Dow Jones 10655.17 +24.39 10:13 am PST, January 5, 2005  NASDAQ 2100.60 -7.26 For info, visit access.smallcapnetwork.com S & P 500 1189.36 +1.31 Change your subscription status here Russell 2000 618.39 -10.15 VOLUME 05: ISSUE 1  Feature: A Happy New Year, for Isonics, Spectrum. Already. I don't actually subscribe to the theory that as the first week of January goes, so goes the year. But, for a couple of names in our stable, the first week of 2005 may indeed evidence some bon temps ahead. As I have mentioned previously on the SCBLOG, hi-tech and biotech concern Isonics (NASDAQ: ISON) continues to be a traders' dream. In the first half hour, Wednesday, the stock had traded over 10 million shares and strapped on over $1 in value to swap hands at around $6 after moving under $5, Tuesday. This morning, the company announced that it had delivered a rare cancer-fighting isotope to the National Cancer Institute. The details are here: http://biz.yahoo.com/bw/050105/55346_1.html. On October 12th, we issued a Profit Alert on the shares at around $3, at which time we suggested a partial sale to lower your cost base. I see no reason to change that approach now that the shares are flirting with $6, since we brought the shares to you originally at $1.42. We stick to our previous rationale that the shares need to breach $6.50 decisively to evidence a renewed run to the upside. Long-term Isonics exposure is still warranted, and for those with an itchy trade finger, the shares have been a stellar performer. We imagine that substantive news will continue, but as with any small cap that trades this much volume, the swings and roundabouts can be--and have been-- dramatic.  The company has a hand in some very interesting pies including biotech, semiconductors and bomb detection technology--all of which are state of the art and have obviously caught the attention of investors. The degree with which one trades any stock is purely personal. Isonics has, so far, been a great long-term play--albeit volatile--and the company seems to have developed a product mix that appeals to investors. The long-term prospects are compelling, and we would suggest a holding in the speculative end of a portfolio with an eye to reducing risk with some strategic sales. It's apparent that dips frequently appear to allow for replacement of those shares sold higher. Traders need to be on their toes with this one. Speaking of volatile... Spectrum Sciences (OTCBB: SPSC) has also seen some decent trade action recently. Shares have broken through their 200 DMA (day moving average), which is kind of neat for those technos out there. Traders who bought shares cheaper might want to take advantage of the move if they stepped in at lower prices. We'd like to see the old high of $1.69 taken out to evidence more upside. The shares were lackluster in the last quarter of 2004, roiling down to nearly $1 a share. The shares idled in a broad trading range of between $1 and $1.50. Wednesday morning, Spectrum announced that it had signed a Letter of Intent to acquire Canadian steel fabricator M&M Engineering. The company supplies product to the industrial and offshore energy sectors. Already dealing with several Fortune 100 companies, M&M will benefit from Spectrum's strong balance sheet to acquire larger contracts. Read the full release here: http://biz.yahoo.com/bw/050105/55143_1.html.  Once the deal consummates, Spectrum will spend some of its lovely cash mountain--$6.2 million-- to acquire the company. M&M posted revenues of $27.5 million for fiscal 2004. For Spectrum, the deal expands both its influence and further diversifies its product mix. The deal is expected, subject to conditions, to close in late January. Shareholders have been waiting to see what SPSC would do with its cash and this deal seems a good strategic addition to help drive the company forward. Spectrum, prior to this announcement, had $27 million in cash and minimal --$1.7 million--debt, which is secured by assets. Depending on when one got involved with Spectrum, it's either been great, or one of the most challenging of smallcaps for investors. While no one ever said the smallcap market was easy, more developments like this deal should drive Spectrum forward, both in revenues, profits and ultimately enhanced shareholder value. NASD'y Picture Hard to get a handle after two days of trading, but our feeling is that the chart below evidences that the NASDAQ COMP is in a profit taking mode which could see a 50 percent retracement of the Oct-Nov 2004 rally which pulled it up to nearly 2200 by December. Best to keep an eye on it, although the trading tenor of the market looks decent. The Index is currently sitting right above its 50 DMA.     We Value Your Feedback Got comments, questions or suggestions? 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