Why Panic ?

Everywhere you go, whether it’s a Little League game or a cookout, people are whining and moaning about the market. It is especially true of the casual investor. Many of this group is also predicting some sort of crash or sharp fall in the market in the near term. My memory tells me that some of these same people were very upbeat during the monster tech rally of the late 1990′s. Others in this group also felt comfortable buying stocks and mutual funds when the market already rallied off of the bottom during our last big decline in 2009.

So what is this telling us ? It obviously shows that people are scared. It has become evident on the OTCBB, where with the exception of a few hot penny stocks, the volume has been weak at best. A stock like Distribution Management Services (DMGM.PK) may have risen more than 75% yesterday, but many other stocks recommended by some of the top penny stock newsletters traded relatively light volume. In other words you have had to be spot on to make money on the long side in this market.

On the large cap side there is a better rationale for the weak volume. Every year people are somehow baffled when the action is light in August. Did I miss something. Did PM’s and hedge fund traders all of a sudden stop vacationing in the late summer. Vacation isn’t the whole reason for the tepid trading, but it has certainly contributed to the absence of buyers.

On the other hand, major corporations are doing the exact opposite. Stock buybacks are happening on a frequent basis and M&A activity is already above the rate of the prior two years. Just keep in mind that if S&P 500 companies are willing to invest at these levels things probably are not as bad as they seem.

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Are Biotechs Too Cheap?

This morning people woke up to shares of Genzyme Corp. (NASDAQ:GENZ) trading sharply higher in pre-market trading. On Sunday, Genzyme received an $18.5 billion offer from Sanofi-Aventis (NYSE:SNY) which comes to $69 per share.

The bid was rejected by the Genzyme Board despite their recent manufacturing issues. This decision could send a sign that many bio pharma stocks, including Genzyme are undervalued. We will probably see some increased volume and news flow early in the week from this sector. Especially with the mid and large cap names.

This M&A activity also bodes well for some of the unknown and under followed names on the OTCBB. Unlike most other sectors, excluding mining penny stocks, tiny microcap biotech and bio pharma stocks do get funding from larger companies from time to time.

For instance, giving a potential hot biotech penny stock $5 or $10 million dollars in R&D money is a small risk to take for a multi-billion dollar corporation looking for a new that could potentially become part of their pipeline.

While I can’t say for sure, it is probably safe to say that you will see some of the top penny stock newsletters writing about this trend in the next few weeks. Please keep in mind that the vast majority of biotech and biopharma stocks are very risky, and shouldn’t be owned by the feint of heart. However, this group has offered some investors some of the most massive gains.

So if you decide to buy one these biotech names of of a penny stock list, make sure you invest small. Also, when investing in a biotech always check their cash position and burn rate. These two numbers will tell you how much money the company has and how quickly they go through it.

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Does it Make Sense ?

Yesterday U.S. markets traded down and world markets followed suit this morning. Both traders and investors are awaiting Fed Chairman Ben Bernanke’s speech from Jackson Hole. This will surely be the catalyst for Friday’s trading and tape action should be volatile

Now there are different ways to approach buying before the Fed Chairman speaks. It is probably safe to say that Mr. Bernanke has usually been clearer with his words than his predecessor Alan Greenspan. But the problem remains trying to anticipate what their message is. Experience tells me that is a losing battle unless you have a crystal ball. Trying to go either long or short before such an important speech tend not to work because of the choppiness of the market. Many traders get stopped out and then have to watch their former position trade to their initial profit target. Without them in it.

Now you have read recent blogs here about takeovers and market bottoms. However, those market trends apply to investors not traders. For instance, if you had an urge to buy a penny stock like China BTC Pharmacy (OTCBB: CNBI.OB) in the 4 dollar range as a long term hold, it may or may not be wise. However, if you had a 2-3 year window and a price target of 10, a fluctuation of 40 or 50 cents really isn’t an issue. On the other hand, if you were buying this micro-cap name as a momentum play for a short term pop, you often are gambling on Bernanke and market direction. Yes, hot penny stocks sometimes do trade in sympathy with the broader markets.

The age old question of trading before Bernanke especially applies to large cap names, which are obviously more sensitive to the Fed, than OTCBB stocks. But the same philosophy applies. If you are comfortable buying a name like Bank of America (NYSE: BAC) and have a long term investment philosophy,by all means buy the stock. But if you are a short term trader, you must remember that many good ideas turn into losses when the Fed is involved. This is why it is often best, to put the trading ideas on hold. Being impatient in the market is often a recipe for disaster.

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Bounce Time?

Stock Futures are up this AM, due to jobless claims falling to 473000. This number wasn’t great, but it was much better than the week before, when claims were over 500000.

To put this number in perspective, claims rose to the 650000 range last year and a claim number in the 350000-400000 range is generally viewed as a positive for the economy. My sense is that the downfall this week was in anticipation of a disastrous number. Well, it looks like short sellers may be disappointed and a bounce potentially could be near.

Keep in mind that we have some other factors that could be used a rationale for a bounce. First, we have poor investor sentiment, which has led to anemic volume, all the way from the NYSE down to the penny stock market. We also, have see takeover fever. Large cap companies are going on a buying spree and using cash a the vehicle. Companies like Dell , BHP Billiton and Intel obviously see value at these levels. Lastly, this morning’s number could be pointing to the fact that the economy may not be good, but at the same time isn’t as bad as people think.

Hopefully, this leads to some bottom fishing in the near term. Many of us own blue chip stocks that are down. Some of us also own once hot penny stocks that have lost the interest of investors. My advice is to re-evaluate your portfolio and add to some fallen positions if it makes sense. After you compile your blue chip and penny stock lists. Review each position and see if anything has changed fundamentally. Now if your current losses in the position are not that big, it may may sense to average down.

Adding new positions also might make sense if you have the liquidity. Especially since we may have seen the bottom already in oil prices. A bounce in oil has recently seemed to be a catalyst to the market and could rally the larger exchanges and make quality commodity based penny stocks look attractive.

Whatever you decide to do, make sure it is done relatively small. While we may turn higher from here looking for bounces and bottoms doesn’t always work.

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Would that Signal a Bottom for Penny Stocks?

Every market has a bubble. Those bubbles exist, whether the market goes up or down. Because we have all heard the saying that “There is a bull market somewhere”. Right now that bull market is in the bond market. Investors have been drawn to this asset class for many different reasons. For some it was the “flash crash” for others it’s been poor returns in equities. The poor economy, and high unemployment are other factors in the interest
in debt market.

This interest is so evident that it’s basically flattening the yield curve and the 10 year yield is nearing the January, 2009 low. Investors are also pouring money into debt mutual funds at alarming rates. My sense is that this could signal a bottom in the equity market. History has shown us time and time again that when retail investors pile into a sector or an asset class, it’s probably near or at the top. It doesn’t matter whether it’s municipal bonds or mining penny stocks. If Joe Public is over weighted a shift the other way has usually been around the corner.

Now why could this be a contrarian indicator to go long microcap stocks ? Well it’s simple. Part of the reason for the light volume in the market has been the shift to bonds. For example if Investor A buy an equity mutual fund. That mutual fund will trade and add volume to different exchanges. Now if that same investor moves those equity funds that were reserved for risk into a high yield bond fund for instance.That simply takes volume away from exchanges like the NYSE and that lack of volume trickles down to the OTCBB. It’s simple macroeconomics.

Since many of us have lived through the internet bubble and others too. You probably get the drift. If history repeats itself, investors will not see the returns that they are looking for in bonds. As evidenced in the past, many of these same investors will eventually shift this money back into the equity market. To me this provides some buying opportunities in the area of penny stocks. The lull in volume has impacted many of these tiny companies. Some have become relativly cheap based on nothing other than lack of interest. Keep in mind that heavy volume is the way low priced companies turn into hot penny stocks. Unfortunately, some of the funds that provide that volume are tied up in bonds. This call might be a little early, but eventually, those funds should come back to stocks. Just be patient.

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What Do They Mean to the Market?

As we have mentioned many times in previous blogs, takeover fever is back. Potash and McAfee lead the headlines and HP jumped right over Dell’s previous bid for 3Par. The common denominator in all of these deals and for that matter proposed deals, was the cash takeover.

Many companies often prefer to acquire other corporations in stock deals. Basically, the prospective buyer uses their own stock as currency in the transaction. This is often done because the acquiring company often feels that their stock is either fully valued or inflated. This past few deals have been different because the premium paid was all cash. Potentially signaling to the market that the acquirer feels that there own companies share price is too cheap.

Now this seems to be a positive for the market because if S&P 500 companies would rather part with cash, this tells us they are confident going forward. Small and microcap stocks often don’t have the luxury of large cash positions and have no other choice other than using stock to make these deals. For example, even the most promising microcap or penny stock, usually uses a rising stock price to for buyouts. Simply because they are growth stories with little cash. However, the big boys can do either. Hopefully this vote of confidence will trickle down from the NYSE to the OTCBB.

So if you ever see a penny stock participate in an all cash buyout, you are getting a signal from management that things are good. Most times reading signs from companies is much more accurate than trading reports, brokerage analysts or penny stock newsletters. But, you have to sometimes read between the lines. So do your home work and prepare your large cap and penny stock lists.

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Does This Signal a Bottom

Today a news story came out that was somewhat disturbing. Mutual fund giant, Fidelity Investments reported that a record number of hardship withdrawals were made from retirement accounts. Also investors who borrowed from account hit a 10 year high.

Now what does that tell us ? Some can analyze this news in a gloomy fashion. Others may look at it as a tremendous buying opportunity. Many of us remember the go-go bulls markets of the 80′s and 90′s where excess ran rampant. Some of us knew ordinary people who somehow accumulated high 6 figure and even 7 figure accounts, due inflated gains in the market.

In both of those bull markets it seemed easy to make money. Everything from blue chips to penny stocks seemed to work. Even when positions were in the red, it seemed that in time they would turn around. And for a time that strategy worked. Until of course, the optimism became too high. Shortly after the two huge runs, we saw the Crash of 1987 and the Internet Bubble burst.

Right now we may be seeing the polar opposite. Although we are currently seeing decreased market volume due to summer doldrums, there is another factor attributed to the light trading. It’s a sad one too. Many retail investors have simply thrown in the towel.

Historically this has been a buying opportunity and could be lucrative for those who are liquid. Sir John Templeton always wanted to buy in times of turmoil and sell in rallies. By no means am I saying to jump in with two feet, but a legitimate look at this market should be taken on a long term basis. Even if it’s seems to be a little early. This means taking a look at everything from the NYSE to the OTCBB.

However, you must be prudent. Sadly enough many of the above mentioned who borrowed versus 401k plans simply fell on hard times. Others, though simply overextended themselves. Either in their lifestyle or by trading to aggressively. These stories range all the way from somebody who lost their job all the way down to somebody losing a substantial amount on a mining penny stock.

This is why you never invest what you can’t afford to lose. For instance, right now we are seeing major consolidation in the Ag space. This M&A activity does merit a look at the sector and it wouldn’t be unreasonable to commit trading money into one of the names.

However, the amount of the investment has to be prudent. Just in case it doesn’t work. So if you want to take a contrarian view on the negative investor sentiment. Do so wisely. For instance never commit 30 or 40 percent of your portfolio to a stock. It doesn’t matter if it is a dividend paying blue chip or a hot penny stock. Also don’t trade on margin. Even if you can afford to. Lastly, and most important. limit your losses. Don’t be afraid to lose 10% on a trade. Preservation of capital is more important than missing out on a winning trade. So if you buy into this contrarian market view, be smart and not greedy.

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Cites Takeover Wave as A Catalyst to Speculation

Last night’s Mad Money show was a keeper. Especially for traders and investors who are currently long.

Cramer opened the show with a theory about how the recent takeovers bids like BHP Billiton (NYSE:BHP) for Potash (NYSE:POT) show that some people still feel this market is too cheap. Cramer mentioned that mergers are up this year in relation to 2008 and 2009.

He also spoke of the “old days”. Which happened to be right after the Crash of 1987. Back then, stocks were so cheap, that many of them were acquired by other companies. I took his remarks in a pretty simple fashion. If the big boys are willing to buy entire companies. Maybe it is time to step in.

Cramer also mentioned that despite some of the positive earnings, many investors failed to be enticed. Now here is the good part, Cramer mentioned that investors may be lured back to the market due to this increases M&A activity.

My sense is that if Cramer is correct, we could see major activity with penny stocks this fall. From my experience, I have noticed that retail investors who speculate, do not have much of a problem buying a stock like Mosiac (NYSE:MOS) and then turning around the next day and allocating five or ten thousand dollars into something they perceive to be a hot penny stock.

Although M&A activity on the OTCBB is usually sparse at best, some microcaps on the AMEX could eventually be in play in the rumor mill. Keep in mind that a rising tide lifts all boats and the return of speculative buyers to the market could make things interesting soon. Hopefully we have not missed it and Cramer is early with his theory. I would venture to guess that he is, and that many large cap and penny stock newsletters will try to jump on this trend. So read up !

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Why Investors Should Want to Pay More at the Pump

This summer was an interesting one for crude prices. We didn’t see the usual summer price surge in gasoline prices that we often see during the vacation months. Think about it. Have you really heard anyone going crazy about gas prices recently ? Probably not, and you may not since many people have become accustomed to paying under $3 a gallon for gas.

Well, the market has a different agenda. Within the last year we have often seen a correlation between crude futures and the S&P 500. On Wednesday crude dipped below $75 on news that U.S supplies had risen. Gas inventories also rose. Both declines point to a lack of demand which raises questions about the future of the U.S economy.

The economics of the recent falling gas prices are simple. People are not driving as much. It could be from unemployment or the lack of taking a vacation. Both bode poorly for exchanges. From the NYSE to the OTCBB, energy related stocks seem to be stuck in a trading range. Many of you have heard this on the news or maybe even read about it in large cap or penny stock newsletters.

Now here are two questions. Would you rather pay a few more cents at the pump and have you stock portfolio and 401K go up in value. Or, would you rather pay $2 a gallon for gas and have your portfolio decline. I know most would chose the first. This is why longs need cruse to stay above $80.

The good news is this negative sentiment can change on a dime. A world event, an economic report or simply some short covering in oil futures can move the commodity sharply higher within a few days. My sense is that we will see some rally back to $80.

Now how can we take advantage of a short term bottom in oil. On the large cap side you can play it safe you can buy Exxon Mobile (NYSE:XOM). If you want to be a little more aggressive take a peek at some of the drillers. But be careful. The drillers sometimes are almost as volatile penny stocks.

Now how does a penny stock traders and investors play this. My advice is to look at the AMEX for these drilling penny stocks. There are tons of microcap energy stocks trading on this exchange. Some of these former hot penny stocks have decent liquidity too. So do your research now and compile your penny stock list. Also, remember that if your wrong take your losses quickly. Preservation of capital is the key.

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Is Another Republican Revolution on its way?

Many political pundits and pollsters expect the Republicans to at least take back the house, and possible the senate this November. Some are even calling for a repeat of the “Republican Revolution” that happened in 1994, where republicans steamrolled the democrats with anti-Clinton fervor. However, some say this drove the left leaning Clinton administration to the middle and set the groundwork for the historic market rally of the late 1990′s.

Could a republican house move Obama to the center ? In theory, yes. Recently, Obama has had problems getting his own party on board to vote on key issues, especially moderate to conservative democrats in swing states or conservative voting districts.. He has often relied on picking off the few remaining northeast republican left to pass bills. A republican victory in either the house or senate would halt many of Obama’s iniatiatives, which much of Wall St. calls big goverment programs. This may bode well for large caps and even penny stocks.

Many also can remember that the republicans at times held both the house and senate under President George W. Bush. That period led to a major downturn in the market that most of us still remember. This is why historically, the market has done better when we have gridlock in Washington. It doesn’t matter whether the democrats or republicans are running things, Wall St. essentially likes neither party to make the decisions.

Many experts feel that the market will rally if the democrats lose the house. Generally, there are specific sectors to watch when a political event happens. This is different, in the late 1990′s, technology stocks outperformed the stodgy old blue chips, but those blue chip names like General Electric (NYSE: GE) still did well. In other words, gridlock leads to broad based rallies and investors who are up in there core stock and mutual fund positions tend to become traders when they have gains. This could lead to the emergence of several hot penny stocks on the OTCBB.

Right now it is too early to tell which microcaps will emerge if the gridlock theory comes to fruition. But it is never too early to prepare. Right now is a great time to research this theory and you have until November to do so. As of now just scan the internet, watch cable news and read as many large cap and penny stock newsletters as you can find. Remember to stay tuned to our blogs and penny stock alerts, because being informed is the key.

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Does This Start an Ag Takeover Frenzy?

Traders who were long the Ag space woke up Tuesday morning to a pleasant surprise. Potash Corp. (NYSE:POT) rejected a bid that was slightly less than $39billion from BHP Billiton (NYSE:BHP). Potash has traded over $145 in the pre-market, which is significantly higher than the $130 bid from BHP. It seems that Wall St. agrees with Potash’s opinion that the bid was far too low.

Other Ag stocks like Monsanto (NYSE:MON), Intrepid Potash (NYSE:IPI) and The Mosiac Company (NYSE:MOS) are also trading up sharply in the pre-market in anticipation of coming takeover speculation in the group.

Ag stocks can be very volatile, much like penny stocks. They are also one of the few large cap groups that can provide the same type of high percentage gains that a rising microcap stock can. However, even though stocks like Potash have substantial earnings and revenues, they are generally traded by aggressive investors.

Today you will surely hear takeover rumors in other Ag space names on television and read them on the internet. You will surely be told about Cargill’s majority stake in Mosiac. Others will say play it safe and buy Market Vectors Agribusiness ETF (NYSE:MOO). Our advice is to be careful and not jump in right at the open. In other previous blogs we highlighted not buying gap ups on or near the open. Mainly because most times those gaps see some sort of retracement.

You may also see some limited impact on the OTCBB because of the massive Potash story and the sympathy in the group. Penny stock newsletters will surely write some reports on some Ag related hot penny stock.

Once again make sure you do some homework. While Ag valuations should be reset to the upside, it doesn’t necessarily mean that these premiums will apply to the stock that you own. Remember, good ideas on the long side happen on a daily basis. So if you miss one, it isn’t the end of the world. So for now I would form a penny stock list and a large cap list of potential Ag stock candidates. And that list should be researched and reviewed thoroughly before acting.

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IPO Could Change Sentiment

In the late fall, online video company Hulu will undergo an initial public offering. While the underwriters are currently unknown, the company is looking to raise roughly $2billion. This offering could potentially be the hottest of the year. In 2009 the company did more than $100million in revenue and most industry people are expecting Hulu to easily generate more in 2010.

Hulu offers a subscription service for $9.99 a month. The service allows subscribers to watch old and new TV shows via internet devices. No matter what, this IPO should create a buzz, not only with the trading community, but with novice investors as well. This type of aftermarket interest propelled Tesla Motors (NASDAQ:TSLA) to lofty highs when it went public.

On the less positive side, industry experts like Rupert Murdoch have often been negative on free internet content. Still this deal should remain hot and potentially be the catalyst for some mediocre IPO’s to suddenly become hot. Penny stock newsletters will probably also join in on the story.

This should bode well for the penny stock market as well. Many OTCBB companies have tried to associate themselves with either Apple Computer (NASDAQ:AAPL) or Google (NASDAQ:GOOG). Surely some potentially hot penny stock will try to capitalize on this new market.

The key is finding the right microcap stock that will trade up in anticipation of the Hulu IPO. This is the hard part. We will be researching this subject and if it makes sense, a company will be highlighted. So stay tuned. Also, due your own research as well. Keep in mind there are many penny stocks that slip under the radar and some of those can provide massive gains if you buy them right. So do your homework and be prepared.

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Goldman Sachs is Bullish on Gold

Goldman Sachs recently came out with a bullish call on gold. Although many gold bugs and conspiracy theorists are calling for $2000 per ounce. Goldman’s $1300 target within 6 months should still be positive for gold stocks. Mainly because there are only four or five Wall St. firms that have the ability to change short term investor sentiment. For obvious reasons the boys at GS fall into that elite category.

The nine page report by Goldman states that gold is oversold and could benefit from quantitive easing. This potentially makes gold the main market moving catalyst again. Recently, oil has taken over as a guide to S&P 500 movement. The $80 level on oil has been a gauge for many traders decisions on whether to go long or short.

Gold going higher potentially offer penny stock traders multiple opportunities to make short term gains on the OTCBB. The price of the yellow metal can influence penny stock prices like no other commodity, mainly because of the large presence of mining stocks on the OTCBB and Pink Sheets.

For instance, Goldman also recently made a bullish call on coal stocks despite outperforming the market so far this year. They highlighted Peabody Energy (NYSE:BTU) and Massey Energy (NYSE:MEE) and a few others. Did this influence penny stocks ?
Not really, there may have been a stray recommendation here or there by a penny stock news letter, but there were no huge gainers to speak of.

This is because nothing attracts penny stock and microcap buyers like rising gold. The key is where to find these stocks that can potentially create massive gains. At this point a watch list should be put together and in addition to buying a large cap name in the gold space there is always room for a speculative name too. So stay tuned for a potential release of a gold stock from us. Hopefully we can ride the coat tails of the most prestigious firm on Wall St.

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Penny Stock Trading

Many people are attracted to penny stocks because of their potential to provide massive gains. However, many novice traders and investors often get involve in speculative investments without having a strategy set in advance.

People often look to buy hot penny stocks because of their low price and the ability to own large share amounts with only a small amount of capital. Penny stock buyers should know that trading strategies should be the same, regardless if you are buying Cisco Systems (NASDAQ:CSCO) or a mining stock on the OTCBB. The amount of capital is irrelevant, because you should have an entry and exit plan on every trade. Remember it doesn’t matter whether you invest 3k or 50k.

Please keep in mind that not just any trading concept will work. Sometimes having no plan might be just as good as having no plan at all. So here are some simple suggestions that should keep you out of trouble and hopefully be cornerstones in your thought process.

Always trade small until you achieve a certain comfort level. Being comfortable as an investor is being consistently profitable. So take your time, good ideas come around all the time. CNBC, the Wall St. Journal and various trading and penny stock newsletters have winning trades often. So don’t be afraid to miss one before you gain the necessary experience. Trust me other good ideas will come again.

Another common mistake made by traders and investors is using margin. In my opinion, trading on margin is not only extremely risky because you can actually lose more than you initially invested, but it also alters your mental psyche during the trade. So never put a stock like General Electric (NYSE:GE) on margin to buy a penny stock. No matter how good it sounds.

You should also look for solid companies. While it is not common for a company trading on the OTCBB to be profitable, you can look for other signs. Start with looking for companies with revenues or contracts. Especially companies that have aligned themselves with major corporations or governments. This often validates a companies prospects.

Finding liquid penny stocks can also be somewhat difficult. It is human nature to want to be first and buy a stock while everyone else is sleeping. But this is usually a losing game. A simple rule to use is to never invest more than half of the average dollar volume that a stock trades. For instance if a $1 stock only trades 10 thousand dollars in volume on average, don’t buy more 5 thousand dollars worth. Novice investors don’t realize that small orders can move some illiquid penny stock names 5% with ease. This is part of building an both an entry and exit strategy. Not using market orders is the best way to avoid getting a bad execution.

The last point is another common mistake to avoid. Don’t buy stocks that gap up. Many professional traders and hedge fund managers “fade” or counter trade gaps. Market makers have made fortunes short selling capitulation moves to the upside in penny stocks. Think about the last time you bought a gap up and the stock went down quickly. Did you ever stop to think of who was on the other end of the trade ? Why do you think these trading firms are in business ? To lose money. So if you really like a stock that gaps up, put a limit order in below and wait for it to retrace.

Lastly, do your research. We always tell you to be prepared. Having knowledge about a company is not a guarantee to a profit, but it surely eliminates bad investments. The internet has leveled the playing field between retail and institutions to some degree. So take the extra hour and simply browse the web for PR’s and financials. Remember, preparation is a key to avoiding rash decisions.

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Will CSCO Lead the Way?

After the close today Cisco Systems (NASDAQ:CSCO) will reports its fourth quarter earnings. Wall St. is expecting Cisco to earn 41 cents a share on 10.87 billion in revenues. Many analysts feel a modest surprise to the upside is probable.

Most traders and fund managers that Cisco typically reports in earnings that are in line or exceed estimates by a penny or two. They also know that what is said Cisco’s conference call is often a major market mover. This is why the street will be closely monitoring well respected CEO John Chambers remarks on Cisco future and the general condition of global demand for technology products and services.

We anticipate that cable financial news pundits will be dissecting Chambers speech tonight and spotlighting the highlights looking for a catalyst for the markets in the short term. Cisco is the largest manufacturer of computer networking equipment in the world. Their earnings and guidance often give the market a clearer picture of near term IT spending.

How will Cisco’s earnings impact penny stocks? As we know the OTCBB is made up of many different biotech, biopharma and mining penny stocks. However, there is a large presence of technology stocks on the exchange as well. If CSCO beats estimates and raises guidance, the probability of a short term tech rally is high. Look for penny stock newsletters to hitch their wagons on hot penny stocks that are related to IT infrastructure spending.

For some time now, there has been an opinion from Wall St. that large cap tech names like Cisco, Microsoft (NASDAQ:MSFT) and Intel (NASDAQ:INTC) are insanely cheap. One way or another, tonight’s conference call will paint a clearer picture. So form your penny stock list with technology names and be ready to act if you feel a tech rally can benefit one of those microcap names.

Look to Cisco Systems for Market Direction is news brought to you by Penny Stock Explosion. We provide up to date current information for hot penny stocks and penny stocks which are primed for explosion.

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China’s Real Estate Bubble

Chinese stocks fell last night to the tune of slightly less than 3%. At this point many think that the world’s third largest economy may finally be ready to roll over. There have been many opinions on China eventually having a real estate bubble. Others feel their demand for commodities will fall. In theory this shouldn’t bode well for world markets, and especially the NYSE and NASDAQ.

However, we have all heard this boom bust story regarding China before. Investors may see not hot penny stocks like returns in Chinese stocks, but history has shown us that it’s usually near the bottom when the media is calling for a crash. We are not saying to take a contrarian attitude and go long Chinese equities, but take the bad news with a grain of salt.

The main concern with China in regard to U.S. stocks has to do with inflation. China’s inflationary fears certainly impact the FOMC’s policy making. Our markets have seen this situation before and Bernanke has pulled us through.

Now how does this impact the OTCBB ? Well, you can look at it two ways. First, the negative sentiment coming out of China will make it difficult for massive short term gains in Chinese Bulletin stocks that trade on the Pink Sheets or Bulletin Board. Penny stock traders often look for momentum and any type of breakout or rally might rare these days with the current news flow out of Beijing.

The second way to look a China from a OTCBB standpoint is a positive one, and it’s a longer term view. Many Chinese stocks trading in the United States are at or near lows. Does this create a buying opportunity ? Maybe. For instance former high fliers like Amico Games Corp. (AMCG.OB) and China Infrastructure Investment (CIIC.OB) are at their lows. We are by no means recommending these two names, but we are pointing out that value may exist in Chinese microcaps. So start forming a penny stock list made of China plays and research them. Odds are that most are at lows and a buy low sell high opportunity might be there. After your list is formed, monitor the Asian markets. If a turn is near, value buyers may take a chance in Chinese large caps and it may trickle down to the OTCBB. Once again, don’t jump in immediately, but be ready and prepared.

Will China Slow Down the US? is news brought to you by Penny Stock Explosion. We provide up to date current information for hot penny stocks and penny stocks which are primed for explosion.

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IPO Preview

Will the FOMC Meeting Weigh on MDMD and RP?

Last Week $885 million was raised in the IPO market. Although most of the deals reduced their offering price, the capital raised still remains substantial. Today, the market started up due to market strength in Europe. The problems at Hewlett-Packard (NYSE:HPQ) didn’t even send the market red for long this morning. However, this week’s FOMC meeting may loom large for upcoming IPO’s.

This week, Web Media Solutions company Media Mind Technologies (NASDAQ:MDMD) and RealPage (NASDAQ:RP) are slated to trade, and seem to be shaping up to look like flagship deals. Unless of course, the market doesn’t like what comes out of the FOMC meeting. As usual the market should see penny stocks volatile coming out of the meeting.

Barring a disaster though, MediaMind Technologies should trade at decent premium according to some IPO services. RealPage should do even a little better, despite the fact that 7.5 million shares from shareholders are being sold into the offering.

Other deals that look decent are DLC Realty Trust (NYSE:DLC) and the secondary offering of Molina Health (NYSE:MOH), despite the fact that their earnings were shaky. Generally the end of August is light for the IPO calendar, due to the labor day holiday. This will make the calendar look very heay for the next two weeks.

Many of you know that there are too many penny stock newsletters to count. There are also several IPO services that offer early reads on deals. They base their ratings on many factors, but none of these predictions will hold their mud if we see bad news out of the FOMC. On the other hand, good FOMC news could take the hotter IPO’s far beyond previous upside expectations. The beauty of investing is that we never know.

While IPO’s are volatile they are somewhat less risky than investing in hot penny stocks. A main difference is that IPO’s are more subject to market news and volatility in the large cap space. This is why you need to be prepared to perhaps buy quality IPO’s in the aftermarket that have only gone down in price due to the broader markets falling.

While a winning trade in an IPO often offers a smaller return than one in an explosive penny stock, you have to consider the risk factor. This week could provide investors a chance for 20-30% in some offerings and potentially more over the long term, if some of these names trade lower due to fear. Once again, compile your symbols and be ready. We will have more blogs and penny stock alerts this week.

FOMC Meeting Effecting IPOs is news brought to you by Penny Stock Explosion. We provide up to date current information for hot penny stocks and penny stocks which are primed for explosion.

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Washington Mutual Inc. (WAMUQ.PK)

In past we have written blogs on zombie stocks like Lehman Brothers (LEHMQ.PK) and Washington Mutual (WAMUQ.PK). Most zombie stocks eventually go to zero because they are usually close to or in bankruptcy.

However, the low priced stocks are usually some of the most active and liquid names in the entire stock market. Today though, it seems Fannie Mae (FNMA.OB) seems to have taken the zombie throne. The volume in shares of Fannie Mae has been insane. The average volume in the stock for the last three months is just under 30 million.

Despite many experts and analysts predicting that Fannie Mae will eventually go to zero, some short term traders have done well in the shares. Even though Fannie Mae has household name, most of the volume comes from retail investors. There may some hedge funds that trade the stock, but institutions usually stay away from situations like FNMA.

The mortgage and housings markets are improving, but are still shaky. The government’s huge stake in both Fannie Mae and Freddie Mac are evidence of this. But common sense tells me that there is a need for a company like Fannie Mae to exist. I think this rationale draws some people to the stock. The holders are basically playing a lottery ticket and hoping for some changes out of Washington. Some sort of proposal could be in Congress by January.

In the meantime, there will be several days to buy and sell these hot penny stocks. The strong volume should continue into the later part of the year, in anticipation of a final decision. Seasoned penny stock flippers should benefit play volume surges and technicals, but others will surely be big losers.

We mention risk often in our blogs and how to deal with it. If you decide to day trade FNMA remember to take profits and implement a risk/reward ratio into your trade. Remember that there are people who make a handsome living trading liquid low priced penny stocks.

If you are a longer term investor and you decide to take a flier on Fannie Mae, only invest what you can afford to lose. The best mentality is to act as if the investment is a lottery ticket. Because that’s what it is. Just remember, that trading zombie stocks is like playing musical chairs. Just be sure to be sitting in one when the music stops.

Is FNMA a WAMUQ on Steroids? is news brought to you by Penny Stock Explosion. We provide up to date current information for hot penny stocks and penny stocks which are primed for explosion.

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Prop Trading to Be Spun Off

The is one thing that you can count on almost every time in the United States. It’s when the government tries to regulate or in this case over-regulate an industry, somebody smarter than them will figure a way around it.

The intention of the FinReg bill, which was signed into law last month was to curb speculation among banks. Once the bill was passed, most felt that it was just a matter of time before somebody found a loophole. Well yesterday, Goldman Sachs (NYSE:GS) figured it out.

CNBC’s Kate Kelly broke a story that Goldman Sachs could potentially spin off its proprietary trading unit this month. Shares of GS rallied sharply and mildly lifted the major indexes. The details of the move are still not etched in stone. However, the intention is obviously to separate it’s highly profitable prop trading unit from the bank. This will basically allow traders to exceed the 3% limit on investing tier one capital.

Now how does this impact investors ? It’s pretty obvious that most people would like to invest in a GS unit that is incredibly profitable, and is filled with some of the top minds in the industry. However, the details of the deal are still unknown. If Goldman’s move proves to be successful, other banks will surely follow.

On the other hand the move will probably only effect the OTCBB with positive sentiment. As we have mentioned many times in other blogs, penny stocks are impacted positively when the large caps in favor. The GS spin off could potentially spur a rally in the financials, which would surely lift major market averages. Consequently, some of those profits often find themselves trickling down into microcaps.

However, the OTCBB is an exchange that is skewed towards mining stocks, and biotech. Not financial stocks. Many mining penny stocks are linked to larger NYSE companies with their projects. Many of us have read about these relationships in various PR’s and penny stock newsletters. It is almost unheard of though, to see an OTCBB financial stock releasing news on some contract with a Morgan Stanley (NYSE:MS) or a JP Morgan (NYSE:JPM). With that being said, the prospect for hot penny stocks to develop off of the GS spinoff is slim. But as usual, be ready just in case.

Goldman Sachs Is First Again is news brought to you by Penny Stock Explosion. We provide up to date current information for hot penny stocks and penny stocks which are primed for explosion.

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A Penny Stocks Value

Not so long ago, hedge funds and traders made massive gains by going long commodity stocks and shorting the U.S. dollar. The trade became very crowded and finally reversed. However, at the tail end of that trade commodity stocks like Newmont Mining (NYSE:NEM) and Potash (NYSE:POT) trading near or at highs. Right now, the dollar is very weak and most commodity stocks are in the middle of a trading range.

This condition of the dollar could provide trading opportunities. Not only in the large cap commodity based stocks, but with OTCBB mining penny stocks as well. Most gold bugs have the mentality that gold is the currency of last resort and site limited demand issues in their analysis. Their mentality often causes them never to take profits and lose hard earned gains.

By no means are we saying to buy and hold gold penny stocks for 5 or 10 years. Mainly because commodities often trade in cycles and in this environment, a bird in hand is often better than two in the bush. We are simply suggesting that a rally in large cap gold stocks could trickle down, even to stocks on the Pink Sheets. For instance, if we see a major rally in the mid and large cap mining stocks, common sense says that investors may take a look at a micro-cap name trading under $1 too.

For now, monitor the news flow on the weak dollar and watch how other gold stocks and gold ETF (GLD:NYSE) reacts to the news. Then form a penny stock list that contains your favorite mining plays. Then if your ready, act quickly. This trend may not last long, so take your profits. Recently, we highlighted Gold American Mining Corp. (OTCBB:SILA) and you may see more mining ideas from us shortly.

Does a Cheap US Dollar Make Penny Stocks Look Cheap? is news brought to you by Penny Stock Explosion. We provide up to date current information for hot penny stocks and penny stocks which are primed for explosion.

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Will FCX and Copper Propel the Penny Stock Market?

Recently we have seen a rally in copper prices, which historically indicates a rally for U.S. equities. Freeport MacMoran Copper and Gold (NYSE:FCX) has come back into favor and has always been a darling of short term traders and hedge fund managers. FCX is one of the few NYSE stocks that moves like a penny stock. Keep in mind that FCX could have a massive move in either direction. The optimism in copper prices last week leads some investors to go long equities. At this point FCX is a good of a barometer for the direction of the market as you can find.

Now if copper continues to rally the S&P 500 could close above 1120. The 1120 range is very important because there is an opinion in some circles that a break of this number will cause massive short covering. A break to the upside should spur some action in not only copper penny stocks, but to many quality OTCBB stocks as well. Now is the time to start getting prepared. One route is to start reading different news stories and compiling a penny stock list and a large cap list. Also, check out penny stock newsletters that have recommended copper and mining stocks in the past. Then break down these stocks into your top ideas. For instance, most traders are familiar with FCX, but don’t know that Southern Copper (NYSE:SCCO) and Encore Wire Corp. (NASDAQ:WIRE) move on copper prices too.

Gold stocks have been beaten up recently but have stabilized due to weakness in the dollar. So while gold and silver penny stocks may rally too, they may play second fiddle to copper related stocks for a brief period. Wheat has also rallied sharply based on the Russian drought. The stars seem to be aligned with the commodity stocks, but this market has provided us with multiple head fakes. So due your research and consider playing some low priced commodity stocks if they make sense for your portfolio.

Will These Mining Stocks Drive the Penny Stocks? is news brought to you by Penny Stock Explosion. We provide up to date current information for hot penny stocks and penny stocks which are primed for explosion.

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SILA – Gold American Mining Corp

We have an exciting new gold play right now. Gold has pulled back 5% this month with the recovery in the markets but is still holding a strong 26% gain over the past year. Investors who don’t invest in physical gold look for the next best thing and that is gold stocks. The market is still in a bearish trend and generally when this happens gold stocks are still in play.
We have found what we believe could be the next junior miner that could be making major headlines.

We want everyone to put SILA (Gold American Mining Corp.) on your radar immediately.

This is a company that has made some very big moves lately and has pulled back nicely. Last week the stock moved from $0.80 to $1.16 (about 45%) and I’m expecting we could see a move like this again early next week.

According to Emerging Stock report SILA has Support at $1.03, with resistance at $1.15. There has been a lot of accumulation at higher levels which typically means there will be little resistance in the stock until investors reach the breakeven level.
We could see a nice pop and some momentum before we see any heavy selling.

SILA is extremely liquid right now. The average volume over the past two weeks has been 800k shares.
Recent activity has pushed the market cap to close to $80 million!!

Every mining company has to have adequate funding in order to pay for drilling operations and the extraction of minerals from the ground. Right now it is estimated that SILA is sitting on an estimated $8.5 billion worth of gold and silver combined on their Mexican and American properties.

This would mean nothing if they did not have sufficient means of pulling it out of the ground. SILA secured a 2-year, $7.5 million equity financing agreement with ZUG Financing Group S.A. in May:

The ZUG group specializes in backing precious metals and mining ventures. This incredible news will keep Gold American busy the next 2 years, in continued development and exploration of their Mexico and Nevada properties. In all, the deal could represent $10.75 million in funding over the next 2 years if the company assumes the full execution of the attached warrants.

SILA’s main property is located in Mexico. The 698.91- acre Guadalupe property in Mexico contains two historically significant mines, and is only about 5 miles north of the Fresnillo Mine, which is the world’s richest underground silver mine. That mine produced over 24,000 ounces of gold in 2009 alone.

Mexico’s mine production of gold increased 10% from 2008 to 2009, and is now the third leading exporter of gold into the US. As exploration and development in Mexico has picked up, SILA has made a timely move to expand their production. The field surveys confirmed the project’s significant potential by returning several high-grade silver results.

SILA’s 2nd acquisition, The Keeno property in Nevada could potentially contain 1.1 million ounces of gold, and 69 million ounces of silver.

It is obvious that The Street is bullish on SILA right now. We have seen tens of millions of investment dollars being thrown at SILA in the open market. We have traders looking to take small profits but it also looks like there is a core of longer term investors waiting on SILA to start the extraction process.

SILA looks great both longer and shorter term right now. Make sure to start your research immediately.
Make sure you visit www.gold-american.com.

Stock Alert SILA is news brought to you by Penny Stock Explosion. We provide up to date current information for hot penny stocks and penny stocks which are primed for explosion.

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Biotech Stocks To Buy?

Sanofi-Aventis (NYSE-SNY) now has approval from the board of directors to offer as much as $70 per share for Genzyme (NASDAQ:GENZ).  This equals roughly $18.7 billion for the transaction. Last week we mentioned that the Biotech ETF (NYSE:BBH) was a more conservative way to take advantage of the GENZ takeover rumor.

History tells us that a high profile takeover of a company like GENZ usually spurs interest within the particular sector. This interest also can trickle down from the NYSE to the OTCBB as speculative money is getting freed up with the turn in the markets.

Volatile and super liquid bio-pharma stocks like Rexhan Pharmaceuticals (AMEX:RNN) and Neostem, Inc. (AMEX:NBS) may see increased activity as well. It has been proven that “most” start up biotech stocks don’t work in the long term. Most investors know that if they want a core biotech holding for their portfolio, they will look at companies like Amgen (NASDAQ:AMGN) or they can simply buy a biotech ETF or a sector mutual fund.  Most penny stock and small cap investors are looking for a speculative “home run”.

The potential takeover frenzy in the biotech space may or may not materialize. This is why penny stock investors and traders need to be nimble. In the next few weeks you might see constant PR’s coming from many different biotech penny stocks. Especially since commodity stocks have been beat up recently and many mining penny stocks have lost their luster recently.

The key now is finding these low priced biotech stocks. The best thing to do right now is form a penny stock list that features some different biotech names. Then look for companies with some cash and low burn rates. Then monitor news on large cap biotechs and general sector news as well. Keep in mind that this positive news cycle may not last. If it does……great, but if it doesn’t you have to be prepared to get out of the trade breakeven or at a small loss. So the best way to approach this trend might be as a trader not an investor. Remember there are penny stock flippers out there who trade these types of trends for a living. So be prepared, do your homework and remember to only commit a portion of your liquidity to an idea.

Will Biotech Heat Up the Penny Stock World? is news brought to you by Penny Stock Explosion. We provide up to date current information for hot penny stocks and penny stocks which are primed for explosion.

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S&P 500 Performance Chart

This week, with the exception of US Steel (NYSE:X) and a few others we have not only seen tremendous earnings come out of the large caps but positive guidance as well. This has led us to become focused on the 1113.00 level with the S&P 500. The market closed above this key number on both Monday and Tuesday, but this widely watched level remains in play.

Tuesday’s action was highlighted by positive earnings from Dupont (NYSE:DD) and Lockheed Martin (NYSE:LMT), but those results only propped up the market slightly. Every rally seemed to be met by profit taking.  Commodity stocks were among the weakest. The story may not play out until Friday when the GDP report is released. In the face of these great earnings this rally has seemed to stall out on economic numbers.

The ongoing trend tells us that more positive earnings will be released. But the question is, are the next wave of upside surprises factored in already? Only time will tell. Now how will this market impact the OTCBB ? Common sense says that if Fed Ex (NYSE:FDX) and United Parcel Service (NYSE:UPS) have positive outlooks, we may see a micro cap retailer develop into a hot penny stock. We also could see some bottom fishing in some gold and silver mining penny stocks due to a pullback in metals. The tough part is to decipher which mining names are actual values. We all have seen various penny stock newsletters highlight the next mining home run. So if you act on the commodity pullback be selective and do your homework.  We will have more penny stock ideas on the way soon.

S&P 500: Breakout or Breakdown? is news brought to you by Penny Stock Explosion. We provide up to date current information for hot penny stocks and penny stocks which are primed for explosion.

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Radient Pharmaceuticals Corporation (AMEX:RPC)

We hope that everyone is enjoying their summer.  We have not come out with a profile in a while because the markets have been turbulent.  We have been seeing them bounce back lately and the Dow is back over 10,500.  This is a crucial point.  There is a lot of indication that big money is coming back into the markets investors are gaining confidence.

We have seen some small cap stocks have a substantial amount of money invested into them over the past few weeks.  This is good news after we saw a huge drop off in the amount of money being invested in the small cap arena.   Most penny stocks were either stagnant or drifting lower on little volume.

We have located an AMEX company that we feel is worth putting on our radar.  RPC is a company that has had a lot of press so far this year.  They company produces and markets cancer testing products.  Back in early April RPC ran from .23 to 2.19 virtually over night.  Millionaires were literally made in a day.

We have seen a drop off in price since then.  It has found a home trading near the 1.00 level.  When a company like RPC makes an 800% plus run like it did, we usually see two events happen that cause the share price to drift lower. (1) People take profits.  If you just made that type of gain on your money you would be crazy not to take some of the winnings off of the table. (2) Shorts will come into the stock because they know that people will be taking profits and it will cause the price to decline.  They take advantage of the declining price and even help it to go lower with the additional selling pressure that is applied when a stock is shorted.

This is why I love RPC.  The stock was mostly accumulated at much higher levels.  There was a period of 3 days back in April in which well over $100 million dollars worth of stock was bought.  This is a huge amount of money for a small cap company like RPC.

Any type of news from the company could allow for a huge gap up.  If you look at the chart you will see that most of the accumulation was done well above these levels.  The break even price for investors is much higher than the current levels.

Make sure that you do your own research on RPC and consult a professional to see if it is a suitable investment for you.  It has been known to be volatile in the past but at the same time it has been a huge home run for speculative investors.

We will keep you updated on RPC and periodically inform you of its progress.  You can start your research at http://finance.yahoo.com/q?s=RPC and check out the company’s new website at http://www.radient-pharma.com/.

Hot Biotech Stocks like (AMEX:RPC) Primed to Rise is news brought to you by Penny Stock Explosion. We provide up to date current information for hot penny stocks and penny stocks which are primed for explosion.

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