Small Cap Network Blog

The dollar’s up, stocks are soaring, oil is way down, which means I can afford gas tomorrow. If visions of sugar plum fairies were dancing around in my head, I’d swear it was Christmas morning. It sure feels nice to see things flow in a positive direction for a change.

I don’t know how long it’ll all last. Maybe not long at all. However, even with reversals on all these fronts, the bulls have the bears back-pedaling. If they can just get a little more momentum going, then forget about it - we’re back into a bull market (which isn’t what I was thinking a few weeks ago).

Of course, it’s easy to be a bull when stocks are on the rise. The real test comes when the bears strike back…when stocks start to fade and oil starts to creep up. If the bulls completely retreat again, then today will mean nothing.

I guess what I’m trying to say is, enjoy the day, but don’t dig in too deep. The bullishness will need to be verified if it’s to have any longevity.

In the meantime, crude oil’s well on the way to $110. If you’ve shorted oil stocks or oil futures, that’s where I’d take some profits and get out of the game for a while…at least until it’s clear what’ll happen there. By the way, $110 is not only a big retracement level - it’s also a previous rebound point. That’s why I’m watching it so closely. 

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OK, so maybe the U.S. dollar isn’t going to immediately head south following yesterday’s rally - it went into its second stage today. I for one couldn’t be happier, but after this upside explosion, I think we really need to get tempered.

The upside to the move is that a potential slide back under 74.30 is less likely….even if the index falls, it’ll probably nto fall under that level. So, the big ceiling I was watching has pretty much been permanently broken (barring a catastrophe).

The downside is, it’s going to be impossible for the dollar to sustain this blistering pace. If I were a short-term forex trader I’d probably short the sawbuck here. Longer-term though (after seeing this move) I think it’s pretty clear the market’s ready for the greenback to recover.

By the way, check out the longer-term weekly chart. The second big resistance line is under attack. I don’t think the index will knock it out with this first attack, which is why I’m looking for  a short-term pullback. The second or third salvo could do the trick though. That may be a few days from now.

If we do indeed see the dollar break past that upper resistance line, look for oil to keep sinking (even under my original checkpoint of $110). And, look for renewed enthusiasm in American stocks.

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I have no doubt whatsoever that betting on further upside from here is the wrong move - this was a sharp peak that will pull just enough people into a forex trade to cause a lot of pain. Nevertheless, the wall has come atumblin’ down….the U.S. Dollar Index has broken past some big-time resistance at 74.30, closing at 74.54 yesterday.

Like I said, I expect to slide back under it again sooner rather than later, but this is a big victory for the greenback; once a resistance line has been broken, it’s easier to break it again.

The story’s far from over though. There’s still a big resistance mark at 76.0. We’ll burn that bridge when we come to it.

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Wednesday’s discussion of Voyant International (VOYT) - and Aviation Broadband - prompted an interesting question from one of our readers. Gary accurately pointed out there’s somebody else already doing what Voyant plans to do with the Internet on passenger jets…

Check out this page on MSN:

http://travel.msn.com/Guides/article.aspx?cp-documentid=579884&page=2

No mention of VOYT.
>From your previous pumping of VOYT, airlines were supposed to be the most promising entry for this technology.
Looks like someone else will get the business.

Thanks Gary. Though nobody is effectively delivering this higher-quality broadband service on airplanes yet, I hope we didn’t imply that Voyant was the only company working on it. (We’re specifically referring to ground-based service. There’s a satellite-based broadband service available, but it’s expensive and ineffective….and probably has no future.)

Here’s some even more concerning news if the article above (about GoGo and Delta) worried you though - there’s more competition than just GoGo.

That said, AirCell (the operator and designer of the GoGo service) seems to be closest to delivery….according to the article anyway. However, don’t forget Voyant successfully tested their technology (which I assume is the same basic technology as GoGo’s) just a few weeks ago, and it worked. I can’t imagine AirCell’s product being significantly more ready than Voyant’s. I expect to see a similar article about Aviation Broadband pretty soon.

Somewhat-related…the passenger jet broadband industry is expected to be worth $1 billion annually in the foreseeable future. If Voyant can even capture a piece of that (and we think they can), it will still be a windfall. Would I like it of GoGo/AirCell fell off the face of the earth? Yep. But, even if Voyant was the only player now, competition at some point would be inevitable.

Point being, we don’t expect GoGo to get 100% of the business.

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We got a handful of good questions regarding Voyant International’s (VOYT) unheralded quarterly results from Wednesday; a few of them even made the ‘need to answer publicly‘ list. Here’s the first…

I’m excited by your assessment of the company’s future, but they don’t have enough money to keep going. The press release today says they have to raise more capital and if they don’t succeed they won’t be able to stay in business for more than a few months.

Excitement versus fear: can they survive long enough to start benefitting from their exciting product developments? They can hardly dilute a stock that currently priced at 12 cents!

Any insights would be welcome.

Thanks for the question. The bad news is, that warning appeared on the latest 10-Q. The good news is, that warning has pretty much appeared on every 10-Q since Voyant’s onset. It hasn’t been a problem yet.

Truth be told, that’s mostly boiler-plate stuff, and on there as an accounting requirement. It’s not unusual at all for most bulletin board companies….none of them really have ‘enough’ money to stay afloat. Yet, many of them do stay afloat for quite some time.

In Voyant’s case, most - if not all - of their people are being paid in stock rather than cash. And, the staff is lean to say the least. They have basically no costs either, and RocketStream (as we now know) is high-margin.

Point being, the warning doesn’t particularly worry me any more than I’d be concerned even if they had a a big stash of cash. If they’re going to fold, any cash they had on hand really couldn’t prevent it. They don’t need it to stay afloat - they haven’t had much cash in a long time. (There are much bigger things to worry about.)

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