Money Talks, BS Walks

With the demise of the junior stock markets this past year,there is one thing very evident and that is 70% of the Venture Exchange now have a very rough time raising money in this new era of no more easy credit, if being able to raise even a nickel.

On one hand this makes it somewhat easier for the junior stock picker to narrow
down their choices. But on the other hand,there are still many companies who are still out there pumping their dead as door nails plays who have already blown their brains out with the easy cash. Their only hope is to lower their warrant prices and hope they suck in enough sheep to keep the lights on. Don't be one of those sheep.

This brings us back to the types of companies you want to hunt for and that is :

1. Up and coming companies with really good projects that have the potential to attract the big money.

2. Companies with the quality management who have the ability/connections to actually raise the money.

3. Companies that have viable projects that will attract new shareholders after the financings.

4. Finding these companies before they raise the big cash.

5. Try to find companies with low share floats,anything under 20 million shares is my usual target for a new company. I will buy into high share float plays if they have something very good, but only for a brief trade with a very low expectation on price gain.


Small financings are the norm in the beginning when they need to raise a million or less to get some early exploration or basic business accomplished. If you miss the first leg up from say 15 cents to 25 -30 cents you haven't necessarily missed the boat. This is because if you really believe you have found what I call "the real deal",then the next step will be for the company to show their hand and try to do a much larger financing at much higher prices in order for the company to reduce share dilution. As well, bigger money attracts the bigger interest from their big money contacts that can really move a stock price if your stock pick has the goods.


As I stated before,these tips most experienced players already know,but are posted for those who are new to the junior game or still haven't quite have it figured out. The less time you spend in the school of hard knocks the better.

Swimming With The Sharks

As promised, I wanted to touch base on the real sharks you have to watch out for in the junior stock game...they are normally referred to as "The Promoters". These investor relations guys have a job to do and that is bring in new shareholders and pump a stock's great points and gloss over the not so great. There are different levels of trust developed depending on what level of junior company you are thinking of investing in which naturally reflect back to my previous post about the "quality of the management ". A good company brings in good guys to represent them.

Some are very experienced guys who have come from bigger successful companies and bring a wealth of market/sector knowledge and maybe have some decent education in the form of sales and communications. These guys can be a huge wealth of info if you are thinking you may have found a real gem of a new junior company. The more you can learn on the inner workings of the company the better your odds.

But there is another couple of groups you have to be the most wary of. One is the young and inexperienced,where you are liable to get little value from as they read from a script. They are also known to chow down on a burger while they try to impress you or they sound very disinterested in even talking with you and have better things to do and offer up almost no info you couldn't get off the website. Believe me,it's happened. I always believe in giving a young buck a chance but many a query has left me less than satisfied.

The other group is the seasoned junior company types who never made the grade to Bay St. and have bounced around the junior resource stocks awhile with a track record of loser/delisted companies. There are some I am sure who love this style of promoter work because the blue chip stocks just isn't there style, but it is usually about the exorbitant amount of money they can make on their cheap options and you will help their cause.

I've met all types over the years, some good,some very good, and some rotten to the core SOB's. The bottom line is they want your money, but usually at certain times of the company's business cycle. One is for private placements, and the other is when they want the share price up to sell out older warrants from previous PP's that will give the company money in the till. They will usually release some enticing news around this time too.


Always ask yourself, "why is he calling me and I have never met him ?" Because somewhere, someone in another company got your name off a list referred to as a "suckers list" that they are known to share amongst each other. Not many times have I had a call from any IR guy just to update me on things, there is always a reason no matter how well you think you know them.

Maybe there is a large shareholder who wants out and they are looking for some buyers,maybe they want the price up so insiders can sell to raise more money cheaper. Most are legitimate business reasons but not always in "your" favor and some can be downright shady. Prices can easily slide back after the price push so you must be on the ball at all times to not buy at the top of one of these stock pumps.

Sounds like almost a real job to dig for this info ? It can be at times, but this is why I am trying to help you cut some corners and save yourself some grief and lost cash and to help you buy when it's undervalued and your risk is low, that is when you make the serious coin.

So next time the phone rings from company ABC,or when you call them seeking some info, dig deep on your due diligence and see where the company is financially, that is the key with these junior plays and will save you much money, especially when "the story" sounds to good to be true.

Next time I will talk about the mining game as some serious money can be made if you know what to watch out for.

Later !

Where to Now ?

The DOW pulls off another comeback after being down 90 points and finishes up 37 even after a FDIC report stating over 400 banks in the US are sucking bigtime. But when you see how much room they have to borrow from the treasury department it looks like as bad as things appear,there will always be bailout money for personal cash accounts.

One point just mentioned on CNBC is that during the 1993 S&L Crisis, there was over 4000 banks in serious trouble and when all was said and done in the end there were over 1500 banks that bit the dust so this meauring stick is meaningful to keep in mind here as the doom and gloomers keep ratcheting up the "end of time/armegeddon" scenario.

The next question is where to now ? Do we correct next week or the week after Labor Day or do the big money players coming back HAVE to buy in or risk missing out any last gasp at a temporary top ?

It is a very reasonable possibility that we break 10,000 on the DOW then some profit taking later in the month. Greed rules and the pigs at the trough will always want theirs even if they missed most of the summer rally.

One area I am keeping a close eye on is gold. As you know I am no gold nut, but a TA guy, and something is going to happen here one way or the other with the US dollar. As I have always maintained, if it breaks $1000, I'll be in there like a dirty shirt as risk is clearly back in vogue and the right juniors and some good call options could make for a nice September.

New Pick

If any of you bothered to scan back through my old posts you may have come across a couple of picks of mine I really like but are stuck in two different situations. One is V.EMG - Emergeo Solutions, a Vancouver tech company that may be on the cusp of some nice contracts and the second one, V.SPW.P which is a capital pool company that is currently halted the last few months while they complete their oil deal in Thailand.

EMG is just a matter of patience and understanding of how long it takes in this new business environment to close a deal and SPW is a matter of completing long winded paperwork and raise some cash. I hope to see it trading by end of September and will be one to watch with the huge success of other companies drilling for oil in Thailand where Shell paved the way.

My new pick is V.COO.P, Colonnade Capital, a capital pool company I have been sitting on a while now, but surprised me today with a press release that they are now focussing on lithium properties and one in particular in Nevada that a private company has the 100% rights to , and that is only 12 miles from the lone lithium processing plant in North America.

One note of caution: the deal is not set in stone but COO has the ROFR (right of first refusal) so I would hazard a guess by the trading action the last few days that it may well be, but nothing is for sure til it's official. It traded up to 50 cents today before pulling back to a 40 cent close so I would watch the trading patterns close before leaping in. Check out the press release for Colonnade Capital on Google or any other stock site and it should show up.

I really like the management here and they only have about 4.5 million shares out, so you have to assume a tight insider holding and not much liquidity but the market depth looks pretty decent the past couple of days considering the low float.

As I have stated before, I take no responsibility for any losses, I am not an adviser....but if you make some bucks, I'll take some kudos. ;)

Feel free to post your picks too, the more the merrier.

Good luck !

Lithium - The Next Wave ?

A prominent theme on the TSX Exchanges that last few weeks is a sudden interest in all penny stocks with the word "lithium", attached to them. Canada Lithium, Western Lithium and Lithium One are a few that come to mind but that I am not invested in. Some easy doubles there if you caught the first wave.

Why lithium ? There is tons of it around the world, but less that is economic and even less that is not able to be processed through a procedure known as "brine roll out" which is much more cost effective than typical hard rock mining. The other part of the equation is some deposits discovered contain high levels of manganese which is a viable product, but increases production costs. As you are mostly aware we need lithium for not only cell phones and lap top batteries but for of course,the electric car.

In the next 5-10 years there will be a serious demand for this mineral like never before, a five fold increase according to Mitsibushi. Chile, Argentina as well as the Chinese and the Russians have a shit load of this stuff, but the clincher is Obama's desire for America to be self sufficient and not be at the mercy of the foreigners, just as he is with oil dependency. Also Obama just put out $2.5 Billion for grants on improving on the lithium battery efficiency and new developments.

When you consider there is only one lithium mine in all of North America down in Nevada, then a large ramp up in new exploration plays in Canada and the US looking for the next economic deposit will make for some serious cash generating opportunity. I will be keeping an eye out for the undiscovered lithium gems the market is sure to invest in. But as in most gold rush type plays, the trick will be seperating the men from the boys. More in another post on that subject. Stay tuned !

Bulls 4 Herd1

Well whoever made that VIX bet last week just had their ass handed to them on a platter. The bulls continued to claw back from Mondays down day and keep the streak alive with year high closings including oil. Overbought or not, there is power in this buying and any corrections will have to be horrendous news to create any drastic change in trend.

Obama's after market anounncement of another $2 trillion to the defecit is really no surprise when considering we have almost become immune to these surprises. The question is wether the markets will do much more than a couple of days swoon over this announcement before reloading and push higher as long as numbers like this morning's existing house numbers and more Bernake statements telling us all is just jim dandy again.


And that folks is what will keep the market moving in the short term, the TA chart showed enough pressure relieved on the indicators to keep the black boxes in hyper mode. This could well break DOW 10,000 in the next week and blow all the bears to bits. I never trust history when dealing with the markets, just when you think you got a lock on the picture, you are left in the dust.


Gold had a nice pop today when the pros seemed to making calls of some retracement to the $910 mark. I will be checking my charts closer over the weekend but that may well be a bullish reversal we saw this week.

Happy Friday !

Decisions Decisions

As mentioned before, I plan to begin popping out a couple of junior stock picks of mine over the next few weeks. But first, for those who are new to the juniors but want to learn,then listen up, but for the pros they will want to skip.
I want to discuss the subject of the high risk hazards and murky waters of the junior stock penny game and how the crucial decisions you make after doing your due diligence can effect your success rate.

Lots of cash can be made from these stocks if you understand the game and how it differs from the blue chips and the mid caps stocks while following a set of rules that will reduce your chance that you will lose ,let alone get outright burnt by unscrupulous companies. I'll be the first to admit to going to the school of hard knocks to learn these valuable lessons over the years, but my success rate has been much better the last several years because I started to follow a system check list that helps me avoid what I call the "shady money".

One reason I like Stockwatch.com is not only the market depth action and news updates, but I can research anyone in the company going back to 1990. That alone is worth it's weight in gold. When finding a stock you like, the first thing you have to do is go to the "Company" section and see what I refer to is "the cast of characters", AKA "the management". These people will 90% of the time determine your odds even if the "story" sounds so enticing. Once you see the difference on who these people are and who they have been with before, you have a massive insight into their success rate.

You also have to use the yearly business cycles of whatever the sector is to determine whether it is a good time to buy in or not. Is it the spring sell off ? Is it the summer doldrums when most juniors have a hard time promoting ? or is it coming into the best time of the year when the junior resource stocks who actually have real deal/new property/ successful summer drilling results ?

The fall is that ripe time for them to raise money and promote the crap out of their company to attract larger shareholders who may participate in the private placements. This is where it gets dicey separating the wheat from the chaff and having some real DD skills and using charts all comes into play in a major way.

I will delve more into this over the coming weeks but when I find management with successful backgrounds starting up a junior, I am all ears. But there are other sharks in the ocean you must avoid too that will chomp your ass when given the chance.


Til next time !

Oil Wrestling

It was all about oil today as the inventories shocked by an 8 million barrel shortfall versus a prediction of a million barrel surplus. Lots can be said about this oil stock offshore sitting on ships but the end result was oil prices soared a few bucks and the markets roared back from a negative 80 odd point open to a day high 80 odd point peak to close up 60. As I said in my last post, do not underestimate the bulls to kick in bigtime when you least expect it.

Looking at the chart, the SPY has blown off quite abit of the overbought signals and may be able to keep the market in a range trade. A 9000 DOW has to be the psychological support number at play here so any floating around 9100 - 9400 til weeks end will be expected depending on jobs claims numbers out tomorrow and option expiration Friday.

Herd 1 Bulls O

The herd had their way today from the get go and barely let the bulls up for a gasp or two. Lots of negative stuff flowing out there that two weeks back was on the back page. Those cheerleaders that the recession is over got a wake up call today with nary a victim left unscathed. A few consumers stocks and some other defensive plays got spared but mostly weakness across the board.

Is this the beginning of something bigger or a short term correction in a range trade ? We should know this by midweek as traders analyze the support/trend lines and the black boxes calculate their logarithms.


You know we were due for some sort of downside move but with a ton of cash on the sidelines still I won't underestimate the bulls to pump it back up if given some positive housing and PPI numbers in the morning.

The DOW futures are up tonite and Asian markets all slightly in the red but not down big like I expected. Should be an interesting and volatile week with it being option expiration week which always makes for some fireworks.

Herd Think

Something to think about at these crucial junctions in the markets is the "herd think" and which way they are leaning. One of the most important market sentiment indicators as most of you know is the VIX index AKA the Volatility Index. Currently we are sitting at the lows of the year going back to last fall. Trying to guess where the pros and institutions are placing their bets gives you a good idea what "may" be coming down the pipe.

According to Bernie Schaeffer of Schaeffer's Investment Research, the large options players have massive bets on the markets moving to the downside in a big way just as they did last year at this time and they made a killing. But are they right this time ?

Seems the consensus back a month ago was that this earnings season was going to be disastrous and look what happened. The options shorts got killed and stock shorters had to cover like madmen which only added fuel to the first legs of this most recent rally.

But what happens if they are wrong this September ? As I posted back a few months ago, the "Sell in May" theory didn't work back coming out of the 2002 recession and we saw some phenomenal stock price runs the past 2 months.

The key point to Schaeffer's article is that the big money is overpaying relative to past S&P500 volatility history.

His closing comments sum it all up :

In addition to the "group think" issue, there is also the fact that recent realized volatility is very much supportive of current VIX levels. The 20-day historical volatility of the SPX is currently a shade below 20% compared to a VIX of about 25. I appreciate the fact that a low VIX can also serve to dampen realized volatility, but the fact is that options traders buying SPX puts (and calls) at current "low" levels are actually overpaying relative to recent historical volatility.

The "inevitability of a higher VIX" argument is a very seductive one, and it is supported by some compelling data as suggested above. But – perhaps to the surprise of some of the confident VIX bulls -- predicting the course of future volatility is a very tough game. And I would strongly suggest that you remain open to the possibility that we have not seen the lows in the VIX, and further that it should not be a total shock if we saw a VIX in the teens before it ultimately bottomed and volatility became a "buy" again."



As I always do, check out both sides of the coin no matter how tempting the "herd think" is.

Dog Days of Summer

Once again it's been awhile between updates so no better time then now to start thinking about a plan of attack heading into the fall while the lazy days of August slowly fade.

We are all well aware of what the DOW has been doing, and myself along with many others wondering when is this summer rally going to correct ? Looks like we have some cracks starting to show but we will have to see what September brings us as history shows we have a 50/50 chance of a sell off. The markets have risen on what is considered low volume so it will exciting to see which way the pros think it should go when they are all back from vacation.

I am compiling a short list of potential winners over the coming weeks so stay tuned. Remember these are all super high risk stocks and I accept no responsibility for anyones losses. I am here for fun and if we make money then the more the better.

Time for a Corona cause it's Friday in August.

See ya soon !