Investor Soup experienced a “phenomenon” the other day.

I did a research report on Washington Mutual (WAMUQ) and posted it to my trade alert section.  Link to my research report.  The response was overwhelming!  I have had literally thousands of unique users follow that link and view it on my site.

That report was a straight forward research report, but I recieved a number of emails asking for my OPINION of the stock.  Well, here you go…

First off, I must repeat the warning that is posted at the beginning of the research report:

Washington Mutual Inc. is in bankruptcy. Investors should be cautious in buying common stock of companies in bankruptcy. It is extremely risky and is likely to lead to financial loss.

Any questions?  No?  Good. It is clear that WAMUQ is not out of the woods, yet.  I find it interesting that a penny stock has a market cap of $354 Million and its branches still number in the thousands.  But WAMUQ’s problems may be much bigger than their branch network.

A particularly harrowing article I read on Seeking Alpha quoted the ongoing legal battles between debtors and WAMUQ and stated that “In their motion to disband, the debtor’s counsel revealed – for the first time – that WaMu’s debts could surpass $50 billion making hopes of any recovery for the equity, “extremely remote.””

There you have it….Equity holders have NO chance with this one.  And, I believe it.  Does that mean that WAMUQ should be avoided?  Not at all, but do not make the mistake of thinking that WAMUQ might be a good position for your IRA.

The chart is telling me several things that nimble traders will want to look at.  I have laid out those items on the annotated chart below:

With WAMUQ, it pays to keep an eye on the chart and on the news.  WAMUQ has been a great trader and could conceivably turn (and turn quickly), so watch the chart.  Look for confirmation that the trend is reversing.  The candles are indicating that buyers are still interested in the stock because it has not been closing at the low of the day.  However, the trend is clearly bearish.

The other thing to watch is news.  WAMUQ has a blizzard of lawsuits, injunctions, and motions between itself and the Fed, FDIC, Goldman Sachs, Regulators, etc…  The Government could pull the plog on WAMUQ at any time.

Lastly, WAMUQ is a sad story.  A proud, venerable institution that traces its origins back to 1889, it fell victim to the its own poor banking practices and the financial tsunami that wiped out so many banks.  WAMUQ is gone for good….what is going on now are just the death throes.

Good luck and good trading,

Jeffrey Dean, Editor-in-Chief

I got an email yesterday  from one of my members (Jeff D.) asking me my opinion on what happened to Labopharm, Inc. (DDSS).  Jeff was at a loss to explain why DDSS’ shares dropped so preciptiously after getting FDA approval on one of their signature drugs.  In some ways, so am I.

Headlines like this one:

Labopharm Receives FDA Approval For OLEPTRO(TM)

usually means that a drug stock will rocket upwards.  Not in DDSS’ case.  The stock lost 40% of its value in just a few days.   Read full release here

You can see from the chart here just what I am talking about:

Stocks dropping on news of approvals is not uncommon ( see BDSI, NRIFF, PK and others), but it is still unexpected.   DDSS, the company, actually has a lot going for it.  It has income (no profits), cash in the bank, good ratios, manageable debt….and a big payday coming some time this year.  I have read where DDSS is in talks with several larger pharmaceutical firms regarding the commercialization of their newest drug, Oleptro.  I can only imagine the frenzy at DDSS offices as they take this surprise announcement and try and turn it into revenues.

I am not terribly surprised at the drop given the rise in the share price in anticipation of approval.  And, I am betting that DDSS will come back and come back strong.  Since I am a technical analyst, I will share one last chart with readers that backs up my contention.

This chart shows how volatile the stock has been and I think it is illustrative of the recuperative powers of DDSS.  You can see that the stock is trading within normal ranges and has shown great historical elasticity.  I would not be too worried about this dip and, in fact, would see this as a buying opportunity.  Having said that, there is support at $1.75 and $1.40.  I don’t think it will drop to those levels, but…you never know.

DDSS is both a short-term and a long-term hold.  In the short-term, I could see the stock regaining much of its recent losses.  It certainly seems like the sellers are out.  In the long-term, DDSS could be a “gold mine”.  I will watch with great interest for news on how they will commercialize this and what the financial ramifications are for the company.

I didn’t spend any time in this blog on drug pipelines and other pharma standards.  I expect that my readers will do their own DD.  Here is DDSS’s website link for your own research.

Trade like you mean it!

Jeffrey Dean

Editor-in-Chief

Note on 2/12/10:  DDSS is getting hammered.  The market did not like the news of their $20MM  offering.   DDSS blew through the $1.75 support and is headed down to the $1.40 level.  MIght be best to take an EVEN more cautious approach to this one.

I am still hanging on to my list of “Usual Suspects” and continue to hold the following penny stocks and small cap stocks on my trading radar:

VIVK - I continue to hold this stock in my own portfolio and am still bullish on its prospects.  The challenge this stock continues to have is to get anyone to care.   Stock Charts Link

LGDI - Still one of my favorites.  It has been a great trader since I first alerted members to it back in mid-2009 with the latest 100% gain making my readers and members very happy.  The company continues to execute on its plan and with the strengthening of the underlying commodity price (Phosphate), things look good for the company.  Stock Charts Link

BYSD - I bought in when I first alerted members to it and watched it plummet the next day.  I hung in because I believed in the stock.  It has recovered, so I am sitting on a profitable trade.  I like the chart and I will give it a few more days to see what transpires.  I have put in a stop loss to protect my gain and I am feeling good about the stock.  Stock Charts Link

RZ - I profiled it last week and said that it would continue to fall (and, it did).  I also said I was looking for a bounce (and, it did).  Yesterday, it advanced quite well and this might be the turning point that I was hoping for.  Stock Charts Link

ZAGG - Chart of the Day

I’ve twittered and blogged this stock this week.  Will ZAGG return to past glory?  The chart setup is certainly in its favor.

Long BYSD and VIVK

Good luck and good trading,

Jeffrey Dean

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DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication (with the exception of VIVK, LGDI and BYSD, which are subject to expired agreements). The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

I must admit that I am an alternative energy junkie.  I love all things alternative:  I love the almost infinite variety of wind, solar, biofuel, CO2 to gas technologies that are out there.  Each one of them is exciting on its own merits and each has a claim to be “The One” that makes it to the next level.  Could RZ be one of the winners?

Raser Technologies, Inc. (RZ - NYSE) is (from RZ’s website) an environmental energy technology company focused on geothermal power development and technology licensing.

RZ has two divisions:

1. Raser’s Power Systems segment is seeking to develop clean, renewable geothermal electric power plants and bottom-cycling operations, incorporating licensed heat transfer technology.
2. Raser’s Transportation and Industrial segment focuses on extended-range plug-in-hybrid vehicle solutions and using Raser’s award-winning Symetron™ technology to improve the torque density and efficiency of the electric motors and drive systems used in electric and hybrid-electric vehicle powertrains and industrial applications.

RZ is making only nominal revenues with large losses every quarter.  Looking through their website, press releases and 3rd party articles on them is impressive.  They really appear to have some great technology and prospects.  The Evergreen Clean Energy LLC joint venture seems to hold great promise.  Read the release here.  Evergreen, a newly-formed alternative energy fund, has agreed to fund several RZ geothermal projects in the U.S. The recent news of the appointment of a new CEO, Nick Goodman, didn’t do much for the stock,  Mr. Goodman seems to have a solid resume and could be just the guy that the company needs….time will tell.

But, since we live in the real world, let’s talk RZ as it stands right now.  RZ has, according to its own balance sheet, maybe two quarters of life left based upon the present cash burn.  The liquidity ratios stink and the company has a great deal of debt (more than it can comfortably service along with huge R & D expenses each Q).

The chart, on its face, doesn’t offer much hope either. The prolonged bearish slide doesn’t appear to be slackening.  Or does it? Candlestick chart analysis gives us some insight into the chart.  Most of the sticks during this decline were long bodies or Maurbozo’s (in a declining chart, that means that sellers ruled).  Buyers put little resistance and the stock was bid down every day significantly.  Except, that is, for the last two days.  We are actually seeing tails develop on the candles which means that buyers and sellers are struggling over the stock.  In fact, yesterday’s candle shows that the sellers drove it down, but the sellers brought it back up to close near the top of its trading range.  The key for RZ is to watch for confirmation that the sellers are getting “exhausted” and that the buyers are coming back in. The oversold stochastics is an important indicator, but until the MACD intensity diminishes, the stock could continue to fall.

Here is my annotated chart:

Any good news could really send this one soaring.  I recommend that traders watch this one and keep it on the radar.  Technology-wise, RZ appears to be a “good horse to back”.  If they can get some financing for general operations and if the Evergreen deal comes through, this could be a HUGE winner.

Lots of variables, though…..

Good luck and good trading,

Jeffrey Dean

When you have been an investor/trader as long as I have, you tend to create favorites. I have my favorites certainly, stocks like JDSU, LGDI, TASR and today’s blog topic: American Oriental Bioengeneering, Inc. (AOB).  I have been aware of AOB for years and have traded it/blogged it to great success.

In fact, it was one of the first stocks that I blogged on this site.  You can read my blog here. I was right about it then, as this chart would indicate.  AOB was profiled around $4.25 and soared to $5.70 in about a week.  I was right then….I wonder if I can be right again.

Headquartered in China and with most of its sales in China, AOB’s develops, manufactures and sells plant-based pharmaceuticals, nutraceuticals and food supplements. Its product are designed to treat a wide variety of ailments under a number of brand/trade names.

The company was founded in 2001 and has enjoyed a great run.   Upon reviewing the financials, I can see that AOB makes money! Every year for the last three years, they have posted a profit.  Sales and profits have slowed down somewhat this year, but AOB is on track to post another profit for 2009.  The balance sheet is strong with great debt coverage ratios.  Debt is high at $116MM (33% of equity), but the company’s cash balances and cash flow are sufficient to service the debt easily.

Here is a two-month chart that shows the recent trading action.

AOB is a great radar stock…..It has shown strong volatility in the past and looks to me like it might be ready for a bounce.  It will be instructive to see if it will hold above the current support level.  Any break below it and the stock should be avoided.

Good luck and good trading,

Jeffrey Dean

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DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Carbon Dioxide (CO2) has gotten a bad rap for causing pollution, the greenhouse effect AND global warming.  Deservedly so, in most cases.

Fossil fuels such as oil, gas and coal have powered the world’s economic growth since the days of the industrial revolution.   As the world economies expand, so does the need for fossil fuels.  The U.S. Energy Information Administration projects that global energy consumption will increase 50% by 2030 to over 112 million barrels of crude oil per day.  The economic cost is significant with the price of oil and coal setting new highs seemingly every day, but the environmental impact is staggering with BILLIONS of tons of CO2 into the atmosphere annually.

What if there was a way to turn that pollution into profits?

Yes!  That is what today’s alert company Carbon Sciences, Inc. (CABN) is doing! continue

I was tempted to have a title that said something like “Helix Wind…that company really blows”, but I thought better of it. That wouldn’t be too professional.  I am serious, however, when I say that my readers should take a look at the company.

Helix Wind Corporation (HLXW) is engaged in the design, manufacturing and sale of “small wind” vertical axis turbines (VAWT) designed to generate clean, renewable electricity from wind.  The key for HLXW is the term “small wind”.   The company makes its case for the small wind strategy on its site:

“Small (or “residential”) wind energy systems typically generate just enough power to meet the demands of a home, farm or small business. They range from 400 watts to 500 kilowatts or more and typically consist of a single turbine (vertical or horizontal). They can be significant power sources and have proven records of performance, even in locations with modest winds.”

Here is graphic evidence on how they are different:

This is not the typical propeller blade turbine that is used on the wind farm installations that are so popular these days. This is a uniquely designed, niche product that is scalable from a single residence (the S322) to the D15000 which produces enough electricity for 10 homes or a medium size commercial facility.   Helix believes that the VAWT configuration is superior due to the fact that functions in wind that comes from all directions and is well suited to gusty wind conditions which typical blade wind turbines are not.

Here is a link to HLXW’s website. It is a very well done site and has a great deal of interesting information on it.  They also have a Fact Sheet nested on their site that makes for good reading.

Now, lets talk about the company and the chart. The company is long on promise and good news, but short on cash.  While the company is booking revenues, it is losing millions of $ every quarter.  The Balance Sheet is no help.  The company is essentially insolvent according to their last quarterly statement.  I have confirmed that the company is raising capital and is actually in a “quiet period” before the announcement which could happen as early as next month.  The key shareholders are subject to a lock-up of their shares in conjunction with the capital raise.

The company has released info on potential orders, but it is sparse.  The Argentinian deal sounds good for the company, but near term it doesn’t appear to help too much.  I would like to see more press releases about sales and distribution.   The company has not issued revenue guidance for 2010 yet, but says they plan to later in the year once the financing is wrapped up and at least one more acquisition is closed.

The chart makes for interesting study:

HLXW is a company worth watching. The stock may have farther to fall based upon momentum and trend lines.  In their industry, there is no market leader in the small wind category.  HLXW wants to become that market leader and in my conversations with the company, they feel that it can be achieved.   Certainly, government and utility subsidies and credits will continue to help drive wind power forward.   But, HLXW has to achieve their financing goals first before “world domination” is possible.

Honestly, I have fallen in love with the product and think that, on its face, it makes a great deal of sense for the market.  If the company wants to install a Helix wind turbine on my house, I will love them even more.

Good luck and good trading,

Jeffrey Dean

Editor

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