s hands, but it’s basically shut down. They haven’t paid any bills in three months.
2. Remember Appco Oil? The company generates about $400 million per year in revenue, but with net margins of only 1%. A top line is great, but I suspect TTGL paid too much for an anemic bottom line.
3. Titan is now filing a suit against USA Detergents, alleging the sales/earnings numbers they provided before the acquisition were fraudulent. If they were lied to it’s technically not their fault, but they should be able to spot a bogus story before signing a check.

As if that weren’t bad enough, Titan salted the wound by submitting their last SEC filing after it was due. I hadn’t realized it at the time, but it was the third late filing in two years. As a result, they now risk being de-listed and moved back down to the pink sheets.

What can I say but sloppy, sloppy, sloppy?

Be that as it may, the question to ask now is what do you do if you’re an owner.

First of all, I think the ‘investment’ value is gone. Even radical improvements across the board won’t undo general stupidity. We’re on the defensive here.

Second, I think the huge dip from late last year and early this year has already priced in most of these problems. Therefore, I think there is some short-term upside potential that will offer a better exit point than what we have now. It may be tomorrow, or next month. It may be at 50 cents, or $1.50. We’ll have to watch charts and cross reference the news, so stay tuned on that front.

One last thought - there’s an old saying “fool me once, shame on you - fool me twice, shame on me”. That’s pretty much where I am right now. It happens. It wasn’t the first time or the last time for any of us. However, if Bryan Chance is reading this…as ‘The Who’ says, we won’t get fooled again. Don’t forget the name, in case he takes the helm of another company.

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Though I get a little seasick looking at the chart, PhotoChannel (PNWIF) may have finally turned the ship around. For the first time since literally a year ago, we’re starting to see PhotoChannel make higher highs and higher lows. The volatility is still the same - more than a one point range framing all the ebbs and flows. But, at least it’s bullish volatility now.

What changed? It’s a little strange actually, but first a quick explanation…

You know how you can upload photographs to websites over the Internet and order prints? PhotoChannel is actually the company that processes those photos. Once ordered, you can have them mailed to you, or you can pick them up at a nearby retail store that works with the company. PhotoChannel makes a few cents for each print.

It’s a pretty simple model - they just need to go out and find high-volume partners.

Anyway, for the better part of 2007 they seemed to be asleep in the expansion department. Then in November, things started to fall in place, all at the same time.

The news spree was kicked off on November 13th when the company announced they’d be running Costco’s (COST) online photo ordering service…a real coup for the PNWIF. However - and as we see all too often - the great news actually ended a perfectly good rally, and started a big pullback (talk about “buy the rumor, sell the news”!). I admit it…at that point I feared the worst - if good news can’t get the job done, what can?

Then, a funny thing happened…the good news just kept on coming. In late January they launched their PNI kiosk. In early February they announced a huge increase in revenues (and record revenues). On Wednesday they inked a deal with Sam’s club. On Thursday they told us they’d be providing the service for Wal-Marts in Argentina.

Needless to say, things got real good in a short period of time. The stock responded.

And while I don’t want to be presumptuous, if the Argentinean Wal-Marts are on board, can others be far behind? Wal-Mart’s (WMT) biggest U.S. competition - Costco - is already offering the service too. I have to think U.S. Wal-Marts aren’t going to stand for it. Just a hunch.

As for the stock, had it not been for a volume spike I may have never even noticed. On the other hand, had it not been for a volume spike, PNWIF may not be so darn overbought right now.

My bottom line here is relatively simple…I like the company a lot, especially in light of recent news. I don’t like all the volatility though. I think if you’re interested, you’ll probably get a dip eventually. That’s just been the pattern lately. Like I said above though, the highs and lows are now getting higher - for a change. Follow the shift in direction of the ‘zones’ framed by blue lines.

However, volatile or not, I think a move beyond the recent peaks (anywhere from $4.65 to $4.88) would be huge for this stock. That move may alleviate some of the up-and-down stuff if it can get past there and stay there.

Just something to mull over.

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It seems like only yesterday we were discussing Stockgroup Information Systems’ (SWEB) Q3 earnings results. But, per the company’s press release today, it’s time to get ready for Q4’s numbers. They’ll announce the latest Q4 (and therefore annual) results on March 6th at 3:00 PM EST.

Just to catch you up, last quarter the company pulled in $3.4 million in sales…much better than the $1.9 million generated in the same quarter a year earlier. A key acquisition was the main reason for the bump. In terms of earnings, Stockgroup ended the quarter in the red by $2.2 million. Of the loss, about $650K of it was a one-time expense related to the development of the new website.

A couple of things came up in the conference call following the Q3 announcement. First, the issue of improving margins and increasing ad revenue was well discussed, and Stockgroup’s management had a plan of action to work on both. Second, investors wanted to know what to expect regarding the smaller revenue-bearing properties like StockStream and Reuters-Connect. Again, those opportunities were being addressed by the management team.

Why rehash the old news? Because those are the first issues and questions I expect to hear during the next conference call, which will be held about an hour after the announcement is made on March 6th.

To participate in the call/webcast, just dial 1-866-400-3310 a few minutes before the 4:05 PM EST start time. Or if you only want to listen in, you can do so via the web using Windows Media Player. Visit www.stockgroup.com to connect to the webcast.

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Not a big deal, but on Monday when I said Applied DNA’s (APDN) marker kit being was incorporated into cash transit boxes, I goofed. The DNA marker is still being incorporated into the boxes, as described. And, like the current dye system, if anybody tampers with the boxes, the sealed DNA-laden liquid explodes all over the cash, essentially ‘marking’ the bills.

Where I goofed was in saying the test would be performed by a pen-like marker. As it turns out, a hand-held scanner (the same one we discussed back on January 22nd) will determine whether or not DNA is present.

The scanner’s use instead of the pen makes not one iota’s worth of difference as far as the features/benefits are concerned. The technology can still pinpoint the rightful owner of the cash, and even determine which cash box it was in. The idea is still just as attractive to cash-in-transit companies as well as insurance companies. The only difference is a trigger pull instead of a pen stroke.

Like I said, not even worth batting an eye. I just want to get it in writing in case anybody intimately familiar with the technology was wondering if something had changed.

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We hadn’t forgotten about our healthcare stock trading idea Tenet Healthcare (THC). We’ve just been busy trying to navigate the market’s recent squall line. Now that the volatility is mostly (hopefully) in the past, we can start to study our stock’s charts again. In fact, we already saw some things we liked about Tenet’s chart.

Basically, Tenet fared about as well as any other stock did in December and January…which was not very well. After peaking at $6.00, we saw THC pull all the way back to $4.04. It was at that low, however, that the last line of defense finally stepped up to the plate. The 100 day moving average line has stopped more than one selloff from spinning out of control, and has actually prodded the recent rebound. Or, maybe the 68.2% retracement lines had something to do with it as well.

Also during December and January we saw a steep resistance line take shape. Today’s strength is a good effort to breach that line. We’re already above it, and volume continues to improve.

If you missed an entry for this stock trading idea the first time around, here may be your second chance.

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Well, one of my 2008 market predictions has already come to pass. We learned early this morning that Microsoft (MSFT) would be bidding $44.6 billion for Yahoo (YHOO). The acquisition isn’t signed yet, but I don’t see any impediments popping up between now and then. Though I’m not surprised Microsoft wanted it, I am surprised nobody else made a bid. Then again, this all happened quickly. Maybe another suitor could step up to the plate in the meantime….maybe Google (GOOG)? After all, Google fell short of expectations last quarter. Maybe going shopping could heal the wound.

If you’re wondering where I made this prediction, it was NOT in my regular ‘prediction’ edition from December 26th. That newsletter had a lot of predictions in, but not exclusively market-related predictions. The Yahoo prognosis was first made in the special report you’ll find on the home page…”Top Ten Stock Market Predictions for 2008“.

What are my thoughts on the merging of the two companies? I like the concept. One of my chief complaints with Yahoo! was that they built a great name, but lacked the technical sophistication to make it as profitable as it could be. Microsoft clearly has monetization know-how, but couldn’t draw traffic to their site. Now there’s the best of both worlds. The risk here is that Microsoft attempts to make Yahoo! an MSN clone, and ends up driving it into the ground. Leave the user interface alone, and they should be fine.

And why does Microsoft want to go to the trouble? The answer to that questions goes back to one of my four technology predictions for 2008, which you’ll find in the ‘Technology Trends’ pages. To make a long story short, software is increasingly competitive, and decreasingly profitable. Open source software - which is free - is a real threat to Microsoft. Needing to diversify, they bought a new-but-proven venture…one they can make even better.

One prediction down, nine to go.

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