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TABLE OF CONTENTS Another Way to Profit
Q
The Cheat Sheet 4
Q
The Internet Review Stocks 7
Another Way to Profit
The markets are obviously having a rough time, with the latest wave of heavy selling attributed
to the Middle East crisis. During a bear period like this, we don’t want to just wait for our Internet
picks to recover with the rest of the market. We want to take action and make some profits now.
Last week, I outlined one long-only strategy for doing this, and this week I’d like to introduce
another: the QQQQ Crash System.
I started writing about the QQQQ Crash System in 2003. That year, it worked all 40 times the
conditions for it occurred. I also discussed it in my book, Trade Like a Hedge Fund.
Here is the system in a nutshell:
Buy Rules:
If the Nasdaq 100 Trust (QQQQ:Nasdaq), or QQQQs, close 1.5 standard deviations
below the 10-day moving average, then buy the shares at the open the next day. Those
unfamiliar with standard deviations can use Bollinger Bands set to 1.5 standard
deviations and a 10-day moving average. Most stock quote software allows you to chart
Bollinger bands.
Sell Rules:
If the QQQQs close higher than the buy price, sell them.
OR
If 20 days pass, sell at a loss.
An Example From Dec. 20, 2000
Late 2000 was a nonstop slaughterhouse. The fallout from the tech bust plus the uncertainty
over the presidential election and the final interest rate hike were keeping everyone away from
the markets. Still, even though it seemed like the world was falling apart, there was money to be
made by taking long positions.
On Dec. 20, 2000, the QQQQ Crash System triggered. In the chart below, the green line
represents 1.5 standard deviations below the 10-day moving average. On Dec. 20, the market
closed below that green line, triggering a signal to buy at the open the next day. Two days later
the system made a 5% profit.
July 17, 2006
TheStreet.com Internet Review
July 17, 2006
As of now, this system has been successful 61 times in a row out of 62 occurrences. But I
must warn you that it had its first failure recently -- its last occurrence, during the period from
May 12 to June 13, when the Nasdaq lost 8%. Still, one failed trade does not ruin the system,
and even after that failure, the average return per trade is still 1.5% and the average holding
period is 2.5 days.
Below is the chart of the past three weeks on the QQQQ:
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TheStreet.com Internet Review
July 17, 2006
As can be easily seen in the chart, recent sessions haven’t been pleasant. Almost every day
has been negative from open to close (the brown bars), with only two small days that were
positive from open to close (the white bars).
On Thursday of last week, the QQQQ Crash system triggered a buy for Friday's open. Friday
was then down 1%. I believe that right now, Monday morning, is a decent time to buy. I'm extra
cautious with this trigger because the last trade didn't work out so well. But now we have a 1%
cushion. Perhaps a prudent way to play it is to enter a partial position today and enter a little
more if the QQQQ goes down further.
Another way to play it is just to add to some of the positions in the Internet Review model
portfolio, perhaps some of the larger-cap but still volatile components of the QQQQs, such as
Microsoft (MSFT), Yahoo! (YHOO), Palm (PALM), NetEase.com (NTES), Copart (CPRT) and
RealNetworks (RNWK).
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TheStreet.com Internet Review
July 17, 2006
Internet Review Cheat Sheet
The coming week is a huge one for earnings reports from Internet Review companies. See
below for specific dates and times. I'll try to provide some coverage during the week.
APTM
Aptimus announced Thursday that it will report its 2006 second-quarter financial results on
Tuesday, Aug. 8, at 5 p.m. EDT: http://biz.yahoo.com/iw/060713/0143926.html
AV
Avaya announced Wednesday that it will report its 2006 third-quarter financial results on
Monday, July 24, at 5 p.m. EDT: http://biz.yahoo.com/prnews/060712/nyw016.html?.v=60
CLCT
Collectors Universe announced Wednesday that it has purchased Expos Unlimited for $2.4
million. Expos Unlimited operates coin, stamp and collectible trade shows in California:
http://biz.yahoo.com/ap/060712/collectors_universe_acquisition.html?.v=1
CPRT
Copart Thursday reiterated its policy of providing no financial guidance for itself, its affiliates or
its equity investments, including lanelogic. The company said it had provided no guidance to
any financial analysts: http://biz.yahoo.com/bw/060713/20060713005582.html?.v=1
ELNK
EarthLink’s opened its second temporary retail store in San Francisco. The first, in Seattle, is
set to close this Friday. The temporary stores sell the company’s broadband services:
http://money.cnn.com/2006/07/13/technology/earthlink0713.biz2/index.htm?source=yahoo_quot
e
Tuesday, EarthLink said that it will report its 2006 second-quarter financial results in a
conference call scheduled for Thursday, July 20, at 8:30 a.m. EDT.
http://biz.yahoo.com/cc/1/70301.html
GSOL
Global Sources announced Monday it has been included in the newly created Nasdaq Global
Select Market: http://biz.yahoo.com/prnews/060710/hkm001.html?.v=28
HRAY
On Wednesday, Hurray! signed a partnership with MTV Music Television China, a unit of
Viacom (VIA), to provide wireless value-added services in China:
http://biz.yahoo.com/prnews/060712/cnw013.html?.v=15
INSP
InfoSpace announced Wednesday it will report its 2006 second-quarter financial results in a
conference call scheduled for Wednesday, Aug. 2, at 5 p.m. EDT:
http://biz.yahoo.com/cc/3/70353.html
IUSA
InfoUSA announced Wednesday it will report 2006 second-quarter financial results on Friday,
July 21, at 4 p.m. EDT: http://biz.yahoo.com/cc/0/70460.html
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TheStreet.com Internet Review
July 17, 2006
OneSource Information Services, a unit of InfoUSA, said that Timothy Brandner had rejoined
the company as vice president of North American Sales and Services:
http://biz.yahoo.com/bw/060710/20060710005742.html?.v=1
KEYN
Keynote Systems reports its 2006 third-quarter financial results on Tuesday, Aug. 1, at 5 p.m.
EDT: http://biz.yahoo.com/cc/0/70270.html
MCHX
Last week, Marchex announced it will report its 2006 second-quarter financial results on
Tuesday, Aug. 8, at 4:15 p.m. EDT:
http://biz.yahoo.com/bw/060713/20060713005634.html?.v=1
MSFT
Microsoft plans to report fiscal fourth-quarter financial results after the close of the market on
Thursday. On average, analysts predict earnings of 30 cents a share.
http://www.thestreet.com/_yahoo/markets/marketfeatures/10296988_2.html
On Wednesday, the European Union announced that the fines Microsoft owes the EU for
disobeying its 2004 antitrust order now total 280.5 million euros, or $357 million. The EU also
threatened to increase Microsoft’s fines to 3 million euros a day starting July 31 if Microsoft
doesn’t start obeying the order:
http://biz.yahoo.com/ap/060712/eu_microsoft_chronology.html?.v=2
Microsoft and Yahoo! are joining together to make their instant messaging services
interoperable. They conducted public beta tests on this program last week. Although the
program will allow both companies’ users to communicate with each other and compile contact
lists, it won’t be interoperable with America Online’s AIM service.
http://biz.yahoo.com/indie/060713/92_id.html?.v=1
PALM
Palm shares are looking very attractive after positive earnings reports from Sony-Ericsson,
and after the announcement of a partnership with Britain’s Vodafone (VOD) and Microsoft.
Through the collaboration, Palm is going to release to Vodafone’s European customers a new
version of the Treo smartphone that will run on Microsoft’s Windows mobile operating system:
http://www.forbes.com/2006/07/13/palm-0713markets17.html?partner=yahootix
And another story on the move: http://biz.yahoo.com/ap/060713/premarket_movers.html?.v=1
RNWK
On Thursday, RealNetworks announced an enhancement of its Rhapsody Web Services. This
improvement includes new APIs and 300,000 RSI feeds:
http://biz.yahoo.com/prnews/060713/sfth050.html?.v=64
On Tuesday, JMP Securities initiated coverage on RealNetworks with a market underperform
rating: http://finance.yahoo.com/q/ud?s=RNWK
SSP
E.W. Scripps announced Monday that it will report its 2006 second-quarter financial results on
Monday, July 24, at 10 a.m. EDT: http://biz.yahoo.com/cc/0/70160.html
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TheStreet.com Internet Review
July 17, 2006
TEAM
TechTeam Global announced a global managed service provider agreement with CA Inc.
http://biz.yahoo.com/prnews/060710/dem009.html?.v=46
TWX
On Thursday, the Federal Communications Commission approved the $17.6 billion sale of
assets of bankrupt Adelphia Communications to Time Warner’s cable unit and Comcast
(CMCSA): http://biz.yahoo.com/ap/060713/fcc_adelphia.html?.v=2
UNTD
On Thursday, United Online announced it will report its 2006 second-quarter financial results
after the markets close Thursday, Aug. 3: http://biz.yahoo.com/pz/060713/102037.html
MySite.com, a United Online Web site, now makes it possible for more than 40 million
classmate.com subscribers to create and display personal Web sites:
http://biz.yahoo.com/pz/060711/101882.html
VRSN
A Morgan Stanley report Tuesday predicted that VeriSign will expand its network and have
significant revenue growth:
http://www.forbes.com/2006/07/11/verisign-0711markets09.html?partner=yahootix
YHOO
Yahoo! plans to report its 2006 second-quarter results this coming Tuesday. On average, Wall
Street analysts predict the company will earn 11 cents a share.
http://www.thestreet.com/_yahoo/markets/marketfeatures/10296988.html?cm_ven=YAHOO&cm
_cat=FREE&cm_ite=NA
Yahoo! is considering partnerships with several newspaper publishers to provide Web
classifieds and local news: http://biz.yahoo.com/rb/060713/yahoo_report.html?.v=2
News Corp’s (NWS) MySpace.com overtook Yahoo! Mail to become the No. 1 most-visited
Web site for the week of July 8: http://biz.yahoo.com/fool/060713/115281923519.html?.v=2
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TheStreet.com Internet Review
July 17, 2006
OPEN POSITIONS
INTERNET REVIEW MODEL PORTFOLIO
Coding System: SB, for strong buy; B, for buy; SP, for speculative buy; N, for neutral and S, for sell.
Company Name/Ticker
Aptimus
APTM
Avaya
AV
Collectors Universe
CLCT
Copart
CPRT
EarthLink
ELNK
E*Trade Financial
ET
Global Sources
GSOL
Hurray!
HRAY
InfoSpace
INSP
Intersections
INTX
iPass
IPAS
InfoUSA
IUSA
J.C. Penney
JCP
Keynote
KEYN
KongZhong
KONG
Liberty Media
LCAPA
Liberty Media
LINTA
Marchex
MCHX
Microsoft
MSFT
Netease.com
NTES
Palm
PALM
RealNetworks
RNWK
Shanda Interactive
SNDA
Greenfield Online
SRVY
E.W. Scripps
SSP
TechTeam Global
TEAM
Technology Investment
TICC
Tom Online
TOMO
Time Warner
TWX
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Date
Initiated
Rating Code
Initiation
Price
Current
Price
Simple
Return
NASDAQ at
Initiation Date
NASDAQ
Return
03/20/2006
SB
5.22
$ 6.69
28.16%
$ 2,311.80
-11.87%
03/20/2006
B
11.90
$ 10.62
-10.76%
$ 2,311.80
-11.87%
12/06/2005
B
14.67
$ 12.73
-13.22%
$ 2,267.09
-10.13%
01/06/2006
B
23.98
$ 25.53
6.46%
$ 2,289.87
-11.03%
04/11/2006
SB
9.16
$ 7.48
-18.34%
$ 2,336.52
-12.80%
10/14/2005
SB
16.28
$ 20.53
26.11%
$ 2,055.78
-0.90%
11/21/2005
B
7.45
$ 8.50
14.09%
$ 2,225.74
-8.46%
04/25/2006
B
9.40
$ 5.30
-43.62%
$ 2,338.06
-12.86%
03/13/2006
B
24.94
$ 20.95
-16.00%
$ 2,269.92
-10.25%
03/06/2006
SB
9.19
$ 10.11
10.01%
$ 2,306.42
-11.67%
10/17/2005
B
5.48
$ 4.86
-11.31%
$ 2,064.90
-1.33%
02/22/2006
SB
11.32
$ 10.16
-10.25%
$ 2,265.59
-10.07%
06/05/2006
B
64.35
$ 64.84
0.76%
$ 2,211.28
-7.87%
10/10/2005
SB
13.05
$ 10.67
-18.24%
$ 2,092.03
-2.61%
02/13/2006
SB
11.91
$ 6.54
-45.09%
$ 2,251.14
-9.50%
05/15/2006
B
78.88
$ 82.29
4.32%
$ 2,234.03
-8.80%
05/10/2006
B
20.25
$ 16.39
-19.06%
$ 2,332.24
-12.64%
11/14/2005
SP
20.00
$ 13.93
-30.35%
$ 2,203.10
-7.52%
10/13/2005
B
24.31
$ 22.29
-8.31%
$ 2,033.28
0.20%
11/14/2005
N
15.63
$ 20.90
33.74%
$ 2,203.10
-7.52%
12/05/2005
SP
13.57
$ 14.75
8.74%
$ 2,269.00
-10.21%
10/18/2005
B
7.52
$ 9.48
26.06%
$ 2,068.61
-1.51%
12/13/2005
B
15.94
$ 13.15
-17.50%
$ 2,255.90
-9.69%
05/30/2006
SB
7.76
$ 7.20
-7.22%
$ 2,202.17
-7.48%
10/20/2005
B
46.34
$ 41.69
-10.03%
$ 2,087.80
-2.42%
02/03/2006
B
9.90
$ 8.49
-14.24%
$ 2,268.46
-10.19%
10/19/2005
B
14.73
$ 13.77
-6.52%
$ 2,048.46
-0.54%
11/14/2005
B
20.74
$ 13.81
-33.41%
$ 2,203.10
-7.52%
10/10/2005
SB
18.01
$ 15.97
-11.33%
$ 2,092.03
-2.61%
TheStreet.com Internet Review
United Online
UNTD
VeriSign
VRSN
Yahoo!
YHOO
July 17, 2006
01/03/2006
SB
14.20
$ 10.96
-22.82%
$ 2,216.60
-8.09%
10/11/2005
SP
20.62
$ 21.84
5.92%
$ 2,084.90
-2.28%
11/14/2005
SP
38.04
$ 32.08
-15.67%
$ 2,203.10
-7.52%
INTERNET REVIEW PERFORMANCE
Average Return Open Positions
Average Return Closed Positions
-6.84 %
0.89 %
Total Average Return
-5.14 %
2006 YTD Return
-8.97 %
Performance results listed here reflect values of stocks as of the
close of the most recently completed trading day. They do not
factor in dividends paid, interest earned and actual commissions
paid. Results are updated overnight and posted prior to the market
open the following business day. The YTD Return figures reflect
changes since the first trading day of the current year.
The Total Average Return figures reflect changes since
inception on 10/10/2005.
NASDAQ COMPOSITE
Nasdaq Composite (COMP)
8
Portfolio
Inception
Open Level
Current Level
% Gain/Loss Since
Portfolio Inception
2006 YTD
Return
10/10/2005
2,092.03
2,037.35
-2.61 %
-8.09 %
TheStreet.com Internet Review
July 17, 2006
CONTACT INFORMATION
Reader Feedback and Questions
Please email James Altucher directly.
Please direct all account-related
inquiries to customer service.
Subscription/Account Info
Please email [email protected] or call
1-866-321-TSCM (8726) Mon. - Fri. 8 a.m. to
6 p.m. ET; or outside the U.S. and in Canada,
call 1-212-321-5200
LEGAL INFORMATION
James Altucher, writer of TheStreet.com Internet Review, is a managing partner at Formula Capital, an
alternative asset management firm, and a contributor to TheStreet.com’s RealMoney. TheStreet.com is a
publisher and is registered as an investment advisor with the U.S. Securities and Exchange Commission.
Mr. Altucher is restricted from transacting for his own benefit in securities discussed in TheStreet.com
Internet Review. Formula Capital and its affiliates may, from time to time, have long or short positions in,
or buy or sell the securities, or derivatives thereof, of companies mentioned in TheStreet.com Internet
Review and may take positions inconsistent with the views expressed.
TheStreet.com Internet Review contains Mr. Altucher’s own opinions, and none of the information
contained therein constitutes a recommendation by Mr. Altucher, Formula Capital, or TheStreet.com that
any particular security, portfolio of securities, transaction, or investment strategy is suitable for any
specific person. To the extent any of the information contained herein may be deemed to be investment
advice, such information is impersonal and not tailored to the investment needs of any specific person.
Past results are not necessarily indicative of future performance.
Investing in the stocks chosen for TheStreet.com Internet Review model portfolio is risky and
speculative. The companies may have limited operating histories and little available public
information, and the stocks they issue may be volatile and illiquid. Trading in such securities can
result in immediate and substantial losses of the capital invested. You should use only risk
capital, and not capital required for other purposes, such as retirement savings, student loans,
mortgages or education.
TheStreet.com Internet Review portfolio is a model portfolio of stocks chosen by Mr. Altucher in
accordance with his stated investment strategy. Your actual results may differ from results reported for
the model portfolio for many reasons, including, without limitation: (i) performance results for the model
portfolio do not reflect actual trading commissions that you may incur; (ii) performance results for the
model portfolio do not account for the impact, if any, of certain market factors, such as lack of liquidity,
that may affect your results; (iii) the stocks chosen for the model portfolio may be volatile, and although
the “purchase” or “sale” of a security in the model portfolio will not be effected in the model portfolio
until confirmation that the email alert has been sent to all subscribers, delivery delays and other factors
may cause the price you obtain to differ substantially from the price at the time the alert was sent; and
(iv) the prices of stocks in the model portfolio at the point in time you begin subscribing to
TheStreet.com Internet Review may be higher than such prices at the time such stocks were chosen
for inclusion in the model portfolio.
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