Email : [email protected]
URL : http://www.otcjournal.com
To
OTC Journal Members:
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Calypte
Biomed (OTC BB: CALY): Interview With Chairman Tony Cataldo Canceled |
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Last week we announced we would be
publishing an audio interview with Tony Cataldo, Chairman of Calypte Biomedical,
later this week. The purpose of the interview was to bring investors up
to date on corporate developments, provide some insight on potential future
developments, and discuss the enormous excess supply of stock which has
been hampering Calypte's ability to move up the charts despite corporate
achievements.
Mr. Cataldo failed to be available
for the scheduled interview, so for the time being it is canceled. It may
be rescheduled, or may never happen. We'll let you know. We apologize for
any inconvenience this may have caused.
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Trading Alert-
Time To Short the Market |
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In this past weekend's edition
we covered the unusual grinding and congestion in the market. We also hypothesized
this unusually long low volume grind is setting us up for a big move in
one direction or the other. In summary, we believe forces are building
up in the market like water building up behind a dam. The longer the build
up, the more violent the inevitable move when the dam bursts.
We now believe there is a 75% probability
the NASDAQ is setting up to retest the October low of 1100, and now is
the time to establish a short term trading position on which you can make
money if the market capitulates.
Note that the NASDAQ failed to retrace
50% of its drop from the mid January to the mid February time frame. Therefore,
we believe any attempt to rally will fail, and a retest of the October
low is inevitable barring any miraculous changes on the geopolitical scene.
We don't believe this means you should
sell all your longs, particularly in the penny stock arena. These stocks
have dropped to absurdly low levels due to a buyers strike, and as long
as the fundamentals remain intact, you should stay in and wait it out.
Working against this trading idea
is the fact that nearly everyone is negative on the market, and the crowd
is usually wrong. No one seems to be able to find any reason to buy. Yesterday
a Fed governor warned about potential problems with Freddie Mac and Fannie
Mae. Warren Buffet is not buying. War in on the horizon as the endless
diplomatic process seems to be winding to a close. 94.8% of yesterday's
volume was on the sell side, a huge number and generally associated with
a bottoming process.
Since the market's job is to fool
everyone everyone, a tight stop and a small amount of capital should be
used if you decide to participate.
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How
To Short the Market |
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Shorting is a strategy which provides
you the opportunity to make money in a declining market environment. There
are several ways to accomplish this. Representative of the NASDAQ 100 is
the QQQ (AMEX: QQQ), which goes up and down just like a stock with
the NASDAQ. Reflective of the S&P 500 are the Spyders, which trade
under the symbol SPY (AMEX: SPY). As we write this edition, the
QQQs are trading at $24, and the SPYDERS are trading at $81.30.
Both QQQ and SPY can
be shorted just like a stock, and you don't need a down tick to be allowed
to short. You can purchase options on QQQ if you want maximum leverage.
Here are three ways to participate in this idea, with the first two giving
you the best leverage for the least amount of capital:
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Short QQQ at the market (currently
about $24 per share)
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Purchase a put option QQQ- one
of our editors has purchased 20 of the April 25 QQQ puts at $1.85 each
for a total investment of $3700 without commissions. The symbol for these
puts is QAV.PY.
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Short SPY at the current market
(about $81.25).
In support of our belief the market
is ready to crack is the VIX- the volatility index. The higher the level
of the VIX, the more volatile the trading activity. Note how dramatically
the VIX climbed in January. It declined through February, but has been
rising steadily in March, indicating volatility could be returning.
If you decide to participate in this
idea, you should do so with a tight stop loss. We would recommend closing
out your position in QQQ if it hits $24.50, and SPY at
$82.20 to minimize potential losses. If you own the put options, and
the QQQ hits $24.50, simply sell the options at the market.
Be prepared to take your profits
when the NASDAQ tries to retest the October lows, but don't try to make
every last dime. Just close out your position at about 1120 NASDAQ, take
your profit and wait. If the NASDAQ can close below 1260, the probability
of the trade being a money market will improve considerably.
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Conclusion |
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For the purpose of this trading alert
we will post shorts on both the QQQ and SPY in our Alerts
Tracker. However, if we hit the stop loss or the profit level we will publish
a special edition.
This trading alert is important because
it will give you the opportunity to take advantage of the what appears
to be the set up for a good trade.
However, if the trade works, the
far more exciting opportunity will be going long at the October lows.
We would recommend you consider setting aside four to five times as much
capital for trading ideas if these lows are challenged.
As usual, comments are welcome -
email: [email protected].
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