Market Report for Thursday, July 19, 2007

By By Ian L. Cooper and Bryan Bottarelli

Market Report: MACD/DMI -- New Buy Signal on Taser

Ann Sosnowski has often spoken about Taser. As for myself, I have gotten readers in and out of the underlying stock and call options several times over the last couple of months on bullish courtroom news, new product news, and breakouts using MACD and DMI crossovers in agreement in Early Alert Trader.

On the news front, the company just announced the first shipment of the Taser C2 for consumer use. Nowadays, for a reported $300 retail price tag, you can order your own Taser. Less powerful than the police version, the C2 shoots barbs that pierce the skin and deliver an incapacitating jolt of electricity.

Technically speaking, a 10-day hourly chart gave us a buy signal using MACD and DMI crossovers. On the hourly chart, the DMI+ crossed above DMI- on Wednesday. Now all we needed was confirmation of a trend with a MACD 12-day and 16-day cross above the MACD 9. We got that MACD confirmation on Thursday morning, right before the stock ran from about $16.40 to more than $17.34 a few hours later.

The Directional Movement Index (DMI) shows directional movement with three components: ADX, DMI+ and DMI-. We use the DMIs. DMI+ shows positive movement in a stock or index. DMI- shows negative movement in a stock or index. When the DMI+ crosses above the DMI-, the stock or index is a sell. When the DMI- crosses below DMI+, it’s a buy.

However, we still need agreement to validate trend. That’s where MACD comes in, using the point spread between two EMAs of the closing price. It’s used as a trend indicator, spotting divergences in charts.

Ian

Trading Tactics:
Basin Water “In Play” by Bryan Bottarelli

As a Market Report reader, you know that I’ve commented on the drought conditions that are going largely unnoticed in the Southwestern United States.

So in an effort to continue with this theme, I’d like to fill you in on an interesting situation that just occurred in one of my recently recommended small-cap picks.

You see, on Friday, July 13, I issued a “buy” recommendation on a small company called Basin Water (BWTR:NASDAQ).

You could’ve entered BWTR on Monday, July 16 for $9.78 per share -- and three days later it closed for $11.44. In fact, as I write you today, the stock just hit an intra-day high of $13.20. That’s a 34.96% gain in just three days!

If you invested $10,000 in BWTR on Monday, you’d have $3,496 in pure profits in your hands today. That’s enough to pay for your entire 12-month membership to Bottarelli Research Small Cap plus have an extra profit of $1,746 left over!

Why is BWTR moving up so quickly?

Well, it’s one of the leading well-water contamination treatment companies in America. And believe me when I tell you, water contamination treatment is a major investing trend that’s gone completely unnoticed on Wall Street. But that’ll end soon.

You see, BWTR just announced that it’s been selected to provide a nitrate removal treatment system for the City of Pomona in Los Angeles County, California. This is a HUGE contract for BWTR, and it could be the trigger that entices a rush of additional water treatment contracts across America.

I have no doubt that BWTR is going much higher, and I hope you’re alongside for the ride.