To OTC Journal Members:
 

Home To A Whole Lot of Ugly: Close out QID

I was home at the end of last week for the first time in 10 days. While I was away the market simply got a whole lot uglier. Wow, what a melt down. I'm just about caught up with correspondence- all your BLOG questions are answered and I have a few more in my inbox.

I hope a lot of you hung in there on QID. I had been projecting QID, which is a stock that goes up when the NASDAQ 100 (NDX) goes down, would trade up into the $45 range. Look at the past postings in the BLOG- you'll see it. I first suggested getting in at $38.67- so you now have a 18% gain if you just traded the ETF- much more if you played the options as well.

QID exceeded my expectations, and is now trading in the $45.50 range- it is now time to close out the position. We have arrived at the LPO- Logical Profit Objective. I chose to close out my trading position prior to my departure as I was without electronic communication, and couldn't monitor the situation. Prudent move, but big mistake. I left about $10k on the table on a trade I called perfectly. Here's the NDX:

I've been calling for the NDX to trade down to about 1811- here we are. It could go lower. The NDX has actually held up better than the DOW, which is an absolute mess and looking to head lower- the auto stocks are at multi decade lows driving the DOW down. Both the NASDAQ Comp (broader than the NDX), and the Russell 2000- are pretty ugly as well. I'm certain the Russell 2000, which is most reflective of OTC Journal type stocks, is gunning for a double bottom at 644- only another 20 points lower than today's 664.

The big picture continues to have Oil planted in the middle of the frame, pretty much eclipsing every other economic factor. Oil, earlier today at $144, continues its amazing run - averaging about $10 per barrel per month in the year 2008, or about $.40 per trading day. The parabolic rise in oil prices has now outstripped in terms of percentage the meteoric rise on the NASDAQ into year 2000- we all know how that turned out.

I have no idea where the top is in oil, but I do believe this parabolic rise is not sustainable. There will be a major correction and a number of months of sideways trading. I have no idea when it will happen, and I wouldn't bet on the top. There will be a big pullback, followed by a rebound, followed by the real move down. It could take six months to complete this cycle from the time it starts- so I hope it happens soon. Yes- we consume a lot of oil. Yes- there is a supply/demand imbalance- no, this meteoric rise is not sustainable. 

On the trading front, I bought RIMM last Thursday as I liked the chart, and felt the overall market was due for a bounce. They missed their numbers last quarter, so RIMM might be losing its "darling" status, but nevertheless I thought it might be good for a punt. Here's the chart:

$90 to $150 is a 60 point move in the March to June time frame. Wow. RIMM missed numbers last week. They took it out and shot the stock. From my point of view, it made a perfect 61.8% retracement of the big move, and this sell off is probably an opportunity. I got my brains beat out shorting this one last time in ran into earnings, so this time I'm going the other way on the pullback.

I picked up 500 shares at $116.85, and 10 August 110 Calls (RUL.HB) at $12.10. I'm betting on the market turning back up a bit this week as well as the stock rebounding, so I will be pretty quick to pull the trigger on this one if it moves up into the money. 

There's a lot to catch up on company wise. EFSF announced it was awarded a patent for Oraphyte- it makes the product far more valuable if a major picks it up. SPKL swooned to a new low - no doubt on investor panic. I haven't made a trade in that stock in months- I decided to hold the stock long term. The company is doing very well. NIHK had nothing to say, and it's reflected in the stock price. I'll try to get BLOGS out over the course of the week. 

Here's one I haven't covered in a while that deserves a mention thanks to the positive news out of the company this past week.
 

 I know it's been a while, but there hasn't been anything to report. Now, TCGD is opening some eyes. Remember this device:

This is the "Compact Safe" device developed by Israel based TraceGuard. It replaces the need for "swab" testing and airport security. TCGD has a relationship with British based Smiths Detection to market this product if and when it gets approved by the national security services in respective countries.

While I was away, TCGD announced it had received approval from the Israeli Security Agency to use this product in replacement of swabbing for exposives. The Israeli market is far from the largest, but it is certainly the best and the hardest to get. The most rigorous testing standards are applied.

TCGD had been so blown out in the '08 bear market, it didn't take much to get the stock headed back up. This is a fantastic first big step for the company. Now, if they can get the TSA Approval in the US, and some orders in conjunction with Smiths Detection, the stock should get back in shape. This could be the one that surprises us all. 

Much more over the course of the remainder of the week on all the situations I cover.

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