Monthly Archives: September 2007

Pickle Propels Higher- Caution Warranted

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SPKL has far outstipped my early expectations with Friday’s breathtaking breakout to the $1.21 level, with a high trade on the day of $1.24.

Are you wondering buy, sell, or hold? If you been reading the OTC Journal for any length of time, you probably already know what I am going to say.

Trading 101- Class- what do we do when stocks we are following make big, spiky, high volume runs? Heres the chart of SPKL:

As you can see, Friday was a huge spike. The answer to buy, sell, or hold? Let’s start with what you don’t do. While this stock may power higher for a day or two more, you don’t buy now. It is going to cool off. The announcement of the addition in one store in Florida is not a game changer- there will be many such announcements in the future.

Hold or Sell? That depends on you and your goals. If you are looking to make some real money off this idea over a longer term, you should probably just hold on, be happy with what you have, and wait for a pullback and some quieter trading to accumulate. I am looking for much higher than $1.20 over the course of time. If you have a traders mentality, or want to try to play the trading game and sell now, hoping you can buy it back cheaper, there’s nothing wrong with that. I might sell a few shares as well next week.

If you are wondering why the stock is so hot- here’s a guess. SPKL starting trading some volume this past Monday. When market makers see volume materialize on a relatively thinly traded stock, they assume investors will get tired and they start shorting. Then they cover at a lower price and make a few cents when seller materialize.

As more investors learned the SPKL story, the buying just kept flowing in. I believe there was a mini short squeeze on Friday. Stocks trade like that when someone has to buy, not wants to buy.

In summary, if you want to establish or add to a position, wait. If you want to make a partial sale, not a bad idea. If you want to stick with this one for the long term, be prepared for the fact that it might pull back a little.

Comments and questions are welcome.

Nighthawk Goes Horizontal

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Ever heard the buzz phrase “Horizontal Market”. Wonder what it means? It references a company who sells its products and/or services to another industry group outside it’s primary target.

In the case of NIHK, the primary market for their remote disconnect technology is Utilities- their technology allows utilities to switch services on and off wirelessly and remotely, now using an internet interface.

They have made some moves into horizontal markets in the past, and each time the stock traded very well. For example- the stock traded up when they announced DaimlerChrysler would install their remote disconnect technology in the fan systems in one of their huge factories.

Another instance was the remote disconnect technology installed on the back up generators on Verizon’s cell towers in New Jersey. Let’s hope that contract expands in a big way.

This past Tuesday morning, NIHK announced another move into a horizontal market. It seems American Traffic Solutions likes NIHK’s remote disconnect products for photo traffic enforcement- they can switch it off and on from a remote location using an internet interface. They ordered systems and are installing them.

Still small- yes. Growing- no doubt- New Markets developing- definitely. Here’s the chart:

nihk11.gif

As you can see from the trend line, the stock is trying to reassert itself and climb back up towards the $.10 mark, and then hopefully higher.

As all of you know who have been following this one, when the volume comes in, it really comes in.

More news like Tuesday morning’s just might have us cruising back in the right direction.

Comments and questions are welcome.

Pickle Open- Favorable for New Shareholders

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It’s about 15 minutes into the trading day, and SPKL has traded a huge amount of volume for 15 minutes, but hasn’t appreciated that much on the price. That’s a very good thing if you are looking to take a position.

Here’s the chart in the early going:

spkl12.gif

As you can see, the gap wasn’t too big, and that’s favorable for taking a position. If the stock were to trade back down and fill that gap, that would be absolutely ideal for getting on board.

Therefore, if the stock happens to trade back down to the $.70 level or so, I’ll bet it will turn right around and head back up. That’s known as “filling the gap”. Traders love to buy when stocks “fill the gap”.

If you are interested in participating in SPKL, I believe this is a reasonably low risk entry point. Your SSL should be somewhere in the $.65 range. More on that later- it’s a little premature to worry about it now.

Comments and questions are welcome.

Pickle: Thoughts on Trading

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Well, the cat is out of the bag. The Spicy Pickle idea is out there, and there are probably thousands of potential investors who will see the video and read about it this weekend.

For the most part, investors who got an early look at the video seem to have been interested in investing in the stock, so I have to make the assumption there will be many more interested investors looking to take a position.

For the first thirty days, SPKL had traded very nicely, with the stock easing up slightly, and the volume increasing slowly but surely.

On Friday the stock got a bit more heated up than I would have like to have seen. It was up 23% on 1.15 million shares of volume - a new record.

It would have been better if the stock had been a bit quieter, but the word is getting around on just how well this company is doing, and a groundswell of enthusiasm is coming directly from people who know the company and have eaten the food.

That having been said, I believe some caution is warranted on the trading side here. Many of the early shareholders are big believers in the company, and they don’t really have much interest in selling. Those that do have already had a fair amount of liquidity in the first 30 days of trading.

Therefore, when the stock opens for trading on Monday, it could get a little out of control. If there is a big spike, some early shareholders might find their profits irresistible, and supply could hit the market. Based on the way it traded on Friday, I suspect there is very little supply at these levels.

So, let’s take another look at this very short term chart:

The stock closed at around $.70 on Friday. I believe the company is worth $1 today, with lots of upside as they continue to expand.

If you invested the 1/2 hour as I suggested, you should have a pretty good understanding of the company.

If you want to own the stock, it is important to own it right. If the stock trades up like crazy on Monday morning, I would stay on the sidelines and wait for things to quiet down.

If it ramps up to $1 very quickly in the early going, you might want to wait for it to cool off. At this point, I would suggest a limit order in the $.80 to $.85 range. You might even want to wait a few days if the stock is trading much higher.

Alternatively, another good strategy might be to take a partial position in the early going, and leave some money on the sidelines for a pullback. If it doesn’t pull back, at least you will own some. If it does, you’ll be in a position to add at a lower level.

If you’re concerned about the 1.8 million IPO shares priced at $.40, consider Chipoltle Mexican Grill (NYSE: CMG). It was priced at $22 in January of 2006, but traded to $45 on the day it opened for trading. On Friday it closed at $113.90

There’s one more issue I would like to get out of the way right now. If you have looked at the disclaimer section for this idea, you know I have sold a few of my own shares already. I did this for two reasons- 1. because I needed some money, and 2. I was hoping it wouldn’t trade up too much before I had the chance to present the idea to OTC Journal members.

I will probably sell a few more shares because I could use the money, but I plan to keep the vast majority for 1 to 3 years.

I am interested in feedback from any OTC Journal readers who happen to have eaten at any of the restaurants. Please share your experiences with everyone else.

I will probably post another BLOG within the first hour of trading on Monday with some thoughts on how we are progressing, and what a sensible strategy might be. Thanks for taking an interest in this idea.

Comments and questions are welcome.

CREE Gets GE’d

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I am very disappointed in this past two day’s move in CREE- why? I mean, after all, the stock is up 9 points, or 36% since I first published the idea back in the August 25th edition. I’m disappointed because I only own 1,000 shares. I wanted to own more.

Let’s start with a look at the chart:

cree1.gif

As you can see, the stock has been on a tear of late. It’s charged up the charts about 5 points in the last two trading days on big volume. I felt like $30 had been fairly big resistance for the stock, so the breakout is very good news for longs.

It’s time to remind you of one of my tried and true trading rules- when stocks make big spiky runs, what do we do? We sell if anything, and we certainly don’t buy.

For all I know, this stock might just continue climbing 5 points per day. However, I feel like it’s a high risk entry point at this time, and I would avoid establishing new positions or adding to existing ones.

There are rumors of a GE buyout swirling around the company, and with the Bernanke put in place this week, the shorts are no doubt scrambling to cover. Short covering is primarily what causes big spiky rises in stocks- not new buyers. They go up like this when investors are forced to buy.

My target remains $50 in 2008, but I’d rather wait for a nice retracement and accumulate. The market deserves to cool off for a few days before making its next leg up. It’s been a hell of a good week.

This company still has the best LED lighting technology, and it’s going to replace the incandescent light bulb eventually. The GE rumor might just be for real.

Comments and questions are welcome.

Much Ado About Nothing

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There have been a few comments of late concerning the behavior of PLHI- the stock formerly known as BTYH- Bad Toys.

I just want to clarify my position on PLHI- I don’t care what PLHI does. When the dividend of Southland shares was paid last January, I suggested everyone decide for themselves what they want to do with their shares of BTYH/ now PLHI.

The only thing I care about is Southland, and the progress they make towards getting out of the defaulted debt with the IRS and GE Capital, and getting the stock up and trading.

If you have any comments and questions, please post them. I will be using this forum simply to update everyone if and when news develops on Southland. If Southland makes some serious progress on their glacially slow endeavors, PLHI could become and interesting play before Southland is able to trade.

Titan Taking a Breather

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The market tanked the second half of last week, and TTGL, which has really run up the charts of late, is finally giving some ground.

Big, spiky runs- my favorite time to sell hot stocks. Pullbacks when the market sells off- or long periods of quiet trading- my favorite time to buy.

So, if you’re becoming a believer in TTGL’s forecast of 3/4 of a billion in sales next fiscal year, and believe the stock has a lot more upside at about a $100 million market cap, you should be looking at where to jump in now that the market is tanking and the stock is giving a bit of ground.

Here’s the chart:

ttgl11.gif

As you can see, the stock really streaked from about the $1.50 level to $2.20- it only took six trading days. The acquisition binge of relatively large companies, along with TTGL’s demonstration of belief in itself buy buying and retiring 1 million shares out of the open market, has investors piling in.

So, if you aren’t on board and want to be, is it smart to just jump in now? You never know- this stock could just keep charging up the charts. However, big spiky rises generally give way to pullbacks, and that’s the time to grab the stock.

This chart tells me $1.94 is a good place to jump in, and $1.78 would be a great place. I not prepared to discuss where it might go from here as I don’t have enough facts at this time, but higher seems to be a pretty good bet.

Comments and questions are welcome.

When Will the Apple Be Ripe For Plucking?

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Dropping the price of the iPhone by $200 for Christmas- Imagine that. Early adopters are pissed- can you blame them?

If you don’t own AAPL, or don’t own as much as you want, this news is heaven sent as the stock is selling off.

Look at the bigger picture, ask yourself the following question- will AAPL sell more or less iPhones with the new pricing structure? My guess is they will sell more.

You put more iPhones in peoples’ hands, and what does that do?- in my view it pushes MAC sales. Then it pushes multi media digital entertainment sales, and brings it a bit more main stream.

Whether the market believes the iPhone has been more or less successful than hoped for, it is still disruptive technology. No one has produced anything like it.

So, my past entry levels have been $93 and $124- pretty good calls. Let’s look at a good level to jump in now if it keeps selling off:

The stock is now trading at a very favorable entry level. However, if the market keeps focusing on the “R” word (recession), it could sell off a little more.

If you see it at $124, that would be ideal. $132 is still a pretty favorable entry point considering it touched off $145 last week.

SSL now should be around $120.

Comments and questions are welcome.

PNWIF Q3 Numbers a Non Event

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PNWIF finally released it Q3 (June quarter) numbers today, and in my view these will be a non event for the market.

The company delivered revenues of $1.3 million, down a little from the same quarter one year ago. They, of course, generated a loss. Margins improved quite dramatically as the business has evolved from installation revenue to transaction revenue.

In my view, the numbers are fairly meaningless. Here’s why- they don’t come close to reflecting where the company is financially today due to the Pixology acquisition.

The closed on the purchase of the company in early July, and paid over $17 million in cash. I haven’t seen Pixology’s hard numbers, but I do know they enjoyed a substantially better top line than PhotoChannel.

Until we can get the picture of the two companies combined, we don’t know where we are. Unless PNWIF chooses to provide some voluntary disclosure, we won’t know until into January as September is their fiscal year end.

I like this stock right here- I think it’s ready to rebound. If it sells off a little on the numbers, I believe it is an opportunity to accumlate. The tough summer months are behind. Look for a pick up in information flow, corporate activity, and new business.

We’ll see what happens with tomorrow’s numbers. Comments and questions are welcome.

Planet Conference Call: Where’s the Beef?

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Well, I couldn’t make the live conference call, but I did listen to the recorded version later on in the day.

It didn’t really matter, as the company did not open the call to questions as I had suggested.

As I suspected, the call was a lot of sizzle and not much steak. This morning, pre open, CPNE announced it had entered into a binding letter of intent to acquire a company named Iventa who offers web solutions at a variety of levels and has hundreds of customers.

Of course, in keeping with what seems to be the Planet’s theory of shareholder communications, there was no indication of how much they are paying or what kind of financial performance they are buying. Therefore, with no information, the market will probably assume the deal is weak until proven otherwise.

The conference call itself was loaded with all kinds of techno babble about their ecommerce services, credit card fraud, higher quality subscribers, etc.

Disappointingly, there was no mention of financial performance in Q3, no clear indication of where they are in their banking relationships, and no concrete plan put forth to get the stock headed back in the right direction.

Instead, CEO Hill alludes to steps they are taking in a “committee” which has been formed to defend the value of their stock without stating concretely what those steps will be.

So Planet management, here’s the painful reality- your stock has been in a free fall for 6 months. You have lost 75% of your value since the end of February, and despite having reasonably good numbers, all you have managed to do is rebound from $.65 to $.85. This is what you call taking steps to defend your value? Whatever you are doing isn’t working yet.

The only positive I took out of the call was the fact that it happened. At least they are finally making some effort to inform investors about what’s going on. If they are going to do anymore of these, they need to provide more hard facts and hard numbers. Not techno babble mumbo jumbo.

I could be wrong, but I don’t believe the market is going to respond favorably to the call. Perhaps they have more info coming rapidly behind. My suspicions are we are going to go in the wrong direction. Let’s see what happens tomorrow.

I really hope I’m wrong. Comments and questions are welcome.