Market Update - a once a week update to provide general market direction

Year 2005
Year 2006
Jan 2007
Feb 2007

Mar 26, 2007

TAGS reported a Q4 profit of .06 EPS and projected revenue of $240 million to $250 million for this year, up from $232.4 million posted for 2006. The estimate excludes the proposed $120 million acquisition of The Buffalo Group announced in December. The company at the time expected the deal to close in the first quarter. TAGS traded up 30% to $2, which is the resistance.

SORL also reported a great earning. Below is the highlight. However, it went unnoticed until the press release hits the wire after the market close. It was a good opportunity to get SORL during the day.

Fourth Quarter Financial Highlights

• Revenue increased to US$24.1 million, reflecting 30.9% year-over-year growth
• Net income increased to US$1.9 million, reflecting 242% year-over-year growth
• Fourth quarter earnings per share increased to US$0.13, reflecting 225% year-over-year growth from US$0.04 in the fourth quarter of 2005

Fiscal Year 2006 Financial Highlights

• Fiscal year 2006 revenue increased to US$84.9 million, reflecting 32.3% year-over-year growth
• Fiscal year 2006 net income increased to US$7.7 million, reflecting 55.5% year-over-year growth
• China domestic OEM revenue for fiscal year 2006 was US$27.1 million, reflecting a 31.6% year-over-year growth
• Revenue from exports was US$33.9 million in fiscal year 2006, reflecting a 44.9% year-over-year growth
• Fiscal year 2006 diluted earnings per share increased to US$0.56, reflecting a 50.2% year-over-year growth

ERS also had a strong reversal session today as earning is approaching for this week. It should able to go to $11.50 before the earning annoucement.

The next update maybe for MA short recommendation.

Mar 25, 2007

CTIB had a really nice rally since two weeks ago and exceeded the 3 months target of $7.50 by far. It's time to take profit from CTIB after the earning.

TSTC also reported a great earning and already hit the $9.25 target the next day!

SORL and TAGS will report earning before the market open on Monday. SORL's chart had been flat for 4 months, and the report tomorrow should move it one way or the other. It recently has entered into a new sales agreement with TATA Motors (NYSE: TTM; NSE: TATAMOTORS), the largest commercial vehicle manufacturer in India. The growth for SORL should be bright in the future.

NEOL should also be interesting in the next two weeks. From the last earning, NEOL stated "Since the announcement of the PRECISE trial results, the Company and our Scientific Advisory Board have been working to develop a potential regulatory path forward based on the totality of the clinical data which we currently plan to review with the FDA in late March 2007. Additionally, the Company has decided to defer the previously scheduled March 14th conference call until early April, after a scheduled late March 2006 meeting with the FDA." The downside on NEOL is limited and stock price should run up for the FDA meeting.

NBIX had a breakout session on Friday. Rumor is that some news is leaked out and sending the stock higher. It should retest $14.50 soon.

Mar 20, 2007

Even the Dow Jones and Nasdaq had been up for the past 2 days, the volume is very low. Please be nimble about going long or short at the moment.

NICH looks good here on a risk/reward basis. It gave an excellent earning report last quarter and the backlog remains strong. The downside is $1 while the upside is $3-$5. The risk is very small at $5 here.

Mar 13, 2007

In the morning, I stayed the following, "With the subprime lender woes, mortgage insurance will likely to be affected. PMI, MTG and RDN will be likely affected. Look for short opportunity there."

PMI was a great setup for the shorts this morning as the stock is getting weak. When the 200MA was taken out, the bottom just dropped. The next support for PMI is at $42. At this point, it's hard to tell what the effect on the subprime mortgage woes will do to the overall economy. In logical sense, the woes will carry out in "ripple effect" to other industry. The mortgage insurance will be the next to be affected as shown today. Home builder is already feeling the pain, and it's just the beginning. The excess inventory homes and foreclosure homes will flood the market within a couple months. It will take a while to clear out the inventory for them. More regulation should be in place for mortgage soon. Then, it will hit the builder's supplier and Home Depot will be affected. The above assumption is the worst case scenario. However, the subprime mortgage woes is very much like the Enron energy crisis back in early 2000.

The old favorite, SMTX , gave an excellent EARNING REPORT. Fourth quarter and full year highlights

• Growth in fourth quarter revenue to $76.1 million, a 31% increase over fourth quarter 2005.
• Net income of $2.1 million for the fourth quarter, an increase of 49% compared to the fourth quarter of 2005.

SMTX is up 20% in afterhour.

Mar 12, 2007

CTIB went higher as discussed last week. It traded as high as $6.40 today.

YMI gained 20 cents since last week, and there is still room for the upside.

The subprime lender were in the hot spot since last week. Most of them had been trading down significantly and NEW is one the edge of bankruptcy. This is one potential trading opportunity here on subprime lender including NFI, NEW, LEND, FMT and DRL once the dust is settled.

I like ICE here for short selling opportunity. The 50 MA is broken, and MACD crossed below to negative. It may bounce to between the 50MA and $140 this week. That should be the entry price for short. The stock traded up on a relatively low volume, and not enough to reverse the trend.

Mar 6, 2007

The market rebounded as stated from last night. The Dow Jones should able to gain another 70 points before the pullback. The next few days will tell rather last week's pullback is just a minor correction or this is the beginning of a downtrend.

The market in asia also gains momentum from US's rally, and it should fuel another rally in US tomorrow.

CTIB broke out from $5 with increasing volume. CTIB may gain another 10% for tomorrow.

PNTR reported, and the stock dropped 4% today. The report itself was not bad, but traders were expecting more. Classic sell on news.

YMI was mentioned in the form on the Jan 30, when it failed the phase III trial. It had been trading down to near its cash value at $1.35. One broker upgraded it and sending the stock up 15% today. YMI still has two other drugs in the phase II and phase III trials. YMI is just another THLD, GTOP, NEOL, that will give another 20-30% gain from here.

Mar 4, 2007

The market trade may head lower in the long term, but the Dow Jones and Nasdaq is near and close to the 38.2% Fib retracement, so a technical rebound may take place in the following week.

The Dow Jones should rebound at around 12000. The Nasdaq is holding above the 200 MA so far, but most high tech companies will not report a very good Q1 numbers as business cycles are usually weaker in Q1.

PNTR will report its earning on Tuesday, and keep an eye on it. I generally do not recommend holding through earnings, and PNTR will swing both way hard on its earning report.

A list of stock to watch for shorts on the next bound are NYX, ICE, GOOG, AAPL, YHOO and EBAY.