Perspectives Weekend Edition - Sept 17
In this week's issue ...
Beware of the OTC BB Scams
For free stock charting software and quality market data, go to
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Commentary
I received an email this week discussing a "hot" stock that I must invest
in. It made me realize something very quickly.
All the criminals have left Vancouver and gone to the OTC BB.
This is not to say that all people involved with the VSE were or are
criminals, nor should it imply that everyone on the OTC BB is a criminal,
or at least unethical. Simply put, however, the open nature of these
markets have made them ripe for the unethical to blow off paper. The stock
market pump and dump is what gave the VSE its bad reputation, and hurt the
legitimate business people who were lumped into the same categories as the
purveyors of paper. Now, it seems the OTC BB is well on its way to the same
reputation as scam artists build perceptions around a hot story that is
really nothing more than a lot of hot air.
So be cautious.
Good companies won't present the psychological tricks that these promoters
utilize to get your money into their stocks. They won't tell you that this
is your only chance to get in before the stock doubles, triples or even
becomes a "ten bagger". I don't think Peter Lynch was talking about paper
scams when he described the ten bagger in his books.
Simply being a promoter does not constitute this unethical behaviour
either. Promotion is an important component for companies to build value
and generate investment to enable growth. However, shoving worthless stock
down your throat and then pulling the rug out from under you is nothing
short of criminal in my mind. Having seen all the tricks, I simply advise a
good deal of caution. Do some due diligence when investing in stocks listed
on markets that are forums for scam artists. And keep your eyes open when
you hear about the can't lose opportunity that is going to pass you by
unless you act now. Good trading decision need not be made on emotion.
Enough Said.
Stock Discussions
US Over the Counter Bulletin Board
Kismet Energy (KISS)
Perspectives Score - 82
Rating - Bullish
Reference: kismetenergy.com , 1-888-722-1295
- KISS has as much as doubled since I first wrote about them a couple of
weeks ago. That was simply because not too many people were aware that they
were land holders in the same area of California as the East Lost Hills
play being explored by Hilton, Berkley et al. The stock looks to be finding
a base around the $0.55 level where I expect it will trade for a little
while as the market takes a breather after the strong gains. Expectations
are that we will hear about California drilling plans soon, which should
take the stock out of that trading range as the market looks toward the
potential of a significant gas strike. This area play will get hotter as
more companies are snapping up land in the region, and KISS should benefit
as one of the earlier stocks to get in there and get a large landholding.
Worth checking into if you like this area play.
Stockgroup (SWEB)
Perspectives Score - N/A (insufficient trading history)
Rating -
Reference: stockgroup.com
- Stockgroup.com is a fairly well known resource for investment research on
small cap stocks. In about three weeks, the company is going to unveil
their new and improved web site. I have had a chance to see the new product
and it is excellent, making it a real one stop source for investment
research. In conjunction with the launch of the new site, the company has a
very significant advertising campaign planned which should generate a lot
of interest for their sites and their stock. I think SWEB could do well in
anticipation of that campaign and as it runs. Stock very cheap relative to
their peers, and is worth considering.
UBrandit (UBRT)
Perspectives Score - 64
Rating - optimistic
Reference: ubrandit.com
- Ubrandit has developed branding technology which enables businesses to
get on the web in a shorter time period with less trouble. The company
intends to announce the launch of its Branding Affiliate program sson, and
the market seems to building in anticipation of that launch. The upward
consolidation that is forming in the market implies growing optimism, with
the stock finding resistance at the $7.50 price level. I expect the stock
will find some nice upward mobility if it can make a break through the
$7.50 price level with good volume support. Looks like we could see that
happen next week. Worth checking out.
Nematron (NEMA)
Perspectives Score - 70
Rating - Bullish
Reference: (734)214-2000
- featured to our daily edition readers about a week and half ago, the
stock gained as much as 41 % in a week before seeing some profit taking
through the middle of this week. This stock still has good potential, but I
expect it will take a breather for a bit before it try to head up again.
Risky entering here, I would rather look for other opportunities. If you
own the stock from lower prices, it looks to still be worth holding onto
however, dance close to the door.
Alberta Stock Exchange
Applied Gaming Solutions (AGC)
Perspectives Score - 53
Rating - neutral
Reference: ags.ca
- AGC bounced higher late this week, as the market begins to realise what
this company has accomplished. Based on some research I have done, I am
quite certain that there are some significant things in the works that will
make the expected $40 million in revenues over seven years from the Hanoi
lottery a relatively small portion of the company's revenues. AGC looks to
be a cheap place to consider putting some speculative money. The link below
goes to a pretty good post from Stockhouse which was emailed to me and I
think is worth reading. Check it out:
stockhouse.com
Oro-Nevada Resources (ONV)
Perspectives Score - 93
Rating - Bullish
Reference: martlet.com
- Oro Nevada intends to change their name to Martlet Venture Management,
and has recently made a strategic investment in systemfabrik GmbH. This
company develops and markets a suite of easy to use products which allow
users to rapidly qualify and extract from any database and then reconfigure
and repopulate targeted databases. The company's trading symbol will change
to MVM on Sept 20th. The stock had a strong day on Friday and looks like it
has good potential to head toward the $1.80 - $2 level.
Chartwell Tech (CWH)
Perspectives Score - 72
Rating - Bullish
Reference: chartwelltechnology.com
- Chartwell develops Java based Internet games and gaming software. Still
has potential, but still finding resistance in the $5 level. Watch the
stock for strong volume and a break through the $5 level.
Wi-Lan (WIN)
Perspectives Score - 68
Rating - Optimistic
Reference: wilan.com
- WIN looks to be stuck in a trading range, and it looks like owners of the
stock are starting to get a bit impatient. The stock has not broken down
yet, but I suggest some caution as it looks like it could see some weakness
soon if the company does not do something to generate some new excitement.A
break below the $9.50 level could telegraph future weakness.
Vancouver Stock Exchange
Hilton Pete (HTP)
Perspectives Score - 73
Rating - Bullish
Reference: hiltonpetroleum.com
- HTP has been heading up in anticipation of news on their drilling in East
Lost Hills. The market is looking pretty optimistic in advance of an
announcement, which means that expectations are also high. In short, the
company not only has to announce good results from their drilling, but they
also have to exceed the market's expectations. It is pretty rare that
company's are able to do that, so I advise a good deal of caution. The
stock looks good, but it is very risky and very susceptible to profit taking.
Starcore Resources (SOE)
Perspectives Score - 60
Rating - Optimistic
Reference: starcore.com
- amazing, but here is a mining company that doesn't seem to be switching
to a .com deal! Announced this week that they had completed another six
drill holes on their Samuels Lake property in Northern Ontario. While the
news did not say much, I would guess that the visual on those drill cores
was very good as the stock had a very strong day. Been bouncing around
since the news, but it looks like something is going on which makes SOE
worth looking at.
Toronto Stock Exchange
Edge Energy (EDG)
Perspectives Score - 88
Rating - Bullish
Reference: (403)269-3797
- featured this stock last week, and it has moved up a bit since then.
Looks like it can continue on the strength of the overall energy market.
The Scores - What They Mean
---------------------------
Scores greater than 70
Bullish
This stock is worth considering as a buying opportunity. Our model
indicates that the stock has good potential to go higher in the short term,
and is worth taking time to consider. Complete your due diligence on this
stock so that you can make your own judgement on the quality of the company
before making a decision, and remember that our score is valid for the
price that the stock is at when we applied the score. Of course, a score of
98 has more potential than a score of 72, but all stocks in this range
deserve your consideration. In addition, if you are short this stock, you
should consider covering the short position.
Scores between 60 and 70
Optimistic
Market activity is beginning to indicate improved optimism for this stock
and it should be put on a watch list as a stock to consider. If you already
like this company's fundamentals, you should now look for the signals that
the time is right to own the stock. If you own the stock, you are likely in
good shape but may want to consider taking profits if profits are high. If
you are short the stock, you should approach your position with some
caution and watch for the signal that it is time to cover.
Scores between 40 and 60
Neutral
Market activity is doing little to indicate the future direction of this
stock. The stock is likely in a trading range, or, if it has been in a
strong trend over the recent past, it may be starting to reverse that
trend. If you own this stock and are in a profitable position, you should
consider whether the stock is reversing and it may be time to take your
money off the table.
Scores between 30 and 40
Cautionary
Market activity is beginning to indicate caution is warranted for this
stock and it should be put on a watch list as a stock to sell or short. If
you believe that the company's fundamentals do not warrant the valuation
the stock has received, you should now look for the signals that the time
is right to short the stock. If you are already short the stock, you are
likely in good shape but may want to consider taking profits if profits are
high. If you are long the stock, you should approach your position with
some caution and watch for the signal that it is time to sell.
Scores less than 30
Bearish
Market activity is very negative on this stock and it may be very risky to
hold this stock. Shorting opportunities should be explored after doing the
appropriate due diligence. If the stock has suffered a major sell off
already, traders may want to watch for signs of a reversal bounce as a long
trading opportunity, but be sure to watch for the technical reversal which
will likely be accompanied by an increase in the stock score.
As a final thought on this new scoring system, it is important to consider
where the score has come from. A stock that moves from 60 to 75 is likely a
better opportunity than one that moves from 90 to 75. Also, consider where
the stock is relative to the score. Again, a stock that has made
considerable gains of late may have a good score, but entering the stock
given the gains it has made will be riskier. Risk is factored into the
model, but use some of this common sense.
Finally, remember that this model is generated by a computer and should not
be used to make investment decisions. It is a tool which can help you find
opportunities from the thousands of stocks that are out there. However, you
have to do the work to take the list of stocks with the scores you want
down to the stocks you want to put your money on.
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