You might want go ahead and note the time and day…Wednesday, January 30th, 2008, at approximately 2:15 PM EST. That’s the day we may end up seeing Ben Bernanke make or break this vulnerable market. Getting just the right-sized cut in the Fed Funds rate - and then saying the right words - could be like doing surgery for Helicopter Ben.

According to Fed Funds futures, a 1/2 point cut is still the favored outcome of the Federal Reserve Chairman’s congressional testimony. However, a 3/4 point is running a close second. A 1/4 point cut is surprisingly still in the race, though a distant-third choice.

Though we don’t want to get involved in the “guess the rate cut” game the media seems obsessed with, we’re siding with the odds evident in the futures…we’re looking for a 1/2 point cut. That’s quite a bit compared to recent history, as 1/4 point moves seem to have become the weapon of choice for the Fed Chairman D’jour. And following an emergency 3/4 point cut, well, that starts to get into unprecedented territory in terms of changes in the overnight rate over a span of only 10 days. We may be challenged, but we don’t need that much economic medicine.

A 3/4 point brings a huge inflation risk with it (and we’re already starting to see it spin out of control). A 1/4 point cut is likely to be perceived as too little, and may end up shutting the average consumer down altogether. The 1/2 point option is the happiest medium.

Will we be right? We’ll let you know tomorrow at 2:16 PM EST. If we are though, we feel stocks could really start to build on the recovery move we’ve only seen glimpses of in the last few days. After what’s basically been a 15%+ correction in stock prices, the underlying dynamics (like volume, sentiment, breadth, and depth) are mostly saying bullish things…they’re just waiting for the trigger. Hopefully the Fed will give ‘em what they want.

Start receiving FREE e-research on select small and micro cap stocks. Get in-depth research reports, comprehensive coverage, exclusive market commentary and more, just by becoming a MCP subscriber today! Look for the submission form at the top of the right-hand column.

This micro cap stock seems to become a little less micro every day. Universal Delivery Solutions (UDSG) announced this morning their partnership with Salad Creations would be expanding along with Salad Creations’ planned growth in 2008.

The relationship was forged in May of 2007, when Salad Creations asked Universal Delivery Solutions to handle delivery order processing for one store in Boca Raton, Florida. The test was expanded to Coral Springs and Weston in July of last year. Apparently things went well, since UDS Group will be on board for Salad Creations’ expansion into Texas and Maryland in 2008.

This is a pretty big deal for Universal Delivery for a couple of different reasons.

First, it validates the viability of such a service. Though the restaurant in this case - Salad Creations - is now going to be a nationwide name, the delivery logistics for all of those stores is to be handled with one call center, using just one national phone number. That’s a much more efficient way of handling phone-in and delivery orders. When other restaurant chains start to see the service in operation, they too may inquire about getting UDS Group involved in their own marketing plan.

The second reason this is a big deal for Universal Delivery Solutions is much more straight-forward…revenue. Salad Creations currently operates 34 units, which may well be their biggest single customer. However, Salad Creations intends to open more than 100 units in 2008. With Universal Delivery Solutions along for the ride, we suspect UDSG’s top and bottom lines are going to start making some significant progress.

As for the stock, owning UDSG wasn’t necessarily any easier to own than any other stock has been since late October. So, while lower, the fact that it held its ground relative to the market at least deserves acknowledgement.

What we found to be impressive - and bullish - was the price action over the last couple of days. The stock had been working on a recovery, but finally made good on the promise Wednesday with a strong move past some key resistance.

Though it might be a tad soon to say this is the beginning of better days, it wouldn’t be wrong to start considering the possibility. Remember, Universal Delivery Solutions is still working on getting their stock listed as a bulletin board equity. An upgrade like that could really be a boost for shares.

Here’s today’s press release.

We’d like to be able to say we found small cap stock Technical Communications (TCCO) based on its strong fundamentals, its growing revenue, or its downright cheap valuation. Unfortunately, none of those would be true. We actually became interested in TCCO during a routine scan of small cap stocks with sudden and usual changes in volume. The fact that the small company’s numbers scream ‘undervalued’ was just a little gravy.

Technical Communications makes communications equipment. Specifically, they create technology that allows its customers to safely and securely send faxes, make phone calls, use radios, use the Internet, etc. The niche is a good one, and the company seems to be filling it nicely. That’s not the impressive part though.

When’s the last time you heard of a true small-cap/bulletin board company that was not only profitable, but also putting up key ratios that are competitive with its large-cap brethren? Some of the results for Technical Communications still have us scratching our head wondering why nobody else has found this stock yet. Here are just a few of the financial highlights. Where applicable, the industry average (communications equipment) is in parenthesis.

• P/E of 11.6 (21.2)
• P/S of 1.8 (1.31)
• Profit margin of 17.8% (36.9%)
• Operating margin of 15.6% (0.62%)
• ROE of 22.8%
• Revenue growth of 107% (13.8%)
• Earnings growth of 896%

All in all not a bad fundamental snapshot. The chart, however, is the tricky part.

Like we said, we found TCCO because of some unusual volume, so we weren’t surprised to see a volatile chart. That’s not a bad thing or a good thing, since volatility can work for you or against you. You just have to be aware of that reality, since you may need to time your entry (or exit) accordingly.

In Technical Communication’s case, the rally we’ve seen since late November looks a little too much like the one we saw in May of last year…it was great while it lasted, but it didn’t last too long. One of the key differences we may be seeing now is volume - there’s a lot more of it. With more buyers apparently interested, TCCO could have a much better shot at getting something started.

From a macro view, we can also see (pretty much for the first time) that TCCO has been trying to make higher highs and higher lows since 2003…a stark change from the opposite habit we saw in the prior decade. A move above $7.25 would not only mean new 52-week highs, but also a break past a key peak from late 2004.

With the kind of fundamentals the company boasts though, we think that’s a serious possibility. A market cap of $9 million, with sales of $5 million and growing? Curious indeed.

Start receiving FREE e-research on select small and micro cap stocks. Get in-depth research reports, comprehensive coverage, exclusive market commentary and more, just by becoming a MCP subscriber today! Look for the submission form at the top of the right-hand column.

Remember a small cap company we mentioned a few weeks ago called Wireless Age (WLSA)? Back on November 27th when we took our first look at this wireless device maker, we were impressed by the stock’s move from 11 cents to the then-current price of 19 cents…a 70%+ run. After a little more digging, we found the stock was hot mostly because this small cap company’s CEO was buying a huge amount of stock, and the organization has just completed a big repurchase of 5 million warrants.

Little did we know our small cap stock pick would remain on its tear for a few more days; it peaked at 40 cents on January 9th…more than a double from where we found it, and almost a 300% gain from early November’s trading levels.

For anybody who acted on the idea, is it time to sell? Well, it was time to sell. Since hitting 40 cents, we’ve also watched this stock pull back with all the rest; it’s now at 27 cents (which still isn’t too shabby). However….

If you didn’t cash in the first time, you may be getting a second chance soon. While we’re confident there was a lot of profit taking in early January, the stock was just plain overbought - that’s what happens when you fly from 11 cents to 40 cents. It’s hard to keep rocketing like that without a break.

After reaching a low of 21 cents on Tuesday (the 22nd) though, the ‘overbought’ problem may have been solved. In fact, Tuesday’s long tail suggests a reversal is already in motion. More importantly, WLSA isn’t bearing the burden of a massive gain, which means there’s a shot of another good upside run.

There’s something else though. While we think there’s a short-term ’swing’ trade brewing for WLSA, the weekly chart reminds us there’s much more at stake than a dime or two’s worth of potential. This stock was trading almost at $5.00 in late 2003. Though it was all downhill since then, the last few months have been remarkably different.

We’re not saying it’s a $1.60 stock just yet, but we can tell you the company was doing much less in 2003 than they are now.

Start receiving FREE e-research on select small and micro cap stocks. Get in-depth research reports, comprehensive coverage, exclusive market commentary and more, just by becoming a MCP subscriber today! Look for the submission form at the top of the right-hand column.

If you’ve been typing in the ticker symbol ‘ZHNP’ and expecting to find our favorite small cap food processing company (ok, our only small cap food processor we’ve ever followed), then you may have been disappointed. Why? Since January 9th, this former bulletin board stock has been trading as a NASDAQ-listed equity. That’s right - Zhongpin (HOGS) graduated.

You may recall we were impressed by Zhongpin back in May of 2007. As surprising as it was, this food company - mostly focused on pork products - was growing pretty well. At the time the stock was trading right around $10.79 per share. Despite a terribly volatile patch (most of which was bearish), this stock’s current level of $11.70 is still impressive….and it had been considerably higher.

While a NASDAQ listing will not guarantee success for investors or the company, it does make it a heck of a lot easier. That’s why it’s the ultimate goal for most bulletin-board-traded companies.

Though HOGS has moved on to ‘bigger and better’, we still intend to follow it. After all, it’s still a micro cap…and a pretty good one at that.

While the editorial staff of the Micro Cap Press strives to create great commentary of its own, we’re also the first to acknowledge other great ideas. We came across such an article last week in a fly-by of SeekingAlpha.com. The article ‘Too Little, Too Late’, submitted by TraderThoughts.com, made some great points about how the Fed was too slow in acting on recent weakness, and had likely allowed the U.S. economy to slip into a recession.

At the time the article was written (January 13th), the Fed had not yet handed over their 3/4 point rate cut…that didn’t happen until Tuesday (the 22nd). However, the criteria examined in the article - things like unemployment, interest rates, and inflation rates - are all data sets we’ve looked at before ourselves. In fact, you may want to review our related newsletter from September 10th ‘Economic Reality 101: What’s Really Good For Stocks?‘ We think you’ll find some interesting overlap in what’s important, and impactful.

Anyway, there’s an ‘overlay’ chart of inflation, interest rates, and unemployment that we found particularly interesting. The author makes a particularly good point about inflation in general, and about 2008 specifically.

If the past is any guide, we may be truly headed into an inevitable recession. That’s not inherently a reason to bail out of the stock market, but it may be a reason to rethink your approach.

Here’s a link to the article.

Though we usually don’t care to comment on most economic news (primarily because most journalists jump to economic cause/effect conclusions that are just wrong), there was an article from CNN Money we thought most investors might like to to know about. We still contend that most economic data is useless for investors looking to make an investment forecast. But, this writer - Chris Isidore (CNNMoney.com senior writer) - had a few truly enlightening comments (and it doesn’t hurt that his view and application of unemployent data is very similar to ours).

Basically, his article mentions that the unemployment trend tells the tale of any recession. If it rings a bell, it’s because we said something similar…that the direction of the unemployment trend plays a role in how easily stocks can rally, or how challenged they might be.

He also adds that some economists say we’re actually already in a recession that may not become evident for several more months.

Click here to read Isidore’s unemployment rate and recession article, and click here to read our take on using unemployment as a market indicator.

By the way, for those who haven’t seen it yet, here’s the most recent chart of the S&P 500 versus the unemployment rate. Though rising unemployment doesn’t mandate that stocks sink (at least not the whole time), the market tends to do much better without that burden.

Also note that we didn’t find a correlation between recessions and market performance. We know - recessions have to be bad for stocks, right? Maybe, though we’ve yet to find any truly helpful way (proven with the numbers) to use economic expansion/contraction data as a buy/sell signal for stocks.

Start receiving FREE e-research on select small and micro cap stocks. Get in-depth research reports, comprehensive coverage, exclusive market commentary and more, just by becoming a MCP subscriber today! Look for the submission form at the top of the right-hand column.

We’d be the first to say investors tend to over-react to most news. It’s not their fault - the media tends to make everything a life-or-death situation…even if it’s not. They’re just trying to sell ad time. The problem arises when investors become desensitized to things they should truly be watching.

As of last week, one of those ‘things’ is unemployment. The move to an unemployment rate of 5% is actually part of a long string of subtle increases in the figure. More than that though, it actually is something that could be a challenge for stocks.

The premise is one we detailed back on September 10th, in our ‘What’s Really Good For Stocks?’ edition of the newsletter. In a nutshell, we looked at how certain economic indicators were assumed to have a predictive effect on stocks, but not proven to do so. Our study of the facts concluded that very few pieces of economic analysis were actually helpful to investors using them to make stock market predictions.

We discovered that certain uses of unemployment data, capacity utilization, and inflation did indeed help make general market forecasts. Many of our readers were surprised that we found no discernible predictive value in GDP, nor most opinion polls (investors are notoriously wrong at the exact worst time).

Anyway, the reason we bring it up now is simple - the unemployment rate sure looks like it’s trending higher. As you can see, those shifts from downtrends to uptrends have not exactly been kind to stocks. The ill effect varied in results and longevity, but it’s a reasonable cause for concern now.

DON’T OVER-REACT! We’re not saying it’s the even of destruction. We’re just saying be aware.