Monday, June 30, 2008

Weekly Stock Pick

Another down week last week in the markets. Record oil prices not helping matters. For the week the DJIA was down about 4.1%, the S&P 500 down about 2.9%, and the Nasdaq down about 3.8%.

In markets conditions like this, it’s good to look for defensive investments. Defensive stocks are those companies which are not highly dependent on economic cycles and the prosperity that comes and goes with them. Defensive stocks are companies providing products and services that we use or have to consume everyday. Food is a good example.

Scanning the charts Friday evening after the close looking for some potential low risk high reward buy or sell candidates, up popped a fast food chain. After closer inspection on a technical basis, I’m putting a buy on this nationwide fast food stock. This company had problems in the past with the quality of food coming out of their kitchens. Some people got sick and died. Let’s hope that the company has made corrections of the past mistakes so it won’t happen again in the future. In case it does, you’ll be ok by using stop-loss in your position.

Buy Long: Jack In the Box. Ticker JBX

Buy at Market or Buy-Limit Entry 23.52

Stop - Loss 22.69 which is about 4%.

Take Profit Areas:

Very Short Term 25.18 – 26.01

Short Term 29.05 – 30.01

Intermediate Term 30.43 – 31.43

Long Term 33.88 - 35

Longer Term 41.02 – 42.37

JBX Income Report

Jack in the Box reported on May 14th 2008 net income of $26.4 million which is $0.44 per diluted share for the quarter ended April 13, 2008. The street consensus was looking for $0.40 cents per diluted share. The 2008 first half earnings were $1.04 compared to $0.92 for the same period 2007. The PE ratio is about 12 with about a forward PE of 16 for 2008.

Jack in the Box Buy Analysis Commentary

With consumer confidence and their cashflow in the toilet currently, this is good news for the fast-food chains. Everyone has to eat everyday, and now everyone has to watch their budgets like a hawk. Budget meals are the special of the day compared to fine dining, and big tips until the economy turns around.

Since 2004 Jack in the Box has been selling it’s outlets to franchisees which currently is about 30% now. They want to increase selling their outlets to 70% by 2014. Franchising will help them from the rise in food prices. They are remodeling their outlets making them look new, being more cost efficient with new equipment, clean, and generally more inviting.

Longer term the earnings could lag just as much as any other company for the same reasons, subprime mortgage problems, recession or possible recession, and the expenses from the remodeling of their outlets. If they move forward with ongoing promos this could strengthen sales. All things considered, I feel Jack in the Box is a good risk reward at this price right now. Just in case price keeps heading south, use stop-loss to protect your downside risk.

Jack in the Box Company Profile

Jack in the Box owns, operates, and franchises Jack in the Box quick-service restaurants and Qdoba Mexican Grill (Qdoba) fast-casual restaurants in 42 states. The Company also operates a chain of convenience stores called Quick Stuff, with 60 locations, each built adjacent to a full-size Jack in the Box restaurant and including a fuel station. As of September 30, 2007, the Jack in the Box system included 2,132 restaurants in 17 states, of which 1,436 were company-operated and 696 were franchise-operated. As of September 30, 2007, the Qdoba system included 395 restaurants in 39 states, as well as the District of Columbia, of which 90 were company-operated and 305 were franchise-operated.

Click here to review and Trial the Trading Software I used in determining my buy long position on JBX.

Good day, good investing and trading!

Friday, June 27, 2008

Brand New MTPredictor v6.0 Trading Software

MTPredictor Trading Software
06/27/08 Announcing the new MTPredictor™ v6.0 Trading Software.


Low-risk high-reward trading with automatic money risk management. Sets up for Automated Trading. Brand new program This is not just a minor update to the previous v5.0 - it is an entirely new software program, written from the ground up. As a major project, it has been completely re-designed for you - the trader - making the essential trading tasks as simple as possible.

The new-look Scanner is extremely easy to use, with the ability to save your preferred Scanner settings for later use. Numerous brand new features have been added, such as a built-in database of the tick values and tick sizes for the major global markets - so, choosing the values you need to Position Size correctly like a professional is now very simple! We have also added the ability to save multiple charts in multiple workspaces, allowing you to follow your markets exactly as you wish.

MTPredictor v6.0 Trading Software Release

Released: 1 July 2008

Price

US $2,495.00

Program features . . .

Organize and save your charts exactly as you want - click here to see

Open multiple charts in the same workspace

Open multiple workspaces at the same time

Easy Initial Risk & Position Sizing calculations - See an example on Forex, European Index Futures or U.S. E-mini Index Futures

Choose the market you are trading from our pre-built lists and the software automatically applies the correct Tick Size and Tick Value to give you accurate Position Sizing!

Data Compatibility

v6.0 reads standard ASCII and MetaStock® format data files (as previewed in EOD v5.0)

v6.0 has a direct link into Worden TC2007 for direct access to their charts and watchlists (as previewed in EOD v5.0) - This feature has been delayed, we hope to add this soon after initial release.....

Near real-time (RT): One-Click Update v6.0 will update your current chart with just one mouse click, offering near real-time charts and analysis from standard ASCII data files - for example from our Data1.efs (eSignal® data) or our Data.eld (TradeStation®8 data)...or via Qcollector http://www.mechtrading.com/ or via MetaTrader4 http://www.metaquotes.net/

Real-time (RT): we plan to include pure real-time data from various suppliers, including eSignal and OpenTick. Watch this space for an announcement on pure RT data (subject to change, as we test their interface APIs for compatibility)

New-look Trade Scanner - click here to see

Automatically scans multiple daily charts - simultaneously

Can switch from daily to weekly charts - so you can scan weekly charts for longer-term trades

Visual long/short alerts - informing you of set-ups

Save your preferred settings - to use again later

Automatic Trade Set-ups on your charts - click here to see

Displays our automatic TS1, TS2, TS3, TS4 and DP set-ups on your charts

Immediate trade details on the chart

Entry trigger | initial stop trigger | profit zones - on the chart automatically

Instant Risk/Reward (R/R) analysis and Position Size displayed - click here to see

Position Size and R/R at the 1st profit target displayed on the chart for you

Manual R/R tool so you can perform these calculations on any bar

Early trade entries with colour-coded reversal bars

Blue long and red short reversal bars - price reversals to guarantee early trade entry

Consistent trade management

Profit targets colour-coded on the chart - disciplined trade management, every time

Trailing volatility stop to let you run your trades further in strong markets

Improved Manual Decision Point™ (DP) - click here to see

New and improved Manual DP tool allows you to add support/resistance areas quickly to your charts

Improved automatic Elliott wave module - click here to see

Constant Elliott wave labeling - automatically finds the most common Elliott Wave patterns in isolation - no count changes mid-trade and no benefit of hindsight!

Automatically adds the WPTs (Wave Price Targets) for the Elliott pattern found, giving you the price areas for the current wave pattern to end

Improved WPT (Wave Price Target) module - click here to see

Expert Elliott Wave analysts - add your own target areas for patterns to end

Simple to use, no need to get involved with complicated price clustering. MTPredictor does all this for you...

Advanced/manual analysis supported

Manual Fibonacci price studies (using the Fibonacci sequence, especially suiting the Fibonacci trader), candlesticks, expert trade management available

Dedicated Support

FREE weekly Training webinars, FREE Discussion Forum, FREE Trading Course, Video Help Files, Document Help Files, phone/e-mail.

Additional features planned . . .

Direct link into Worden TC2007 for direct access to their charts and watchlists (as previewed in EOD v5.0) - This feature has been delayed.

Real-time data from eSignal and OpenTick (subject to change, as we need to test their interface APIs for compatibility)

Direct data access into CSIData Unfair Advantage program http://www.csidata.com/ (subject to chage, as we test interface APIs for compatibility)

Direct data access into ShareScope program (UK/US stocks) http://www.sharescope.co.uk/ (subject to change, as we test interface APIs for compatibility)

Additional Fibonacci price projections tool

MTPredictor v6.0 example: MTPredictor™ automatically identifies a TS3 buy set-up on the 15min NQ M8 (E-mini Nasdaq futures). Notice the Position Sizing (number of contracts) is automatically shown on the chart for you as well as the Profit targets for the trade.



Thursday, June 26, 2008

Calendar Spreads or How to Trade Time

By Online Trading Academy

When dealing with options, almost anything is possible. In fact, options traders often talk in terms of buying and selling time. Unfortunately, they're probably talking about time premium, and so the search for the fountain of youth must continue! The trading of time premium is typically done using Calendar Spreads although you will also hear them referred to as Time Spreads or Horizontal Spreads. Actually for options on futures, some writers do differentiate between Calendar and Time Spreads, but for our purposes they are the same.

To get us all on the same page, let's start out with the definition.

Definition: A Calendar Spread is an options strategy in which an option is sold in a near term month and an option is purchased in a longer term month. The options are either both Puts or Calls and have the same strike price.

When you buy the far term and sell the near term options you are said to be long the Calendar Spread. The other side of the position, buying the near term and selling the far term options, is said to be short the Calendar Spread. Since the longer term option is almost always higher than the near month option, a long Calendar Spread is usually done for a debit, and we will go on this assumption for the rest of this article. You may want to think about what circumstances could lead to a situation where the near term option is more expensive than the far term option. HINT: it has to do with volatility skew and dividends.

Calendar Spreads are a very useful and common strategy. Most public traders trade this strategy from the long side for a number of reasons, the most important of which relates to the margin requirements. The short option in a long Calendar Spread is considered covered by the longer term option and therefore, no additional margin is required. However in the case of the short Calendar Spread, most brokers would not consider the short far term option to be covered by the long near term option and therefore would impose a margin requirement on this position.

What is the basic concept of the long Calendar Spread? The idea here is that both options, the short and the long, will decay over time. However, the near term option will decay at a faster rate than the long term option and if nothing else changes, the value of the spread will increase.

For example, with XYZ stock trading at $102, the theoretical value of the July 100 Call is $6.40 and the Sept 100 Call is $9.85. So it would cost us $345 to buy the XYZ July/Sept 100 Call Calendar Spread. As of today, there are 38 days left until July expiration and 101 days until Sept expiration. Let's assume we put on 10 spreads for a total debit of $3,450, ignoring commissions of course. If nothing else changes, namely; stock price, volatility, risk free interest rate or expected dividends, an admittedly big IF, the value of the spread will change in the following manner:



This shows that we would have made a nice profit of $2,510 as the value of the spread increased from $3,450 to $5,960 in 38 days. That's about a 72% nominal rate of return time on an initial investment of $3,450 (or almost 700% annualized) with a maximum risk of less than $3,450.

This profit was based on the stock staying at $102 through July expiration. Is that where we actually want it, or is there a better sweet spot? I can just run some numbers in my options calculator, but let's think about this. At expiration, if the stock increased to $103, then the value of the July 100 Call would be $3. Since the Sept 100 Call is slightly in the money, I would estimate that its delta is about 60%, so a $1 increase in the stock price ($102 to $103) would cause the Call to increase by 60 cents from $7.96 to $8.56. This would result in an estimated decrease in the value of the spread to $5,560. In a similar fashion I think it's clear that as the stock increases in value, the spread will decrease.

If you need more convincing, just assume that the stock increased tremendously to say $200. Again, looking at July expiration that Call will be worth exactly $100, while the Sept Call will have shed most of its time value and will probably be worth about $100.45, yielding a spread value of only $450.

On the other hand what if the stock went down $2 to finish right at the strike? Now the July Call will be worthless, and the Sept Call will be worth approximately $6.76, for a spread value of $6,760. Since we know that the Sept Call will continue to lose value as the stock heads south, and that the July Call is already at zero and can't decrease any further, the value of the spread will decline.

Again, take an extreme case of the stock falling to $50. The July Call is $0 and the Sept Call will also be very close to $0, for a spread value of near $0.

What about implied volatility, do we want it to go up or down at expiration of the near term option from the time that we put it on? The answer should be obvious. When we get to the near term expiration, that option will be either worthless or equal to parity. In other words it will not have a volatility component, and its value will not be dependent on volatility. The long far month option will have a volatility component and will increase if implied volatility increases. That is what we want to maximize the value of the spread.

So it seems like when we put a Calendar Spread on, we want the stock to not move very much, but for volatility to increase. This is a well known characteristic of Calendar Spreads and is referred to as the internal inconsistency of the Calendar Spread.

The question arises as to when and how do we put on a Calendar Spread. We want implied volatility to be low and have reason to believe that it will increase. If there's a reverse horizontal skew (higher implied volatility in the near month versus the far month) that will also help.

General guidelines suggest that the near month expiration be somewhere between 30 and 60 days, and that the far month expiration be from 1 to 3 months after that. The strike price should be where you expect the stock to be at expiration of the near term option.

And now for the $64,000 question; should you use Puts or Calls? The answer is; while there are some nuances regarding the impact of early exercise, and some other minor things, it really doesn't matter very much. The Put Calendar Spread and the Call Calendar Spread are synthetically equivalent to each other. Using a technique called pricing off the Jelly Roll (I kid you not), you can determine if there is an advantage to putting on the spread with Puts or Calls. That's something I reserve for my mentoring students.

You've probably noticed that I hardly made any mention of the Greeks this week. The idea was to show you how to reason things out just based on the knowledge you already have about options. The truth is however, that by using the Greeks it would have been a lot easier. I won't go through examining all of them, but I suggest that you do. It will be a good test of your understanding. For instance, regarding volatility, we know that the far term option (Put or Call) has a greater vega than a near term option. So the vega of the Calendar Spread will be positive. Hence, an increase in volatility is good, and a decrease is bad.

The Calendar Spread is extremely versatile and can be used in many different types of situations. I'll just mention a few variations to whet your appetite. They can be ratioed (sell 10, buy 9) to make the spreads delta or gamma neutral. If there is both a vertical and a horizontal skew, they can be diagonalized (sell July 100 Calls, buy Sept 105 Calls), or you can put on dual Calendar Spreads (one spread below the strike and one above.) There's lots to play with.

Click here to review more options trading information and options trading home-study courses.

Good day, and good options trading!

Wednesday, June 25, 2008

Did You Win the 2008 Traders Superconference DVD's?

"The Votes Are In! And The Four Win.ners Of The 2008 Superconference DVD's Have Been Posted, (Along With a Special Surprise...)"

The Options University 2008 Superconference DVD's contest is now officially over, and the names of the four luck traders who won copies of the DVD's are now listed on the page below.

4 Lucky Traders Selected To Receive Complimentary DVD's

To recap, you were invited to enter this contest by heading over to the official OU Superconference blog above, and to watch the Superconference video testimonials, then vote for your favorite.

OU then randomly selected four voters, and 4 lucky people will be receiving a set of Superconference DVD's F.R.E.E. (a $497 value).

The contest is now over, and these lucky traders have been chosen.

Click here to see if you are one of them:

If your name is listed there congrats! Brett tells me your DVD's will be sent out as soon as they are ready in early July. And to all participants in the contest Brett asked me to say a special "thank you" to you all. As always, it was a lot of fun.

And now for the surprise . . .

Brett told me the demand was so strong for the DVD's (they sold out almost immediately) that they felt bad not having any more available.

Since so many of you wanted a set, but were turned away once these were sold out last week, here's what he's decided to do.

They're going to do another limited production run.

That's good news for you if you wanted the DVD's, but missed your chance the first time around.

But these will be limited, and they're not sure how many extra sets they can have produced on short notice, so you'll want to get your order in sooner than later -- they won't last long.

If you haven't done so already, just read some of the heartfelt comments that people left on the blog below to see what you missed at this year's Superconference, and how much other people wished they had attended.

Limited Superconference DVD Release -- Thursday 12pm Noon EST

So now that the surprise is out . . .

Here's that web page where you can get all the details:

The DVD's will be available again, Thursday June 26th at 12pm EST.

But this is it. This will be your final chance to get your hands on a set of the DVD's at this low price. If they are offered again in the future, it will be at a much higher price level, I'm being told around $997.

Why not witness first-hand what the excitement was all about, and what caused the exuberance seen on the video testimonials you just watched?

Miss the videos? Here's the blog page where you can watch clips from them:


To get your personal set of the 2008 Superconference DVD's - and discover for yourself the professional insider "tricks", techniques and trading systems 10 world-class experts revealed at the conference.

Click here to go to this page immediately to see if there are any sets left:

And once again, congrats to the contest win.ners, and thanks to all the participants in the 2008 Superconference DVD's contest!

P.S. Were you one of the 4 lucky recipients of a set of this year's Options University Superconference DVD's? If so, congrats!

And if not, you now have one last chance to get your hands on your personal set of DVD's for the lowest investment ever (1/2 price).

Good day and good trading

Tuesday, June 24, 2008

Save 58% on Financial Forecasts

In my email inbox today, I got a message from our friends at Elliott Wave International. In it, they deliver an update on the FreeWeek they’re running for U.S. Stocks, Bonds, Gold, Silver and more (there’s still time to take part: click here).

But what really caught my attention was the incredible offer they presented for their most popular U.S. analysis package, the Financial Forecast Service, which combines Bob Prechter’s famous Elliott Wave Theorist with two other short and intermediate-term U.S.-focused publications.

In the email, I was reminded about a forecast I’d almost forgotten, one that was delivered by the company way back in July 2005:

"This time, there’s no mistaking who the Enrons of the bust phase will be. They will be the firms now peddling adjustable-rate, no interest/nothing down and assorted other types of subprime mortgages." – The Elliott Wave Financial Forecast, July 2005

With the downfall of some of the biggest investment companies (i.e. Bear Sterns) and departure of dozens of formerly heroic CEOs fresh on my mind – and in the news headlines – only now can I appreciate the boldness of this forecast. It was delivered when the consensus among mainstream investors was that real estate was the ultimate capital-growth investment. Of course, we now know that real estate was peaking at that very moment.

There’s still time for you to read what Elliott Wave International sometimes calls “tomorrow’s news today” right now during their FreeWeek (click here). If time is an issue for you, you can even print out the publications before FreeWeek ends and read them at your leisure.

But, in trademark FreeWeek fashion, EWI has released a special offer that’s only available to those willing to act now. It’s an incredible 58% discount off the individual value of their flagship forecasting and analysis service, the Financial Forecast Service.

Click Here for the Financial Forecasts Exclusive Offer

Friday, June 20, 2008

Free Forex Webinar

Free Forex Webinar June 25

Join trader, author and educator Bo Yoder, author of Optimize Your Trading Edge for an intensive half day strategy development and analysis session. Utilizing the IBFX MT4 Trader program, Mr. Yoder will take attendees step by step through the process of strategy evaluation and optimization. Register now and take advantage of this opportunity to watch and learn how a professional trader goes about developing his edge in the markets!

Forex Topics will include:

Edge Analysis

Position sizing strategies

Advanced entry tactics

Profit cycle analysis

Stop loss placement to optimize risk control

Click here for more forex trading information.

Click here to open a free forex demo account and attend this free forex webinar.

Thursday, June 19, 2008

Forex: "When U.S. Stocks Decline, the Dollar Rallies?"

Is it worth trying to gauge the long-term trend in the U.S. dollar based on the trend in U.S. stocks?

There is a persistent belief among many forex traders that trends in various global markets have a profound influence on the trends in currencies.

The faith in inter-market correlations is strong because of the constant rumination of this idea in the financial press. Hardly a day goes by without somebody saying something like: “Higher oil prices sent the U.S. dollar down today, as rising energy costs are feared to slow down the U.S. economy.” Or, “The dollar gained today as a rally in the Dow restored investor confidence in the strength of the U.S. economy.”

That's not to say that correlations between markets don't exist. They do, but they are always temporary.

Still, at Elliott Wave International's Message Board, readers often ask us to verify them. One question that comes up frequently is this: "When U.S. stocks decline, the U.S. dollar rallies, and vice versa. Is this correct?" When trying to answer a question like that, you could go a couple of routes:

1. You could consider the “fundamentals." Why would the USD rally when U.S. stocks decline? Well, it could be because, “as the money flows out of the stock market, it goes into other dollar-denominated assets – i.e., Treasury bonds.”

2. Or – and this is a simpler way to answer this question – you could look at the chart of the Dollar Index and compare it to that of the DJIA, the U.S. benchmark stock index.

That could be eye-opening, because even a quick comparison proves the presumed negative correlation between U.S. stocks and the USD inconsistent:

US Dollar Index

In 1995-2000, the DJIA rallied. The USD rallied, too. (Positive correlation.)

In 2000-2002, the DJIA lost big – and so did the USD. (Positive correlation.)

In 2003-2004, the DJIA rallied. The USD lost. (Negative correlation.)

In 2005, the DJIA stayed flat. The USD rallied. (No correlation.)

In 2006, the DJIA rallied. The USD lost. (Negative correlation.)

In 2007, the DJIA gained. The USD lost big. (Negative correlation.)

In 2008, so far, the DJIA has been losing. So has the USD. (Positive correlation.)

Bottom line: Trying to gauge the long-term trend in the USD based on the trend in U.S. stocks doesn't yield consistent results.

Click here to View this Urgent (June 18) Video Forecast for the USD posted right now inside EWI's Currency Specialty Service. Editor Jim Martens tells subscribers, "the moment has come for the U.S dollar" to make a strong move.

Good day and good forex trading!

Wednesday, June 18, 2008

Elliott Wave on Crude and the USD

We’re excited to announce that our friends at Elliott Wave International have announced a FreeWeek of Expert Financial Forecasting for U.S. Stocks, Bonds, Gold, Silver and the U.S. Dollar from noon Wednesday, June 18 to noon Wednesday, June 25.

FreeWeek is always exciting, but we’re especially excited to share this one with you, as EWI has opened its new Financial Forecast Service delivery portal to you. The new portal combines all of EWI’s world-class analysis onto one easy-to-navigate webpage. It allows you to toggle between near-, intermediate and long-term forecasts and analysis with ease, including recent archives. And, only during FreeWeek, will you get totally free access with no obligation to buy – ever!

You’ll get analysis and commentary from EWI’s top three analysts, including Robert Prechter himself, who’s latest Elliott Wave Theorist is interestingly titled Stocks and Oil; Barack and Hillary.

In today’s markets, having an independent market forecasting and analysis service on your side is more important now than ever. FreeWeek lets you test drive EWI’s U.S. forecasting service, giving you top-level access and FREE forecasts for U.S. Stocks, Bonds, Gold, Silver and the U.S. Dollar. This is not an opportunity you’ll want to pass up.

Click here to Dive into EWI’s FreeWeek Now!

Good day, good Elliottwave investing and trading!

Tuesday, June 17, 2008

Trading Superconference DVD's

Here's your official notification that we're now taking pre-orders for our Options University 2008 Investing and Trading Superconference DVD's.

There's just one small problem if you want to get your set of the DVD's today. Actually, there are two.

The first "issue" is that we're only producing 100 sets, that's it. Why is that? Well, most DVD duplication houses produce these sets in sets of 100 to get the best pricing.

And since this is a 'pre-release' offer, and we're trying to keep the pricing down as low as possible for you, that's all we're producing at this time. Sure, we'll re-release them later in the year but as you'll see today on the live web page, they will be at a much higher price ($997 to be exact).

But starting today, the first 100 who pre-order their copies will have a chance to get these for 1/2 off, or as low as $497 for the DVD's, and $297 for the CD's (both include seminar binder).

The bad news is, once all 100 sets are sold, they're off the market.

Just ask anyone who tried to order them after our pre-release period last year. Point is, we're not kidding, this may be your only chance to order this year's DVD's at these prices, ever.

Why are we doing this? For two reasons actually.

First, we're limiting the number of DVD's available, because we have a verbal agreement with the speakers not to flood the market with their valued secrets and techniques.

After all, if *everybody* knew about them, they might become less effective.

The second reason is, because we don't want to encourage people NOT to come out to the Superconference in person, which is far more valuable to you as a learning experience.

There simply is NO substitute to coming to the Superconference. But for those of you who couldn't make it, here's your next best option. Ok, I said there were two "issues" facing you if you want these DVD's today.

Here's the second one. At 9:00 am, we sent out a special email to over 100 students who wanted a "head start" on everybody else. They registered ahead of time to get the "first in line" pass.

That number is greater than our planned production run. And now, the DVD's are already over half sold-out.

Update: Only 44 Sets Remaining

So if you want these DVD's, this is not something to "mull over", or think about over the weekend. Now is the time to be decisive, and reserve your set today.

And besides, you have no risk anyway. If you order the DVD's, you can take a full 90 days to watch and learn from them. And after that time, if you don't think the information is at least 10 times more valuable than your '1/2 price' investment, you can simply return them to us, for whatever reason, with no hassles.

Fair enough? Oh, there's one more thing. This email is going out to 67,712 other traders who wished they could have been there at the Superconference -- so I expect to sell out early.

I don't want you going to the website, only to see that big "SOLD OUT" banner at the top of the site! Why not head there now to see if there's still a set of DVD's
with "your name on it"?

Click here to get access to those DVD's.

P.S. Once all 100 DVD sets are gone, they're off the market.

Good day, good investing and trading.

Monday, June 16, 2008

Weekly Stock Pick

Scanned the charts last week, and came up with what looks like a nice, technically speaking, intermediate term long trade on an excellent, and one of my favorite high tech companies since 1989 when I started investing and trading the markets. They are a leader in the digital information storage sector.

I like this company very much because of its big performance in my portfolio in the 1990’s. I do hope it continues to perform long term, but with current market conditions as they are, I might have to get out at whatever profit or stop-loss and look for another re-entry point. I’ll just let the market and the stock price guide me, and be always looking for the low risk high reward technical trade setup on this company or any of the rest.

EMC Corp. Ticker EMC

Trade Setup: Based on price data up to Friday June 13th.

Entry 16.50

Stop - Loss 16.12. Nice and tight. You could allow more stop-loss, 8% or more if you like. All depends how much you’re willing to lose.

Take Profit Areas:

Very Short Term 17.26 – 17.64

Short Term 18.71 – 19.31

Intermediate Term 20.40 – 21.05

Long Term 22.47 – 23.20

Longer Term 25.83 – 26.67

1 Year from now 29.00

Monday’s trade on EMC

Open 16.44, High 16.54, Low 16.24, Close 16.50. Stop-loss price of 16.12 not hit yet.

Repeating Chart Patterns To Profit

It’s funny; the chart setup on EMC right now looks very similar to me as almost the same setup when I first invested in it back in the early 90’s. The price had recently been to about 18, like it was on May 18th last month, then there was a pullback to about 16, like it was on June 12th, then it started back up on its uptrend. I hope it continues, because this company and its story, has the greatest potential to do so.

History repeats itself, and human actions repeat themselves over and over again, and it always shows on the charts. All information of the past, present, and thoughts of the future is what the stock price reveals at any given time. Certain charts patterns offer lesser risk, and bigger rewards than others. Learn, identify, take action on low risk high reward chart trade setups, and you will be investing and trading with as lowest risk and highest reward as possible.

S&P upgrades EMC Corp. to 'A-' from 'BBB+'; Outlook Stable

Standard & Poor's raised EMC Corp.'s corporate credit and senior unsecured ratings to A- from BBB+. "The upgrade reflects consistent profitability in the face of very competitive industry conditions, a more diversified product portfolio following recent acquisitions, and a strong financial profile," said Phil Schrank, an S&P credit analyst. EMC benefits from a leading market position and favorable trends that will continue to support strong demand for data storage, S&P said.

EMC Company Profile

EMC Corporation (EMC) and its subsidiaries develops, delivers and supports the information technology (IT) industry's range of information infrastructure technologies and solutions. EMC's Information Infrastructure business supports customers' information lifecycle management (ILM) strategies and helps them build information infrastructures that store, protect, optimize and leverage their vast and growing quantities of information. EMC's Information Infrastructure business consists of three segments: Information Storage, Content Management and Archiving, and RSA Information Security. In December 2007, the Company acquired Dokumentum Services CIS, a distribution and consulting services provider focused on providing marketing, support and maintenance, consulting, training and localization services related to its Content Management software. In March 2008, the Company completed the acquisition of Document Sciences Corporation and Infra Corporation Pty Limited.

Click here to review and Trial For Free the Trading Software we used in determining our buy long position on EMC.

Good day, good investing and trading!

Thursday, June 12, 2008

Acquire A Career In Mergers

By Investopedia.com

Some of the world's largest companies, and many smaller ones, owe much of their success to the benefits derived from mergers & acquisitions (M&A). The phrase "mergers & acquisitions", refers to a business strategy of purchasing or combining companies to achieve cost savings, expansion, an improved capital structure and other goals. Unfortunately, the mergers and acquisitions landscape is also littered with corporate combinations that fail to thrive due to poor strategic planning, inadequate due diligence and other problems. M&A professionals can help avoid these pitfalls and ensure that the two companies join successfully. Read on to find out if a career in this growing industry may be right for you.

Why Companies Engage In M&A

M&A professionals need to be familiar with several types of transactions. A deal can involve an acquisition, which is a 100% purchase of a target company. A merger is a combination of two companies into a single entity.

A minority or non-control investment typically involves the purchase of less than 50% of a target company, and a joint venture and/or strategic alliance is a collaborated effort between two entities to join together and work on a common initiative.

Companies engage in mergers and acquisitions for a variety of reasons:

Revenue synergies - A target company may offer opportunities for an acquiring company to increase its revenue through access to new customers, an innovative product development team or expanded geographic reach. Diversified product and service lines can also lead to cross-selling opportunities. Companies may also target another company in order to acquire its proprietary technology or superior R&D department.

Cost synergies - By eliminating redundant roles through the newly combined entity, management hopes to reduce operating or capital expenditures. Finance, accounting, legal, procurement and human resources from two entities can be combined to achieve cost savings, while allowing the newly combined entity to retain the best talent. In addition to streamlining initiatives, a larger entity may enjoy more significant discounts from its suppliers.

Capital risk reduction - Companies can be seen as cash flow streams that senior executives can proactively manage in order to reduce the volatility of that cash flow. The market sees reduction in volatility as a reduction in investment-capital risk, and rewards accordingly. Combining two or more companies, and their cash flow streams, may reduce the risk of the overall portfolio company.

Higher valuation multiples- Larger companies are often valued at higher multiples than smaller companies. Generally speaking, larger companies are perceived as less risky because of greater resources and access to capital.

To learn more about M&As, check out The Basics Of Mergers And Acquisitions, Owners Can Be Deal Killers In M&A and M&A Competition Is Cutthroat For Acquirers.

Key Players

Within a company, key players in the M&A process include corporate business development professionals, who serve as in-house mergers and acquisitions champions within a strategic operating company, often with a large corporation. These business development officers, or BDOs, are tasked with growing their companies through acquisitions. Other members of the senior management team play an important role in providing strategic and operational guidance, including the chief executive officer, chief financial officer and chief operating officer. Various transaction personnel, such as lawyers, risk management professionals and accountants provide support to help guide a deal toward a successful conclusion.

As consultants to companies involved in mergers and acquisitions, professionals may work for investment banks, which act as intermediaries and help to broker a deal. They can serve as either a buy-side or sell-side advisor to a proposed acquirer or target company, and may also help in financing a deal. Private equity / buyout firms raise capital from institutions and high net worth individuals for the purpose of buying and running companies. Most buyout firms are small and all levels of the organization are typically involved in specific aspects of the deal-making process. Special purpose acquisition companies (SPACs) are public shells that raise money in the form of stocks and warrants from the general investing public. The monies raised are used for the purposes of acquiring a target company. Finally, a variety of advisors can be involved in a transaction: legal and tax advisors and valuation or appraisal firms offer consulting services in specific areas.

Click here to learn how to have an investment career, job listings, and the licensing requirements of the National Association Securities Dealers to be a registered financial professional.

Wednesday, June 11, 2008

Direction Doesn't Matter with Delta Neutral

Anyone, who knows anything about options trading, knows that to make profits on a consistent basis you have to predict something. The days of arbitrage trading for the public customer are long since gone, and in fact, even market makers and other professionals can't make a business strictly out of finding profitable arbitrage positions. Generally, the predictions fall into one of two categories, making directional predictions or volatility predictions. Either way probably can work, although most of the successful options traders that I know make their trades based on volatility, as do I.

A key component of volatility trading is the concept of "delta neutral." If you've been in this business for any length of time I'm sure you've heard the term, but do you really know what it means and how and when it's used?

Definition: An options position on a particular stock is said to be delta neutral if it consists of various options and possibly stock such that the total of the positive and negative deltas of the options and stock net out to zero, or very close to zero.

The consequence of having a position that is delta neutral is that for small changes in the price of the stock, the total value of the position does not change. Note the emphasis on the word small. In effect, by making a position delta neutral we have eliminated, or at least reduced, the impact of a change in the value of the stock on the value of the position.

Let's look at an example:

XYZ stock is trading at $55 and the Sep 60 Calls @ 3.50 with a delta of 40. The implied volatility of the option is 45 which I think is too low, relative to prior historical and implied volatility levels, and will be increasing. I decide to buy 10 of the Calls, and make the position delta neutral. In that way, I'll be eliminating the impact of any small change in the price of the stock on the position and can focus in on the volatility.

The 10 Calls will have a total delta of 400, so to make the position delta neutral I need to eliminate 400 deltas. One way to do this is to sell short 400 shares of stock. The following table illustrates that for this delta neutral position with the stock at $55, the position is put on for a net credit of $18,500. As you can see, if the price decreases to $54 or increases to $55.50 the value of the position does not change.



Larger changes in the price of the stock will start to have an impact on the position total, because as the price of the stock changes the delta of the option is changing as well. So, for instance, if the price of the stock rose to $60, my theoretical options pricing calculator tells me that the value of the Call will be $6. That means that the Calls would be worth $6,000 and the short shares $-24,000, for a net position value of $-18,000.

What happened here is that the Calls increased in value more than the 40 delta would have indicated. Applying the 40 delta to a $5 increase in the price of the stock (from $55 to $60) we would expect the price of the option to increase from $3.50 to $5.50, but instead it actually went to $6. Why? It's because of the gamma of the option. As the stock is increasing, the delta of the Call option is also increasing. The same situation would happen if the stock went down a considerable amount. The gamma would cause the Call option to lose value.

As far as delta neutral goes, it looks like we have a problem if the stock moves too much. So what can we do? That's easy, we make an adjustment to the position to make it delta neutral again! In this example with the stock at $60 the new delta for the option is 50 or 500 - 400 = 100 for the position. So to stay delta neutral, I can sell another 100 shares of stock. Keep in mind that selling shares is not the only way to neutralize long deltas. I could also buy Puts, or sell other Calls. Analogously, if the position was short deltas, I could neutralize by buying stock, buying Calls, or selling Puts.

In the example, the reason I chose to short stock is because buying or selling stock does not affect any of the Greeks aside from delta. That's right, stock does not have any gamma, vega, theta or rho. If I neutralized the position by buying Puts or selling Calls, it would have changed the characteristics of the position in a way that might not be what I was looking for.

Something else to be aware of is that as time goes by a position will also become less delta neutral. This particular position will retain its neutral status for about 2 weeks before there is a significant change in its delta position. However, other positions may be more sensitive to time. Finally, a change in volatility will also cause a position to lose its neutrality, although again, different positions will be more or less sensitive to a change in volatility.

Either way, it's not a big deal to keep a position delta neutral with the purchase and sale of stock. Of course, an alternative method to using stock would be to use synthetic stock to make the adjustments. Short deltas could be neutralized by buying a Call and selling a Put for each 100 deltas. Long deltas would be neutralized by selling a Call and buying a Put.

The real question is not how to keep a position delta neutral, that's fairly easy, but rather when to make the adjustments. This is where some art gets mixed in with the science. Some traders will make adjustments when the stock moves a certain number of points, or when the deltas exceed some pre-set limit, or at some regular interval of time. The less disciplined trader will just make the adjustments when "it feels right." I don't buy that approach. I believe a plan, even a plan that's not great, is better than no plan. If the plan isn't working it can always be modified.

Going back to the original example, I put the trade on because I thought the current volatility of 45 was too low for this XYZ stock. I was predicting that the volatility would increase at least 20 points to 65 or more. Since the vega for the Calls was 12.50 and I did 10 contracts, I expect to make 12.50 x 10 = $125 on this trade. In reality, I would never put on a position of this size with the expectation of making only $125. After transaction costs, even in a best case scenario, I would end up with very little profit. A more palatable trade might be to buy the Calls and then buy the appropriate number of low volatility Puts to neutralize the position. This will provide me with a delta neutral position, but with more sensitivity to volatility, i.e., a higher vega. Adjustments would be made as needed using synthetic stock. When the volatility reached my target, I would take the position off and enjoy the profit. If the volatility did not change, I would hope to not suffer much of a loss.

For now, I'll mention a few final points regarding delta neutral trading. First, it's not very practical to think that you can get the total deltas to be exactly equal to zero. Some traders only consider a position to be neutral if it has between -99 and 99 deltas. Others may consider a position to be delta neutral if the position has several hundred deltas. It depends on the size of the trade and the amount of directional risk that you're willing to absorb. Second, keep in mind that these numbers are "soft." In other words, the deltas are calculated based on a set of imprecise assumptions and while they're obviously useful, they are a blunt tool and not a precision instrument. Nothing makes me laugh more than seeing screen monitor real estate being wasted by showing deltas (and the other Greeks) to 5 or 6 decimal places. They're just not that precise.

Finally, while delta neutral is a great concept, when stocks are very volatile and moving around a lot, a position doesn't stay neutral for very long. The next step to eliminating the directional component would be to make the position not only delta neutral, but gamma neutral as well! A position like that would be neutral over a wider range of prices and a longer period of time.

Click here to review more information on options trading, live seminars, software, and home study programs.

Good day, and good investing trading Exchange Traded Funds.

Tuesday, June 10, 2008

ETF Qualities Most Admired By Advisors

A recent survey revealed what qualities advisor's relish in exchange traded funds (ETFs) and what they think can improve. There were 840 investment professionals surveyed and asked to rate the importance of different characteristics of ETFs, such as cost, liquidity, and exposure, reports Jesse Emspak for Investor's Business Daily.

State Street Global Advisor's and the Wharton School of Business came to two major conclusions from the survey. The major factors for why advisor's use ETFs are cost and liquidity. The flood of choices and unproven indexes are rated as the biggest setbacks.

Overall, cost was the biggest and most important factor, with liquidity finishing second. Continuous trading came in third, with tax efficiency rated fourth, somewhere in the middle. Shorting was last on the list, with many advisor's not even interested in that aspect. 40% of respondents are planning on using ETFs more in the future.

Click here to review more information on Exchange Traded Funds, and a one of a kind ETF Home Study Course

Good day, and good investing trading Exchange Traded Funds.

Monday, June 09, 2008

Weekly Stock Pick

My scans of the stock charts this week are showing a nice short sell on a famous tennis shoe retailer. It sold off about 5% on Friday after the unemployment rate hit 5.5%, oil spiked back up to $11.00 to end the day at about $138 a barrel, and an analyst at research firm Sterne Agee posted a hold rating on this stock giving it a $12.00 price target.

Short Sell: Foot Locker. Ticker FL

First, my analysis to sell or buy is mostly from the technical perspective as I'm looking for low risk high reward trade setups of at least 3:1 reward risk. Foot Locker is showing about a 3.5:1 reward risk ratio. Now reward risk ratios are subjective also, and my analysis of this could be wrong. Simply put, this business of investing and trading is more an art than a science . . . predicting the future I mean. I do look at the forward fundamentals of the general market, and the companies in considering my buy and sell positions. Since I use stop-loss, and stick to my stop-loss rules, whether I'm right or wrong, I've got a long term winning system. So when the market proves me wrong, just like the market proves anyone wrong, I take the small loss and move on to the next investing and trading idea. I hope you are using stop-loss too. Live to invest and trade another day right? Right!

FL Short Sell Trade Setup

Sell at current price of $13.74 or higher up to 15.08.

Stop-Loss 8% or any amount you can handle losing.

Take Profit Areas

Short Term $12.40

5/22/08 saw a low of $11.84, and 5/23/08 saw a gap up opening at $12.81 on bigger than normal volume with a close at $13.54. I’m betting these fresh longs will be tested along with a price of $12 or so anytime now.

Intermediate Term $11.06 to $9.72

Long Term $9.01 to $8.20

Longer Term $6.64 to $7.30 if things get and continue to stay ugly for Foot Locker

Depending upon which ratings service you’re using, Foot Locker has a PE of 42 to 59. With the economy in trouble, would you be buying $100.00 plus tennis shoes or paying off overdue bills?

The longer term scenario could play out, if Foot Locker doesn't unload its overloaded inventory, close some stores, and their earnings next quarter come in lower. I've heard comments of a Foot Locker stock price lower than 6 dollars a share if they don't get it together soon enough. What are you buying this year? Tennis shoes or technology gadgets? Tennis shoes look cool, and feel good, but many tech gadgets can help you be more productive. I would say at least this year, vanity will take second seat to tech. My recent long position in AMD is proving that to be right so far.

Foot Locker Competition

Competitors to Foot Locker are Finish Line, and Wal-Mart. I'm betting Wal-Mart fairs the best of those stores selling tennis shoes with their discount pricing and exponential market reach over Foot Locker.

Foot Locker Company Profile

Foot Locker, Inc. is a global retailer of athletic footwear and apparel, operated 3,785 primarily mall-based stores in the United States, Canada, Europe, Australia, and New Zealand as of February 2, 2008. The Company, through its subsidiaries, operates in two segments: Athletic Stores and Direct-to-Customers. The Athletic Stores segment is an athletic footwear and apparel retailer, whose formats include Foot Locker, Lady Foot Locker, Kids Foot Locker, Champs Sports and Footaction. The Direct-to-Customers segment reflects Footlocker.com, Inc., which sells, through its affiliates, including Eastbay, Inc., to customers through catalogs and Internet Websites. The Foot Locker brand is the Company’s principal brand.

Click here to review and Trial the Trading Software I used in determining my short sell position on FL.

Good day, good investing and trading!

Thursday, June 05, 2008

How To Use ETFs In Your Portfolio

By Investopedia.com

Exchange-traded funds (ETFs) are an investing innovation that combines the best features of index mutual funds with the trading flexibility of individual securities. ETFs offer diversification, low expense ratios and tax efficiency in a flexible investment that can be adapted to suit a multitude of objectives. (To learn more about the features and benefits that ETFs offer, see Advantages of Exchange-Traded Funds.) To reap the true benefit of investing in ETFs you need to use them strategically.

At the most basic level, ETFs can be used as part of both long-term and short-term investment strategies. Their low expense ratios and high trading flexibility make them attractive alternatives to traditional mutual funds.

Index Investing

From a strategic standpoint, the first and most obvious use of ETFs is as a tool to invest in broad-market indexes. On the equity side, there are ETFs that mirror the S&P 500, the Nasdaq 100, the Dow Industrials and just about every other major market index. On the fixed-income front, there are ETFs that track a variety of long-term and short-term bond indexes including the Lehman 1-to-3 Year Treasury, the Lehman 20-Year Treasury and the Lehman Aggregate Bond Index. (Again, if you are not familiar with the broad range of market index coverage that ETFs offer, see Advantages of Exchange-Traded Funds for more information.)

Using ETFs to cover the major market sectors, you can quickly and easily assemble a low-cost, broadly diversified index portfolio. With just two or three ETFs, you can create a portfolio that covers nearly the entire equity market and a large portion of the fixed-income market. Once the trades are complete, you can simply stick to a buy-and-hold strategy as you would with any other index product, and your portfolio will move in tandem with its benchmark.

Actively Managing a Longer-Term Portfolio

In a similar fashion, you can create a broadly diversified portfolio but choose a more active-management strategy instead of simply buying and holding to track the major indexes (which is passive management). While the ETFs themselves are index funds (meaning there is no active management on the part of the money manager overseeing the portfolio), this doesn't stop investors from actively managing their holdings. For example, say you believe that short-term bonds are set for a meteoric rise; you could sell your position(s) in the broader bond market and instead buy an ETF that specializes in short-term issues. (You could do the same for your expectations for equities.)

Of course, the major market indexes represent only a portion of the many investment opportunities that ETFs provide. If your core portfolio is already in place, you can augment your core holdings with more specialized ETFs, which provide entry into a wide array of small-cap, sector, commodity, international, emerging-market and other investing opportunities. There are ETFs that track indexes in just about every area, including biotechnology, healthcare, REITs, gold, Japan, Spain and more. (For more information about the many varieties of ETFs, read Introduction to Exchange-Traded Funds.) By adding small positions in these niche holdings to your asset allocation, you add a more aggressive supplement to your portfolio. Once again, you can buy and hold to create a long-term portfolio, but you can use more active trading techniques too. For example, if you think REITS are poised to take a tumble and gold is set to rise, you can trade out of your REIT position and into gold in a matter of moments at any time during the trading day.

Active Trading

If actively managing a long-term portfolio isn't spicy enough for your tastes, ETFs may still be the right flavor for your palette. While long-term investors might eschew active- and day-trading strategies, ETFs are the perfect vehicle if you are looking for a way to move frequently into and out of an entire market or a particular market niche. Since ETFs trade intraday, like stocks or bonds, they can be bought and sold rapidly in response to market movements, and unlike many mutual funds, ETFs impose no penalties when you sell them without holding them for a set period of time.

While it is true that you must pay a commission each time you trade ETFs, if you are aware of this cost and the dollar value of your trade is high enough, the commission cost is nominal. Consider, for example, a $10 commission on a $10,000 trade. At .1%, the cost is hardly worth mentioning.

Also, since they trade intraday, ETFs can be bought long or sold short, used in hedge strategies and bought on margin. If you can think of a strategy that can be implemented with a stock or bond, that strategy can be applied with an ETF - but instead of trading the stock or bond issued by a single company, you are trading an entire market or market segment.

Wrap Investing

For investors who prefer fee-based investments as opposed to commission-based trading, ETFs are also part of various wrap programs. While ETF wrap products are still in their infancy, it's a safe bet that more are coming soon.

Conclusion

Overall, ETFs are convenient, cost efficient, tax efficient and flexible. They are easy to understand and easy to use, and they are gaining in popularity at such a rapid pace that some experts anticipate that they will one day surpass the popularity of mutual funds. If ETFs haven't found a place in your portfolio yet, there is a pretty good chance that they will in the future.

Click here to review more information on Exchange Traded Funds, and the ETF Home Study Course.

Good day, and good investing trading ETF's for lower risk and higher returns.

Tuesday, June 03, 2008

Investors Superconference Sold Out

This will be just a short post to let you know the Options University 2008 Online Investing and Trading SuperConference in Orlando Florida June 5 to 8, is officially SOLD OUT.

Our many thanks to all who had a part in making this very special event possible. It takes a tremendous amount of time, effort, and coordination it takes to pull off an event like this.

For everybody registered to come, Now -- the FUN begins!

The Superconference kicks off Wednesday evening with a special reception with George Ross. TV's co-star of The Apprentice and VP of the Trump Organization.

Gold and Platinum members, be sure to meet with us from 7:00 - 9:00 PM for this unique kickoff event where Mr. Ross will be doing a book signing of his new Amazon best-seller 'Trump Style Negotiation'.

Have a cocktail with George, while getting some insights and insider stories from Donald Trump's right-hand man", and one of the world's top negotiators.

Followed by an opening session Thursday morning with Dr. Alexander Elder, author of 'Trading for a living' who will be talking about how to best mentally prepare for full time trading, including trading your retirement account.

Now, there's a small chance we'll have a few "last minute"openings due to cancellations. Click here to be put on the waiting list.

But we can't promise that we'll have any space available for you inevitible last minute decision makers that try to sneak in during the final hours every year.

To all of you heading to Orlando this Wednesday -- I hope you are as excited about this conference as we are! It will truly be an experience you'll remember -- and be able to profit from -- for the rest of your trading life.

After all -- it only takes one idea -- one new investing or trading strategy, technique, or "twist" on what you may already know -- to profoundly change your life for the better.

That all starts this Wednesday night. We'll see (some of you) in Orlando! Trade Smart. Not Often.

P.S. You may still have one last chance to attend this year's Superconference. We usually have one or two last-minute cancellations due to illness, work conflict, etc.

To be considered immediately to fill those cancellations, or to be put on the Priority Waiting List, simply click here.

Monday, June 02, 2008

Weekly Stock Pick

Another week and another scan of the stock charts. My analysis this week has given me a buying opportunity in a market of not so many good long choices currently, and many short sell candidates in my opinion.

I always love a challenge, and when I can find a possible contrarian investment to what the general market is doing, I get interested. If I’m right, I can be right in a big way if the rest of the market has not seen what I have yet, and I’m positioned first before the crowd comes rushing in.

This stock only has an 18% institutional ownership currently. It’s also a small cap, so be careful, don’t put your entire account equity in this stock just in case the price tanks after you get into it. On the other hand, this company has the potential to grow big and fast being this small at a $65M market cap.

Starlims Technologies. Ticker LIMS. Buy Long

LIMS Trade Setup

Buy entry at current price of $7.50 or pullbacks to $7.07

Stop-Loss $7.05

Take Profit Areas:

Short Term $8.71 to $8.96.

Intermediate Term: $10.10 to $10.38

Long Term: $11.62 to $11.94

Starlims Technologies Company Profile

Starlims Technologies Ltd. is a provider of laboratory information management systems (LIMS). The Company develops, markets and sells configurable off-the-shelf LIMS software solutions trade-named Starlims. Starlims manages the collection, processing, storage, retrieval and analysis of information generated in laboratories. Starlims Technologies’ software seeks to improve the reliability of sampling processes, supports compliance with domestic and international regulations and industry standards, provides reporting, monitoring and analysis capabilities, and enables its customers to manage their laboratories. The Company’s Starlims software is used by more than 500 laboratories in over 40 countries around the world.

Starlims 1st Quarter 2008 Earnings Report

Total revenue for the first quarter of 2008 was $7.0 million, up 28.9% from $5.4 million reported in the first quarter of 2007. Product revenues were $4.7 million, up 36.8% from $3.4 million reported in the same period a year ago. Services revenues were $2.3 million, up 15.4% from $2.0 million reported in the same period a year ago.

With their PE at a reasonable 13, I see Starlims with very good growth potential going forward.

Starlims Stock Repurchase Program

Starlims purchased an aggregate of 90,727 common shares in the first quarter of 2008 for $681,000 or an average price of $7.54. The company approved the stock repurchase program on February 13, 2008, and enables STARLIMS to purchase an aggregate of $2 million of the Company's common stock over a period of 18 months. At March 31, 2008, the Company had approximately $1.3 million remaining on its stock repurchase program.

Starlims Forward Earnings Guidance

Starlims is reiterating its financial guidance for fiscal year 2008 that was provided on February 14, 2008. Management continues to expect total revenues of $27 to $29 million and GAAP EPS of $0.55 to $0.70, which includes approximately $0.05 of stock-based compensation expenses, amortization of intangibles related to acquisitions and other non-recurring expenses. The guidance assumes an annual tax rate of approximately 15% and estimated weighted average shares outstanding of 8.9 million during 2008.

Click here to review and Trial the Trading Software we used in determining our long position on LIMS.

Good day, good investing and trading!