Dow Jones 0.00 +0.00 4:16 pm PST, February 15, 2007 NASDAQ 2497.10 +8.72 For info, visit access.smallcapnetwork.com S & P 500 0.00 +0.00 Change your subscription status here Russell 2000 815.43 +1.44 VOLUME 07: ISSUE 18 How to Catch a Falling Knife - Buying Stocks on a Dip "I can remember it like it was yesterday....watching Commerce Planet's (OTCBB: CPNE) stock launch like a rocket, wishing I was along for the ride, but also convinced it couldn't go any higher. If it did, I lamented. If it instead pulled back, I congratulated myself for not getting sucked in.....only to kick myself later when it moved on to even higher highs! 'Oh geez' I thought' to myself, 'why didn't I buy on the dip? Why!?' If only I had, I could be looking at a triple-digit winner."  Sound familiar? We've all been there.  Commerce Planet was one of our biggest recent winners, moving from our pick price of 19 cents to our target level of $1.95 in less than a year - a gain of 926%. But did you know we saw six key dips along the way, each of which could have been a nice chance to jump into at least a small segment of the uptrend?  True, fishing for a bottom is kinda' like catching a falling knife...tricky to say the least. But, the more you do it, the better you become at picking entry and re-entry points.  As a chance to exercise your 'pick your spot' trading muscles, we've got a couple of recently-sagging stocks we feel could be opening up some nice re-entry windows of their own.    Ground Rules We've all probably heard the proverb "If you give a man a fish he'll eat for a day, but if you teach a man to fish he'll eat for a lifetime." My use of the philosophy is probably a little more esoteric than it needs to be, but this is actually a discussion the good people here at the Small Cap Network Newsletter have on an ongoing basis...do we serve it up to our readers on a silver platter, or teach them everything we can about how to trade well on their own?  Color me indecisive, but I say we do both. So, before we tell you which stock dips look attractive to us, here's a handful of minimum criteria we think you may want to keep in mind when bargain shopping.  1) For the 'buy on the dip' strategy to work, we think there has to be some sort of prior uptrend in place. There may be a few exceptions to the rule, but let's face it - a dip implies a pullback from what was previously an uptrend. In general, we just like to see a chart on top of its moving averages lines, or tracing a rising support line. (It really can be as simple as looking at a chart and eye-balling it.)  2) The more often you see the ebb-and-flow pattern in the past, the more likely you are to see it in the future. If a chart has recovered from pullbacks recently, we think the odds of getting a repeat performance are good.  3) Volume can frequently confirm any suspicions. Is the runup on rising volume, and the selloff on tapering volume? Then the weakness is possibly just some profit-taking...and may end soon. A light volume rally but a heavy-volume dip? Look out - there could be more downside in store.  OK, now armed with at least a few pieces of the puzzle, let's get to today's stocks.    Two For The Show I'll be the first to say, even the best knife catchers can get cut every now and then. So, don't think just because we see a short-term bottom in place that each of these names is absolutely poised for a pop. We certainly think the odds are in favor of it, but a safety net - aka stop loss - has saved many a trader from trouble.  Anyway...  Clearly Canadian (OTCBB: CCBEF) - This might be one of our best dipping-stock samples we're watching right now. Since November, and really since September, we've seen CCBEF shares make swings big enough to make Davy Jones seasick (the sailor/pirate, not one of the Monkees). But, a closer look reveals a pretty reliable pattern to us, fulfilling our second rule on how to buy dips.  For Clearly, the stochastics indicator has been making the tops and bottoms relatively easy to spot. Any stochastic reading over 80 is technically 'overbought', and a pullback is nigh. Any reading under 20 is 'oversold', and a rebound is probably looming. While the precision and consistency with which the stochastic lines have worked recently is much better than usual, the point is still the same - the pattern seems to be in place, and we're thinking it could remain in place going forward. Ergo (what a word!), we expect the bulls to really start applying pressure.  There's something else that popped up on the Clearly Canadian chart though. If you've been reading our newsletter long enough, you'll know we're also fans of Fibonacci retracement levels. Don't ask me how or why they can spot tops and bottoms as well as they do, because I don't know - maybe some NASA computer figured them out. I do know that I've seen them be a factor too often to just be a coincidence. In any case, we saw a near-perfect 38.2% Fib retracement from the recent peak of $3.05 (see the chart) to yesterday's low of $2.70, and then look what happened...we started to move higher again today.  Challenger Powerboats (OTCBB: CPWB) - We love big gains for sure, but Challenger ran up 159% over twelve trading days - whoa. Well, as we saw yesterday, those big gains were just too juicy for a few folks to sit on. CPWB came back from a close of 11.4 cents on Tuesday to a close of 9.5 cents on Wednesday. To be honest, in a way we're glad it happened. We'd equate it to letting some air out of an over-inflated tire before it burst - we think CPWB shares have settled in, and any hyper-short-term activity is in the past.  But here's the part we like...remember rule #3? Volume can often confirm suspicions. Throwing out the initial burst from late January, what do you see happening on the volume portion of the chart as we've traded into February? For the most part, the bullish volume has been increasing. Better still, yesterday's substantial dip was on relatively light volume. So, the pullback from that day doesn't necessarily reflect the majority opinion. Though down even a little more on Thursday, there was practically no volume behind the selling. In simpler terms, more investors stayed in than got out. What does that tell you? Oh, did you notice how Wednesday's low basically tagged the 61.8% Fib retracement line at 7 cents as well as the 20 day moving average line....right before the rebound back to the close of 9.5 cents? Coincidence? An amazing one if it is. In our opinion, we think Challenger shares are gearing up for another leg higher.  And those are just a couple examples of stocks we potentially see setting up an upside reversal. We could have - and perhaps should have - offered the same basic opinion of BioCurex (OTCBB: BOCX), Stockgroup Information Systems (OTCBB: SWEB), CEL-SCI Corporation (AMEX: CVM), and Titan Global Holdings (OTCBB: TTGL), just to name a few.  So there you go - a few tools to work with, and a couple of specific stock ideas to perhaps get you started. In my experience, I've made more money by getting to the party early than I have by chasing a stock once it took off, even if I was occasionally wrong. More than that, I also think you can do the same just by remembering those three rules above. The cool part is simply how these ideas can be fruitful for traders as well as investors...getting in at a low level is getting in at a low level, no matter how long you plan on holding a position.      We Value Your Feedback   Got comments, questions or suggestions? Send 'em on over: Editor@smallcapnetwork.com If you wish to send a written request or inquiry, please send it to our physical address: TGR Group, LLC 4653 Carmel Mtn Rd Suite 308 #402 San Diego, CA 92130 It's Coming Hey everyone, just wanted to give you an early warning so you aren't surprised later....  ...the SmallCap Digest is now going to be called the Small Cap Network Newsletter. We're still going to be bringing you great small cap ideas and commentary. However, as we transition into a more user-interactive site, we think the new name will better reflect what we actually are (and that's a good thing).  Though a little less obvious, you may have also noticed our site is now located at smallcapnetwork.com rather than smallcapnetwork.com. This switch will also apply to the e-mail address from which you get our newsletter, so if you can, be sure to go ahead and whitelist us today.    Web2 Corp. Enhances Marketing Strategy For 'Chamber' Up and running now since September 20th of last year, Web2 Corporation (OTCBB: WBTO) today announced a twist that we expect to generate even more sales.  The International Chamber of E-Commerce had previously been marketed by a human sales force, who were paid a portion of any monthly subscription fees created by their customers. Now, anybody who runs a website can generate their own recurring commissions by promoting the service via the Internet. We can potentially see this small twist making a big difference in this venture's revenue.  For more, click here.    Immune Response's HIV Therapy Shows Promising Results So Far Today, Immune Response (OTCBB: IMRP) posted an interim update for its Phase II (Italy) testing of two HIV vaccine candidates. Both of the drugs being tested, REMUNE and IR103, have been shown to sustain a CD4+ T-cell count over a 36 week period.  In English, we think this is an important sign that Immune Response's work is showing promise so far. By prodding a patient's body to maintain its CD4+ T-cell level, the body's own immune system remains strong enough to fight the virus' effects on its own. Most alternative HIV drugs are designed to attack the virus directly, which can be less effective (and perhaps ineffective) than a patient's own immune system trying to do the same.  More on the news.    Commerce Planet: This May Be Your Window We've all been following Commerce Planet (OTCBB: CPNE) pretty closely over the last few weeks....some of us because we own it, some of us because we wish we owned it. While we'd all love to go back mid-January and scoop it up again at $2.00 (knowing it was on its way to more than $3.00), that ain't gonna' happen. However, we think we might be looking at the next best thing - a short-term pullback that may be a window of (entry) opportunity.  Click here for more (and a chart).    Clearly Recruits Competitor In one of our recent reviews of Clearly Canadian (OTCBB: CCBEF), we specifically highlighted how the company had put together a great team.....every team member is what we'd consider an all-star in the business world.  Well, you can add another one to the list. The company recently announced a former account/category manager with Pepsi-QTG (Quaker, Tropicana, Gatorade) has joined the ranks of Clearly Canadian. Jackie Fox is now in charge of the entire sales and marketing strategy. Based on her credentials and experience, we'd call it a major coup for Clearly. Score one for our neighbors to the north.  Anyway, here's more about Jackie Fox.   Three New Exclusive Articles Now (Only) On The Home Page OK guys, we've said it before, but it merits repeating now.....if you're only getting the e-mail version of our newsletter and/or only reading the blog (or getting the RSS feed), then you're missing some of our best stuff. Just take a look at our three newest - and exclusive - articles you can only find on the smallcapnetwork.com home page:  Heating Up: Large Caps to Lead in 2007? It Would Be A Rarity.  Technology Trends: Technology Predictions for 2007.  Market Wise: Be Careful What You Believe.  Be sure to check it out today. And hey, if you have any topics or ideas you'd like to see us cover in the future, just let us know!  Subscribe Information is power and timely information is profitable. Become informed and profit from Small Cap Network Profiles and Trading Alerts by becoming a Preferred Member today. 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Unsubscribe Here D I S C L A I M E R: The Small Cap Network, its website and email newsletter (hereafter, cumulatively referred to as "SCN") , is an independent electronic publication committed to providing its readers with factual information on select publicly traded companies. SCN is owned and operated by TGR Group, LLC ("TGR"). TGR is not a registered investment advisor or broker-dealer. All companies are chosen on the basis of certain financial analysis and other pertinent criteria with a view toward maximizing the upside potential for investors while minimizing the downside risk, whenever possible.  Moreover, as detailed below, TGR accepts compensation from third party consultants and/or companies, which it features in the publication and circulation of SCN. To the degrees enumerated herein, SCN should not be regarded as an independent publication.  Click Here or go to http://access.smallcapnetwork.com/compensation_disclosure.html to view our compensation on every company we have ever covered, or visit the following web address: http://access.smallcapnetwork.com/profile_disclosure.html for our full profiles and http://access.smallcapnetwork.com/short_term_alerts.html for Trading Alerts.  On January 19th, 2007 TGR Group LLC entered into an agreement with Stock Group Media, Inc. (a wholly-owned subsidiary of Stock Group Information Systems, Inc.) whereby Stock Group Media, Inc. will provide $50,000 worth of advertising and marketing services to TGR Group, LLC in exchange for coverage of Stock Group Information Systems, Inc. on the Small Cap Network web site and newsletter. TGR Group LLC has been paid a fee of $30,000 cash by Titan General for coverage of the company. In addition, TGR Group LLC has been pledged a fee of 100,000 warrants convertible at $1 into restricted shares by Trilogy Capital for coverage of the company.  TGR Group, LLC has been paid a fee of $30,000 cash and 100,000 shares (reverse split adjusted 12/20/06) of newly issued restricted stock by Immune Response Corp. for coverage of the Company. TGR Group LLC has been paid a fee of $60,000 by Commerce Planet for coverage of the company. In addition, one of the principles of TGR Group LLC is also a principle of MarketByte LLC. In a separate contractual relationship in 2004, MarketByte LLC was paid a fee of $25,000 in cash and 750,000 newly issued, restricted shares by Commerce Planet for coverage of the company. The aforementioned shares are all currently eligible to be free trading. The term of MarketByte's obligation to Commerce Planet has expired. TGR Group LLC has been paid a fee of $30,000 and pledged 150,000 warrants with an exercise price of $2, currently convertible into restricted shares of Clearly Canadian, by Level III Research, for its coverage of Clearly Canadian. TGR Group LLC has been paid a fee of $25,000 and 150,000 shares of newly issued restricted stock by Cel-Sci for coverage of the Company. Additionally, back in November of 2002, TGR Group LLC was paid a fee of $25,000 and 250,000 shares of newly issued restricted stock of Cel-Sci for coverage of the company until November of 2003. The aforementioned 250,000 restricted shares became free trading under SEC rule 144 and were sold in the open market prior to the company entering into a new contract agreement with TGR Group in February of 2006. TGR Group LLC has been paid a fee of $25,000 cash and 500,000 shares of newly issued restricted stock directly by Challenger Powerboats for coverage. The aforementioned shares have become free trading under Rule 144. On March 7, 2006, TGR Group LLC entered into a contract extension whereby TGR could receive as much as $65,000 cash and 1 million, newly issued restricted shares over the next one year period from Challenger Powerboats for coverage of the company. To date, TGR has received an additional $35,000 and 500,000 newly issued restricted shares. In October of 2003, TGR Group LLC was paid a fee of $25,000 and one million newly issued restricted shares by Biocurex for coverage of the Company. Under SEC Rule 144, all one million issued restricted shares have been eligible for sale into the public market since October of 2004. In addition, on March 22, 2005, TGR entered into an extended agreement with Biocurex for a fee of 25,000 newly issued restricted shares and on July 1, 2006 TGR entered into another extended agreement with Biocurex for an additional 100,000 shares of newly issued, restricted stock. 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