daytrades march 1 pre-market, page-2

This Weeks Picks

Market Direction: Last weeks economic data was generally disappointing which could lead to further weakness in the short term. This week the key piece of data coming out will be the ADP non farm employment change at 12:15am on Thursday morning followed by the unemployment rate which will be released at 12:30am on Saturday morning. I expect the markets to be softer this week as nerves creep in that economic data will again disappoint to the downside.

Sectors of Interest: Gold should again be an area worth focusing on this week with the price staying above the $1,100 level and a fairly large $11 increase on Friday night. The AUD price is still under the $1,250 an ounce mark. With nervousness back in the market over recent weeks I think non cyclical stocks will perform, hence my interest in more established pharmaceutical stocks like APH, which posted excellent annual results last week.

APH: Results for the 2009 year were released last Tuesday and the markets initial reaction was somewhat muted, with the stock moving from 17.5 to a high of 24.5 before falling away to 21.5 cents. NPAT came in at $9.2m on revenue of $105.1m and cash flow was positive $9.8m, exceptional results for a company which was capitalised at only $44m prior to the announcement. There is reason to be optimistic for the first half of 2010 because 2nd half sales were up 20% in Australia and 109% in Asia (2H Asian sales are for 5 months only and do not include the Green Cross acquisition). There are two things in particular that convince me that this story will only get better. Firstly the agreement with Pfizer to sell off patent medicines is yet to have its full impact on the financial performance of the business (agreement commenced in October 2009). Secondly the market for generic medicines is growing quickly because many medicines are coming off patent protection and in an uncertain economic environment consumers are more likely to choose lower cost generic medicines to save money. I would expect this trend to continue and am therefore optimistic about APH's performance in 2010. News Due: Although no specific news is due, the company did say in its results release that it is well positioned to deliver further sustainable profit growth in the competitive generic pharmaceuticals market. Disclosure: Holding APH

MHM/MHMO: The market was clearly disappointed that there was no update on the silica plant last week with the stock hitting a low of 29.5 cents late on Friday before bouncing back to close at 33 cents. The bounce late Friday improved the stock technically with the slow stochastic crossing up and the RSI rising slightly back up to 50. The MACD is still falling with the histogram negative. News Due: An update on the Silica project (Wacker AG) is due now. Plans for exploration on gold and base metal projects located in Tasmania. Disclosure: Holding MHMO

SSN/SSNO: As I expected the selling pressure increased late last week as the technical's began to point to short term weakness. The slow stochastic, RSI and MACD are all still falling pointing to the possibility of further weakness in the days ahead. However, I expect any weakness to be short lived as the company moves towards the spud of the Ripsaw well and the fraccing of the Gene#1-22H well in the second half of March. This week could provide some good opportunities to enter the stock or increase exposure at reasonable prices. News Due: Commencement of fracturing operations at the Gene#1-22H well in mid-late March. Spud of Ripsaw well. Details of the upcoming drilling program at Bakken. Disclosure: Holding SSNO

BCN/BCNOA: With drilling underway for a week we should soon start to see some speculative money taking a position ahead of drilling results. The Bollinger bands began to widen following Friday's increase but, in my opinion, the volume wasn't sufficient to convince me that a breakout has begun. The slow stochastic has crossed up and is rising, the RSI ahs broken through 50 and the MACD looks poised to cross this week. As stated last week BCN will be worth watching over the next two to three weeks. The cup and handle pattern that has formed over the past couple of months is still in play with a breakout level of 3 cents providing a target of 4 cents. News Due: Drilling results from the Barlee gold project. Disclosure: Holding BCNOA

ADO: The CEO should be back in the country by now so I am expecting news to flow soon regarding new licensing agreements. The trend line that started on the 13th of January has now been broken and the stock looks like it is now in a sideways consolidation pattern between 5 and 6 cents. Any fall below 5 cents will see 4 cents as a short term target. If further licensing deals materialise then the stock will most likely be re-rated and could quickly move to retest recent highs of 10.5 cents. News Due: Further license agreements for the company's Mix & Go technology. Disclosure: Holding ADOO

ARM: The manipulation continued on Friday with the buyers of 180K shares at $1.00 being taken out within the first few minutes of trading. The stock went on to hit a low of 96.5 cents before bargain hunters moved in, turning the stock around. The buying continued throughout the afternoon with the stock closing near the day's highs resulting in a bullish hammer candle. News Due: Approval of drilling work program for the upcoming exploration on the Capricorn South East manganese project. Disclosure: Stock Held