We’re always open to new trading ideas, particularly from the micro cap world. Not that we’re looking to make this a free-for all, but if it’s legitimate, we’re open-minded. In any case, one of these recent ideas submitted by a fan/reader was Brilliant Technology Corporation (BLLN.PK). Here’s a quick take on the company…

Have you heard of Qtrax? Basically, it’s a free/legal p2p (peer to peer) music download site. It was supposed to launch in January with signed deals from the four major record labels…Universal ,EMI, Sony, and Warner. Right before the site was launched though, all four labels came out pulled out of the deal.

Since then, Qtrax was re-launched….though on a very low key basis. Only Universal and EMI - and a few independent labels - were on board. Still, it’s enough - the site is now up and running with free and legal downloads from Universal’s catalog, and more music is added daily. Sony and Warner are also rumored to be following that lead and interested in licensing their music via the same venue.

Conceptually it makes sense. Most music downloaded over the web is still illegally transferred, but there’s a market for monetization of the medium. How much? Hard to say. However, considering iTunes Rhapsody is the only viable competition we’ve found, Qtrax could penetrate the market fairly well.

What’s any of this got to do with Brilliant Technology Corporation? Qtrax is a subsidiary of Brilliant. To the best of our knowledge, it’s their primary and sole business.

As for the stock, we’ve seen worse. It rallied with the rest of the market a couple of weeks ago, but has since fallen back with the market.

We’re not making a judgment call either way, mostly because it’s still new, and we really can’t get a grip on how much revenue and earnings this kind of thing could generate. But, we did want to put it out there so our readers could explore the opportunity. Might be worth watching.

Any additional thoughts or information are welcome; just use the links and space below.

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Late last week we heard what the media considered to be somewhat-good news….the Michigan Sentiment Index had ticked up from 56.4 to 61.2 in July. Since it’s a measure of consumer optimism, and higher readings theoretically indicate higher odds of bullishness, investors welcomed the idea.

We don’t disagree with the theory - the better the mood, the better the market. What we find ridiculous is a handful of things the likes of which we’ve pointed out (rhetorical questions we’ve asked) several times now. They are…

• If last month’s multi-year low reading of 56.4 was a reason to panic, can the move to 61.2 be a reason to celebrate? After all, we’re still at multi-year lows.
• Wouldn’t it have been better to ‘get bullish’ based on the sentiment index prior to the big rally? For that matter, wouldn’t it have been better to ‘get bearish’ based on the June index reading of 56.4 before the market started falling apart in May?
• Why doesn’t the media provide some context…or at least verify that any particular piece of economic data has the assumed impact?

There are no answers to our rhetorical questions. The only comment we can make is this - the media is either late, or irrelevant, most of the time. And, they sure as heck aren’t complete. We’ve yet to see any journalist create anything close to the chart we’ve created below.

Take a look and see if you spot the uselessness of merely-cursory coverage of ‘economic news’.

‘One shot’ economic data is of no value to you as an investor. The trend is the key. Moreover, ‘opinion’ data is usually a better contrarian tool than a predictive tool, meaning you should be betting on the market when things feel horrible, and betting against the market when things feel great.

As for the Michigan Sentiment Index, it;s more likely to look terrifying at market bottoms, and look bullet-proof at market tops…..which is just the opposite of what you’ve been told. The historical results show it, even though the talking heads pretty much say the opposite.

None of this is news to the Micro Cap Press or its readers. This whole site was founded on the idea of providing information that was actually helpful to investors. We’re still in minority when it comes to financial media, but that’s fine by us. Keep reading our site; we cover the news and its actual impact….not assumptions.

To learn more about our strategies for using economic data to make more money as an investor, check out our original article ‘Economics 101: What’s Really Good For The Market’.

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Yesterday we gave you a report card from our July 3rd style and market cap forecast. Today we’re going to update our sector expectations. In a nutshell, we were basically right.

We favored financial stocks, feeling they were undervalued. We liked telecom as well. We suggested investors steer clear of energy and basic materials, as they had passed their prime. We also observed how utilities and staples had shown the most relative strength at that time. Take a look at how things have panned out since then.

The one surprise was transportation - we assumed they had peaked in May, as they fell the fastest in June and early July. However, they’ve recovered pretty well. Maybe there’s something to them after all. We think telecom is still an undervalued area….mobile telecom in particular.

We’ll keep tabs on these charts, but we’re still expecting the same - it’s rotation time. The six month leaders are apt to become the laggards, and the six monght laggards are apt to take the lead. We’re already seeing hints of this.

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It was about a week ago today we updated our expectations regarding styles (value versus growth) and market cap (large versus small). The initial discussion took place in the July 3rd edition, but a wild market pretty much required an update on the 17th. Now - though only five days later - it’s time to revisit the theory….that’s just how quickly things have been moving.

You might recall we were looking for simple rotation. By that, we just meant growth’s leadership in the early part of the year was going to be trumped by a revival of value. In terms of market cap, we specifically felt mid cap growth was going to weaken considerably, and anticipated large cap value would pull itself out of the deep hole in which it had been buried. 

By the 17th (last Thursday) we were already seeing hints of this rotation. And how about since then? Check out the results table - you can see for yourself what’s happened over the last five days (which doesn’t include today’s data). Value has led the way…mostly small cap, but large cap too. Growth has trailed. Mid cap and large cap growth have decidedly not participated in the bounce. That’s pretty much what we expected.

So is now the time to pile on the leaders and dump the laggards? Not quite. The time to do so was a week ago, or three weeks ago. No, at this point we think the market’s going to take a break….perhaps a long weekend. That’s fine - we need to burn off some of the euphoria and see stocks fall back a bit. When the profit-taking is done, then we can start fishing based on this relative strength in certain areas. This isn’t a five-day war. Five days is just a battle…the war will last for weeks. And, timing is still half the battle.

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Just remember you saw it here first! Did anybody see the July 21st edition of Fortune magazine (plus the online version)? The cover featured an electric car, which we covered the heck out of about a month ago. In fact, the cover specifically featured the Tesla Roadster, which we specifically highlighted about a month ago.

Are we saying to gloat? No. Well, maybe a little. Mostly we’re mentioning it to reiterate the same point we were making a month ago…that electric cars - as in 100% battery powered - have a big place in the future. In fact, they may have the only place in the future.

By the same token, we’ll use Fortune magazine to reiterate a separate point we made, once again, about a month ago.

This industry is making its way out of the ‘alternative’ phase and into the ‘mainstream’….in terms of technology as well as within the media. We used a Business Week article about electric cars in late June as evidence of this reality, but adding Fortune to the list makes our case even stronger.

The point? Read the blog. If we’re going to cover news and events and trends before the mainstream media does, how can you not want to? Tesla isn’t a publicly-traded company, but if it was, you can bet a magazine article like that would drive the stock higher. If you’re in tune with our blog and newsletter, you can use our information to beat the crowd…and not need to chase a rally.

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We’ve been following clean energy investments for quite some time, and more recently focused on solar power stocks as one of a few ‘green friendly’ niches. The topic was well received, and also raised a lot of good, common sense questions. In response to those queries - and after some thought from our editorial staff - we’ve basically boiled down the overarching solar stock questions into one simple question. This one question, however, may ultimately be the only one that really matters when it comes to picking one or any of these stocks.

Question: Which solar power company can bring the kilowatt cost per hour to under 10 cents?

The national average cost per kilowatt hour of conventional electricity is 10 cents. Unless a solar power plant can do close to the same (without government subsidies), who would want to pay for solar power….even with the environmental benefits?

Some companies are getting close; others are not. That’s the hurdle for all of them though.

On a side note, we also want to clarify a matter that may not be totally clear to a solar stock newcomer. There are actually two ways to produce solar powered electricity.

• The most familiar way is via photovoltaic panels that convert sunlight directly into electricity inside the panel itself. Photovoltaic energy costs between 17 and 27 cents per kilowatt hour, on average.
• The alternative is solar thermal power, which magnifies the sun’s rays to create heat. That heat is used to boil water, which in turn is used to crank a steam-engined generator. This kind of electricity production costs between 13 and 22 cents per kilowatt hour. Don’t get too excited yet though….the plants that can do this really need to be in the southwest part of the U.S. where the sun is the strongest. Once generated, the power needs to be transported to where people actually live. Those lines can cost more than $1 million per mile.

In short, it’s still about dollars and cents for the consumer. At the same time, the technology has to be profitable and marketable for the company creating it. A company that can maximize the output of their solar panels or thermal plants, while minimizing their cost associated with building them, is the key.  

Over the next few days we’ll be reviewing some of the companies that look like they’re getting close to this important breakthrough. We may also be panning some stocks that aren’t even close to doing so. Stay tuned.

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The market may have spent the last month getting whacked, but several bulletin board stocks shrugged it off and managed to keep moving higher. Whatever the reason, the ones that survived and thrived many deserve a closer look, as they may be hot small cap stock picks. In no particular order, they are….

• BioSpecifics Tech (BSTC) - Biotech’s been hot, but this outfit doesn’t appear to have a hot product in the hopper. XIAFLEX is on Phase III testing, but the market is small.
• TraceGuard Technologies (TCGD)
• DynaMotive Energy (DYMTF) 
• Coastal Caribbean (COCBF)
• Zap (ZAAP) - Remember our multiple mentions about the investment merits of the elecrtic car? Maybe somebody is listening. Though Zap’s cars looked relatively uncool, function before form may be the key here.
• Oromin Explorations (OLEPF)
• Modavox Inc. (MDVX) - Modavox makes and distributes audio and video content for the Internet…..mostly Internet radio. The company’s got a market, because they have revenue growth. The problem is, they don’t have profits. Maybe that’s set to change eventually, though it would need to be a paradigm shift for the industry. Modavox has cited news to that effect, however.
• uBid.com Holdings (UBHI) - Another Internet auction site? Ubid is the home of the incredible shrinking revenue. We think the company will need a total overhaul to survive; current investors don’t seem to agree. The stock came to life in early May when they unveiled an excess inventory liquidation program. Maybe that will do the trick, though we’re not making that bet yet.
• Financial Media Group (FNGP) - This diversified financial media organization is actually doing reasonably well as far as unprofitable companies go. Unlike most unprofitable outfits, FNGP is making measurable progress towards a positive bottom line. In other words, the stock’s rise on higher volume may actually be merited.
• U.S. Precious Metals (USPM)
• International Isotopes (INIS)
• Biotime Inc. (BTIM) - Another biotech company. BioTime is working on blood substitutes, and recently partnered with Embryome Sciences to make a map of all the cell types derived from human embryonic stem cells. This is likely to be the first step in the production of what could be hundred of stem cell lines. The mapping could take  months, but the creation of stem cells could take an unknown amount of time (more than less).

This is hardly due diligence. In fact, odds are more than one of these stocks is on our ‘hot’ list and doesn’t deserve to be.  These tickers are only here because they somehow managed to appreciate in price recently; no credence was given to whether or not the underlying company has any merit.

We’ll do further research as we can, but if you decide to take a plunge on your own it’s imperative you do plenty of homework. Also, if you opt to look further into these small cap trading ideas, please share the wealth (i.e. knowledge). You can post any of your findings using the link below. 

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.