As the NASDAQ Composite sits on its 200 day moving average, the DOW and the S&P 500 are treading water so far this morning while the NDX plays the weakest index of the bunch continuing to test its short-term lows. No surprise since darlings like Apple (AAPL), Google (GOOG), Amazon (AMZN) and Priceline (PCLN) all continue to hunt for some semblance of a bottom. Speaking of GOOG, shortly after their earnings miss last week, we mentioned the stock would be a nice add to one's long-term conservative portion of their portfolios around $666 per share. While the stock does seem to have a bit of support around current levels, it's low since last week sits at $669 per share, three bucks off our suggested entry level. Reality is, if the major indexes continue to move lower, it's possible GOOG could see $643 before it's all said and done, so if you're willing to wait and exercise some patience, maybe you can pick up some shares of the biggest success story in modern day Internet history (which is only about 15 years by the way) on the cheap. On the hourly charts of all of the major indexes, it looks like the bulls are trying to stage at least another short-term rally, but I wouldn't necessarily be running to their defense right now. We've basically said what we have to say about the markets in general for now, and unless anything changes significantly, we're not convinced we've seen its lowest levels just yet. However, we're definitely not as doom and gloom as most. I could almost swear the media is reading our content because after we published yesterday's edition, Yahoo! Finance published an article talking about how much cash companies are sitting on and how they'll be leveraging that cash to grow in coming quarters. Isn't that what we said yesterday morning? It's just important to focus more on what's ahead for the markets than it is to focus on what's going on right now or where it's been. There may be further downside before stocks decide to turn for the better, but don't think they're aren't opportunities out there right now to take advantage of. With that being said, I actually can't believe I'm going to do this, but we're going to make Zynga (ZNGA) a featured stock! Before you go trying to tell me I'm crazy, I've got my reasons. Yes, this is a very big contrarian play, but that's part of the strategy. Let me set the stage based on some recent news coming out of the company. Yesterday, during Apple's keynote presentation, Zynga CEO, Mark Pincus, leaked information to Reuters with a copy of a memo to employees in which it announced Zynga would "sunset" 13 older games and significantly pull back its investment in "The Ville" game - a major recent initiative - as it sought to cut costs. The Company also cut its work force by roughly 5% by laying off about 150 full-time employees. This all came a day before the struggling social game maker was due to report third-quarter earnings. More importantly, the announcement came almost three weeks after the San Francisco firm reduced its financial projections for the third quarter amid a weakening market. When the company revealed in early October that financial results would be weaker than projected, Pincus stated that Zynga would shift its focus toward more popular casino gaming titles. That statement was key in my opinion, but I'll get to that in a bit. Lastly, Tuesday's layoffs consisted in large part of four studios it had picked up through acquisition. Until recently, the company had been on an acquisition binge as its revenue and stock value grew too fast too early. Welcome to IPO hangover land. As for the stock's price action and technical landscape, shares of ZNGA have been a complete and total disaster. The stock IPO'd shortly before the Holiday Season last year giving investors something to cheer about as it ran to a high of just under $16 per share. Then all hell broke loose in late February and the stock has been in a downward spiral ever since. I suspect there are some pretty bitter investors out there who would never touch ZNGA again. Sour money, bag holders, whatever you want to call them, you can be rest assured they've got pretty good reason to be bitter, but don't hate on us because we're patient and opportunistic. We typically don't run out and buy IPO's for the long-term for this very reason. If that happens to be your strategy, then good luck to you. Now here's my argument. I'll try and keep it as short as possible. First, Wall Street loves to suck investors in and bury IPO's. It happens all the time. I'm not going to get into the why, let's just say it's simply for their own greedy prowess. Did ZNGA deserve it? Yes. However, Mark Pincus is no dummy and the reality of being a public company CEO is no easy task. They came into the markets flexing their muscles, spending cash aimlessly and setting expectations they couldn't keep. Then reality set in. Wall Street and investors in general are ruthless, and for good reason. They want you to do what you say you're going to do. However, the old adage, if it doesn't kill you, it will make you stronger, seems to apply here and I suspect Mark Pincus is likely starting to figure it out. Pre-announcing weaker numbers, leaking bad news of layoffs prior to earnings, it's all part of better managing investor expectations. There's been so much negative sentiment surrounding the stock, how much worse can it really get? Is all of this a prelude to ZNGA turning the corner now? That's what we're betting on. It's no different than what we've been saying all along about why large caps continued to perform well over the last few years in the face of a terrible economy. It appears ZNGA is now doing what they should have been doing all along, getting leaner and meaner. Now consider ZNGA's competition. EA, TTWO, and ATVI used to be the darling gaming stocks of the public markets. What have they done in recent years other than flounder? Not a whole heck of a lot. Why? The landscape and business model for gaming has changed dramatically in recent years with live online social gaming taking center stage. They haven't been able to transition quickly enough to grab enough market share to make a difference fundamentally. Enter Zynga. Zynga sits in the sweet spot of this space. Yes, their Farmville and whatever ville's are passé, hence the decision to retire many of those. However, Pincus eluded to getting into more casino gaming. If you've been around the Internet as long as I have, then you know casino gaming is a huge online industry that can also command top advertising dollars, which in ZNGA's case would result in much more revenue growth than any farming game could ever amass. It's also important to remember that the software business model is an extremely profitable model at the bottom line assuming you have your internal operations structured properly and efficiently. That's also what I think. The Company is on the verge of getting their act together on as well. As for more fundamental arguing, did you see Facebook (FB) this morning? Even they're figuring it out. The beat estimates on their mobile advertising unit. Everyone thinks as goes Facebook, so goes Zynga. However, I suspect ZNGA is going to continue to separate their core focus away from Facebook and continue to go directly after the pure mobile advertising play piggy backing the continued success of the Iphone and it's IOS. That's where FB surprised investors, and I suspect ZNGA may well do the same in coming quarters. If I see someone playing Words for Friends on their IPad one more time, I might just lose it. Ha. And yes, Words for Friends or whatever you call it is probably the single most popular mobile game out there and it's owned by Zynga. More games for the masses like that coming from Zynga and they may surprise you in the months and years ahead. Fundamentally, the stock is trading at just over one times sales, but more importantly still has over a billion in cash on the books prior to their earnings announcement which is due out anytime now. In this market right now, cash is king and they've got a lot of it. This puts them in a position to now learn from all of their mistakes, but still have enough dough in the coffers to do something very positive about it. The Company is now projected to return to profitability in coming quarters and years ahead, so let's not dwell on what they've done, as much as look out toward what they can do. Dwelling on the past never makes investors money, but looking ahead can be extremely profitable, when in the right ideas. Technically, the stock made an all-time low yesterday of $2.10 on the layoff news before gapping up this morning in sentiment with FB's numbers. I've included a daily chart of ZNGA here for your review. First, I love trading beaten down stocks off new lows where the whole world hates the stock. Secondly, yesterday's new low didn't come on huge volume. That may be suggesting sellers are finally starting to get exhausted. Third, long-term shorts will start covering when they smell things have gotten as bad as they can get. See the price action today? Stock gapped up, sold off and is climbing its way back as I type. If and when ZNGA starts to make a counter move from its year-long meltdown, the reversal should be very quick and very sharp, almost like a pressure cooker ready to blow the lid. Now you might ask... why now instead of waiting for earnings? My own personal opinion is the bad news is all priced in. I could be wrong, but that's the stance I'm taking. If there's any surprises to the upside at all, the stock could go nuts, therefore, I think the risk/reward prior to earnings right now is pretty good. Are we the individuals who are finally going to be right about ZNGA's bottom? We're going to find out very soon. We've watched newsletter publisher after newsletter publisher make every effort to peg a bottom in the stock for months and months now. And, every single one of them have been wrong. You can best rest assured if we're the ones who end up being right, you're probably never going to hear the end of it, haha. Just for the record, this IS the first time we've ever came out and suggested now may be the time to pick up some ZNGA stock. So there you have it. Call me crazy. You wouldn't be the first. Then again, you wouldn't end up being the first to be wrong either. Yes, this is a very big contrarian play. Do contrarians get blasted from time-to-time? Yes. However, a lifelong contrarian can beat your returns handily because when they're right, the return percentages are ridiculous. Let me also add, this is not a play for the faint of heart. The way I'd play this idea is throw as much money at it as I'm willing to completely lose in the event they never get their story turned around. Or, set a protective stop loss to the downside in the event the stock moves lower before finding a tradable base. I don't know how much money you have in the bank, or how old you are, or anything really for that matter, so don't ask me about a stop loss price. That should be your own decision based on your own financial situation. I'm giving you an idea, you decide for yourself if it's right for you. We'll be making ZNGA a featured stock on the site, so if you want to follow the idea with us going forward, here's a link to ZNGA's Stock HQ on our site: http://www.smallcapnetwork.com/Zynga-Inc/s/quote/p/s/ZNGA/. Feel free to participate or peruse, everything ever written by our Community Members and Contributors can be found there. Remember, be opportunistic and don't be afraid to take profits when they are there. Especially if the stock runs up too much too fast. Good luck and happy investing!