4 Stocks Under $10 Moving Higher

DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

>>5 Stock Trades to Take This Week

Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.

Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits. If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success.

>>5 Hated Earnings Stocks You Should Love

With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside today.

China Recycling Energy

China Recycling Energy (CREG) engages in the recycling energy business, providing energy savings and recycling products and services. This stock closed up 9.2% to $3.07 in Tuesday's trading session.

Tuesday's Range: $2.69-$3.14

52-Week Range: $0.78-$3.14

Tuesday's Volume: 410,000

Three-Month Average Volume: 95,671

>>5 Stocks Ready to Break Out

From a technical perspective, CREG spiked sharply higher here right above some near-term support at $2.60 with heavy upside volume. This stock has been uptrending strong for the last three months, with shares moving higher from its low of $1.66 to its recent high of $3.16. During that uptrend, shares of CREG have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of CREG within range of triggering a major breakout trade. That trade will hit if CREG manages to take out some near-term overhead resistance levels at $3.16 to $3.50 with high volume.

Traders should now look for long-biased trades in CREG as long as it's trending above support at $2.60 or above its 50-day at $2.41 and then once it sustains a move or close above those breakout levels with volume that hits near or above 95,671 shares. If that breakout hits soon, then CREG will set up to tag $4 to $5.

Performance Technologies

Performance Technologies (PTIX) is a supplier of advanced network communications solutions to carrier, government and OEM markets. This stock closed up 14.1% to $3.15 in Tuesday's trading session.

Tuesday's Range: $2.80-$3.20

52-Week Range: $0.73-$3.97

Tuesday's Volume: 364,000

Three-Month Average Volume: 262,357

>>5 Stocks Set to Soar on Bullish Earnings

From a technical perspective, PTIX skyrocketed higher here right above some near-term support at $2.70 and back above its 50-day moving average of $2.94 with above-average volume. This stock has been trending sideways and consolidating for the last three months, with shares moving between $2.59 on the downside and $3.97 on the upside. Shares of PTIX are now starting to move within range of triggering a big breakout trade above the upper-end of its recent range. That breakout will hit if PTIX manages to take out some key near-term overhead resistance levels at $3.20 to $3.25, and then once it takes out more resistance at $3.79 to its 52-week high at $3.97 with high volume.

Traders should now look for long-biased trades in PTIX as long as it's trending above support at $2.70 or $2.59 and then once it sustains a move or close above those breakout levels with volume that hits near or above 262,357 shares. If that breakout hits soon, then PTIX will set up to enter new 52-week-high territory above $3.97, which is bullish technical price action. Some possible upside targets off that breakout are $5 to $6.

Altair Nanotechnologies

Altair Nanotechnologies (ALTI) develops, manufactures and sells nano lithium titanate batteries and energy storage systems. This stock closed up 6.8% to $4.82 in Tuesday's trading session.

Tuesday's Range: $4.45-$5.05

52-Week Range: $2.02-$8.00

Tuesday's Volume: 76,000

Three-Month Average Volume: 103,311

>>5 Rocket Stocks Worth Buying This Week

From a technical perspective, ALTI spiked sharply higher here right above some near-term support at $4.30 with lighter-than-average volume. This stock recently dropped sharply from its high of $8 to $4.30 with heavy downside volume flows. During that plunge, shares of ALTI have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of ALTI now look ready to see an end to its downside volatility, since the stock is starting to rebound off that $4.30 low and move within range of triggering a near-term breakout trade. That trade will hit if ALTI manages to take out some near-term overhead resistance at $5.08 with high volume.

Traders should now look for long-biased trades in ALTI as long as it's trending above Tuesday's low of $4.45 or above more support at $4.30 and then once it sustains a move or close above $5.08 with volume that hits near or above 103,311 shares. If that breakout hits soon, then ALTI will set up to re-test or possibly take out its next major overhead resistance levels $6 to $6.50.

AK Steel

AK Steel (AKS) is a producer of flat-rolled carbon, stainless and electrical steels, and tubular products through its wholly owned subsidiary, AK Steel Corporation. This stock closed up 5.8% to $4.43 in Tuesday's trading session.

Tuesday's Range: $4.11-$4.45

52-Week Range: $2.76-$5.77

Tuesday's Volume: 8.76 million

Three-Month Average Volume: 5.23 million

From a technical perspective, AKS spiked sharply higher here with heavy upside volume. This stock has been uptrending strong for the last month, with shares moving higher from its low of $3.73 to its recent high of $4.46. During that uptrend, shares of AKS have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of AKS within range of triggering a major breakout trade. That trade will hit if AKS manages to take out some near-term overhead resistance levels at $4.46 to $4.65 with high volume.

Traders should now look for long-biased trades in AKS as long as it's trending above Tuesday's low of $4.11 or above its 50-day at $3.89 and then once it sustains a move or close above those breakout levels with volume that hits near or above 5.23 million shares. If that breakout hits soon, then AKS will set up to re-test or possibly take out its next major overhead resistance levels at $4.94 to its 52-week high at $5.77.

To see more stocks that are making notable moves higher today, check out the Stocks Under $10 Moving Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

Take Five with Chris Alderson of T. Rowe Price International

Domestic equities have been the place to be since the financial crisis ended almost five years ago, but with head winds starting to mount in the United States, investors may be better off on the other side of the Atlantic, said Chris Alderson, president of T. Rowe Price International.

European equities have begun to get hot again recently as the region shows signs of emerging from its year-and-a-half-long recession.

Investors put $5 billion into European equity funds for the one-week period ended Oct. 24, the most ever for a single week, according to Bank of America Merrill Lynch.

Mr. Alderson discussed what is behind the excitement over Europe and which areas internationally look “overblown.”

InvestmentNews: What is driving the increased interest in European equities?

Mr. Alderson: The economics are getting a lot better. The tail risk is off the table. Maybe most importantly, they're a lot cheaper than stocks here in the U.S. European companies' margins are still depressed from the recession, but they're starting to improve and that will drive higher earnings. In the U.S., margins are already at peak levels.

InvestmentNews: In which areas of the eurozone are you seeing the most opportunities?

Mr. Alderson: We've recently moved our focus from luxury exporters, such as Gucci (GUCG) and Ferrari (FERI), to more domestic stocks in Spain and Italy. We've seen significant improvement in those economies. International small-caps could pick up, too. They haven't had anywhere near the rally small-caps have had in the States.

InvestmentNews: What international asset class are you most worried about?

Mr. Alderson: Frontier markets are overblown at the moment. At the beginning of the year, if you told me emerging markets would be down 10% and frontier markets would be up 30%, I'd have thought you were crazy. Over the medium and long term, I think they're a good place to be, but they've been driven up by money coming into frontier markets funds.

InvestmentNews: Are you seeing signs of a turnaround in emerging markets?

Mr. Alderson: They're cheap, but they're not out of the woods yet. They're trading at a significant discount to developed markets. But as interest rates normalize, that's going to put more pressure on the local economies, and growth is declining rapidly.

InvestmentNews: One of the most popular international trades this year has been buying Japanese stocks and hedging out the yen. How do you see that playing out over the rest of the year?

Mr. Alderson: It has been a very well-flagged trade, but it's stopped working. There was all that talk o! f the yen going to 150, but it's back down below 100. I still think it will go to 110, 115 eventually. [Japanese Prime Minister] Shinzō Abe is determined to get inflation back into the system. They still need more structural change, though. That's going to be challenging.

Has Daily Journal Made You Any Real Money?

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Daily Journal (Nasdaq: DJCO  ) , whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, Daily Journal generated $3.7 million cash while it booked net income of $3.8 million. That means it turned 11.0% of its revenue into FCF. That sounds pretty impressive. However, FCF is less than net income. Ideally, we'd like to see the opposite.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at Daily Journal look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With 65.9% of operating cash flow coming from questionable sources, Daily Journal investors should take a closer look at the underlying numbers. Overall, the biggest drag on FCF also came from changes in taxes payable, which represented 29.3% of cash from operations.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

Looking for alternatives to Daily Journal? It takes more than great companies to build a fortune for the future. Learn the basic financial habits of millionaires next door and get focused stock ideas in our free report, "3 Stocks That Will Help You Retire Rich." Click here for instant access to this free report.

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

Add Daily Journal to My Watchlist.

Watch Out: 3 Reasons Your Home Value May Plateau

In this video, Motley Fool analyst Austin Smith talks with host Chris Hill about trends in the housing market and focuses on three reasons home values may plateau in the short term. Many homeowners are still too far underwater for moving to a new home to be a financial possibility, while private equity firms are buying a large number of homes at a premium, which is driving up home prices across the board. Meanwhile, interest rates are rising. With all those factors combined, demand to buy a home may take a serious hit. Austin tells investors how this could cause short-term stagnation in the value of your home, and which stocks are great picks for a housing market where people are staying put.

With the American markets reaching new highs, investors and pundits alike are skeptical about future growth. They shouldn't be. Many global regions are still stuck in neutral, and their resurgence could result in windfall profits for select companies. A recent Motley Fool report, "3 Strong Buys for a Global Economic Recovery," outlines three companies that could take off when the global economy gains steam. Click here to read the full report!

Dow May Open Higher After JPMorgan Beats the Street

LONDON -- Stock index futures at 7 a.m. EDT indicate that the Dow Jones Industrial Average (DJINDICES: ^DJI  ) may open up by 0.12% this morning, while the S&P 500 (SNPINDEX: ^GSPC  ) may open 0.1% higher. Both the Dow and the S&P 500 closed at new record highs yesterday, and these gains have helped propel CNN's Fear & Greed Index back into "greed" territory -- the sentiment indicator is set to open today at 59, up from last night's close of 51.

European stock markets made a strong start to the day, extending yesterday's gains through the morning, helped by a number of potential mergers and acquisitions that were reported today. New figures showed that eurozone industrial output fell by 0.3% in May compared to April, matching expectations and taking the annual fall to 1.3%. There was, however, some good news for Portugal, whose industrial output grew by 6.1% in May -- the biggest increase of any eurozone member. As of 7:55 a.m. EDT, the FTSE 100 is up 0.37%, the DAX is up 0.9%, and the CAC 40 is up by 0.21%.

Today's economic calendar is unlikely to move the markets, but any surprises will still be of interest. At 8:30 a.m. EDT, June's producer price index is expected to show a 0.5% rise over May, when prices also rose by 0.5%. The Core PPI is expected to have risen by 0.1% in June, also matching May's rise. At 9:55 a.m. EDT, after markets have opened, July's consumer sentiment index is expected to remain unchanged at 84.1, according to consensus forecasts.

Barring any further macroeconomic developments, today's big news may be the latest quarterly earnings from JPMorgan (NYSE: JPM  ) and Wells Fargo (NYSE: WFC  ) . JPMorgan reported second-quarter earnings up a dramatic 32% to $1.60 per share on revenue of $26 billion, beating consensus forecasts for $1.44 per share. The company cited increasing consumer deposits and credit card volumes. The stock is up 0.6% in premarket trading. This morning Wells Fargo reported second-quarter earnings up 20% to $0.98 on revenue of $21.4 billion, beating analysts' expectations of $0.92 in EPS and revenue of $21.17 billion. Wells Fargo is up 0.2% in premarket trading.

Dell shares may also be actively traded this morning after investor Carl Icahn told Bloomberg yesterday that he would sweeten his $14 per-share offer for the computer maker by adding a warrant giving investors the option to buy more stock if it rises to a certain point. Icahn said the new bid would be "vastly superior" to founder Michael Dell's offer. Shares in Dell are up 0.6% in premarket action.

Finally, let's not forget that the Dow's daily movements can add up to serious long-term gains. Indeed, Warren Buffett recently wrote: "The Dow advanced from 66 to 11,497 in the 20th Century, a staggering 17,320% increase that materialized despite four costly wars, a Great Depression and many recessions." If you, like Buffett, are convinced of the long-term power of the Dow, you should read "5 Stocks To Retire On." Your long-term wealth could be transformed, even in this uncertain economy. Simply click here now to download this free, no-obligation report.

Icahn ups stake in Apple, demands $150 billion buyback

Carl Icahn has written a letter to Apple CEO Tim Cook, asking the company to buy back $150 billion of its own stock.

NEW YORK (CNNMoney) Activist investor Carl Icahn is at it again, this time writing an open letter to Apple CEO Tim Cook and urging the company to buy back $150 billion of its own stock.

His idea: Apple (AAPL, Fortune 500) shares are extremely undervalued, so now's the time for the company to invest in itself -- and increase the value of its investors' stock holdings.

Icahn claims he upped his stake in Apple by 22% over the past month to 4.7 million shares. That's only about 0.5% of the company, but at a value of nearly $2.5 billion, it's a big enough stake to draw attention.

Top 5 Companies To Watch In Right Now

Icahn began his crusade in late September over dinner with Cook. In his letter, posted on Icahn's website, The Shareholder's Square Table, he tries to convince Cook that the company should tap into its massive, $147 billion cash reserves to take advantage of what he portrays as a tiny window of opportunity.

"Irrational undervaluation as dramatic as this is often a short term anomaly," Icahn wrote. "The timing for a larger buyback is still ripe, but the opportunity will not last forever."

Related story: Icahn demands $150 billion from Apple

  Thank the government for your iPhone

To build his case that Apple's shares are undervalued by Wall Street, Icahn notes that the company's shares aren't keeping up with the market as a whole. While the S&P 500 trades at about 14 times the value of estimated future company earnings, Apple trades at just 9 times analysts' estimates, Icahn said.

"With such an enormous valuation gap and such a massive amount of cash on the balance sheet, we find it difficult to imagine why the board would not move more aggressively to buy back stock," he wrote..

To prove he believes the move would benefit investors in the long run, Icahn said he would hold back his shares from any buyback program. In his view, the value of Apple shares could more than double to $1,250 within three years.

Apple didn't respond to requests for comment. Altho! ugh Apple shares rose slightly on Thursday, they seemed little affected by the news.

Facebook playing with fire by policing beheading videos

Rather than set a bright-line policy on violent images, Facebook must now decide what is the right context for clips of people being decapitated.

NEW YORK (CNNMoney) Facebook has enacted a murky, case-by-case policy on violent content, setting the company on a precarious path.

Facebook (FB, Fortune 500)temporarily banned graphic, violent content from its site back in May, when clips including a particular video of a woman being beheaded were spreading across the site. That video resurfaced recently after Facebook quietly lifted the ban on graphic videos, and it once again caused a stir.

Facebook defended its decision on Monday after a BBC article publicized the lifting of the ban, but just 24 hours later, Facebook once again decided to take the video down.

But rather than set a bright-line policy on violent images, Facebook instead backed itself into a gray area. The site removed the specific beheading video that caused the flap -- but going forward, the site said it will make a determination about each post individually.

Facebook said it will allow the videos to stay up as long as posters "condemn" the violence and warn viewers of the graphic nature of the content. But the content will be removed if it is deemed to be shared for "sadistic pleasure or to celebrate violence."

Related story: Facebook kills search privacy setting

In doing so, Facebook has created yet another murky policy -- and thrust itself into making difficult decisions around controversial content on a case-by-case basis.

Instead of determining whether or not this content is allowed on Facebook, the site will now play the jury for each violent post that makes the rounds. If context is truly the key, why did Facebook remove this specific beheading post from the site entirely? Surely some of the users posting it were condemning the horrific act.

In explaining the new policy, Facebook said its philosophy is that people use the site to raise awareness of important issues -- and that sometimes involves violent images.

That may be true, but by getting into the context game, Facebook is making itself an easy target for the ongoing debate over what is censored on the site. Facebook has already gotten flak over controversial policy decisions involving issues like images of breastfeeding mothers -- which are sometimes banned and sometimes not.

With over 1.1 billion Facebook users, it's only a matter of time before another shocking bit of violence goes viral on the site. And now Facebook has put itself in the position of moral compass for all of those s! candals going forward.

LIVE FROM FPA EXPERIENCE: 'Seller beware' atmosphere means need for new client approaches

Daniel H. Pink

With access to a broad array of investment information, wealth management choices and worldwide communication, clients are gaining the upperhand in their relationship with their adviser.

Traditonally "the seller" has had more information and it's been a "buyer beware" situation, said Daniel Pink, author of "To Sell is Human: The Surprising Truth About Moving Others," at the Financial Planning Association national conference in Orlando on Saturday. New technology is giving more power to the consumer.

"All kinds of markets have gone from those with information asymmetry to a world where consumers have lots of information, lots of choices and lots of ways to talk back," Mr. Pink said. "Now it's seller beware."

Mr. Pink offered advisers a few unconventional tips for bringing today's clients on board and getting them to agree with investments and other decisions that are in their best interest.

For one, he said that actually changing a client's mind on a particular issue or investment matters less than giving them a way to act on particular concerns. Giving clients a way to take a step forward with an investment or other idea may be more fruitful than spending too much time just trying to convince a client to buy into an entire strategy or concept.

When "the facts are on your side," Mr. Pink said, asking clients some suggestive questions often beats providing those answers to clients.

Hot Small Cap Companies To Own In Right Now

If you're a small cap enthusiast looking for some budding ideas, you may not need to look any further than China GengSheng Minerals, Inc. (NYSEMKT:CHGS), Bio Matrix Scientific Group Inc. (OTCMKTS:BMSN), and MER Telemanagement Solutions Ltd. (NASDAQ:MTSL). All three have either pushed themselves to the brink of a breakout, if they haven't started one already. Here's a closer technical look at MTSL, BMSN, and CHGS, and what it's going to take to get them going if they're not going already.

To say that China GengSheng Minerals, Inc. is off the radar would be an understatement. This specialty materials company hasn't offered up much in the way of news lately, and what little news we've heard has been anything but good - CHGS is at risk of losing its NYSE listing. Yet, there's something undeniably bullish about the way the chart's been acting lately, and especially yesterday.

Hot Small Cap Companies To Own In Right Now: OmniVision Technologies Inc.(OVTI)

OmniVision Technologies, Inc. designs, develops, and markets semiconductor image-sensor devices. The company offers CameraChip image sensors, which are single-chip solutions that integrate various functions, such as image capture, image processing, color processing, signal conversion, and output of a processed image or video stream for use in various consumer and commercial mass-market applications; and CameraCube imaging devices that are image sensors with integrated wafer-level optics. It also provides companion chips used to connect its image sensors to various interfaces, including the universal serial bus and other industry standard interfaces; and companion digital signal processors that perform compression in standardized still photo and digital video formats. In addition, the company designs and develops software drivers for Linux, Mac OS, and Microsoft Windows, as well as for embedded operating systems, such as Blackberry OS, Palm OS, Symbian, Windows CE, Windows Embedded, and Windows Mobile. Its products are used in mobile phones, notebooks, Webcams, digital still and video cameras, commercial and security and surveillance, and automotive and medical applications, as well as in entertainment devices. The company sells its products directly to original equipment manufacturers and value added resellers, as well as indirectly through distributors worldwide. OmniVision Technologies, Inc. was founded in 1995 and is based in Santa Clara, California.

Advisors' Opinion:

• [By Anders Bylund]

  Shares of OmniVision Technologies (NASDAQ: OVTI  ) jumped as much as 23% overnight, driven by a rock-solid fourth quarter report. The stock set a fresh 52-week high, but remains far below the $36 high-water mark that was set in 2011 when OmniVision's back side illumination, or BSI, camera chips seemed set to rule the smartphone world.

• [By Dan Caplinger]

  But if you expand your view of the market, you'll find plenty of big movers and more interesting goings-on. OmniVision Technologies (NASDAQ: OVTI  ) is the big winner this afternoon, soaring more than 19% in the wake of last night's positive earnings report. OmniVision said its cost-reduction strategy had started to bear fruit, revealing a combination of favorable results for its most recent quarter and expectation-beating guidance for the current quarter. In the long run, OmniVision has to demonstrate its ability to keep its image-sensor chips in the most popular smartphones, tablets, and other mobile devices. So far, though, investors are content with the growth they've seen.

• [By Evan Niu, CFA]

  STMicroelectronics (NYSE: STM  ) and OmniVision (NASDAQ: OVTI  ) are the two camera suppliers, and HTC is reportedly no longer considered a "tier one" manufacturer so it doesn't get priority any more. That implies that one of these image sensor specialists was giving HTC the cold shoulder in favor of bigger names.

• [By Brian Pacampara]

  What: Shares of image sensor specialist OmniVision Technologies (NASDAQ: OVTI  ) spiked 19% today after its quarterly results and outlook topped Wall Street expectations.

Hot Small Cap Companies To Own In Right Now: KongZhong Corporation(KONG)

KongZhong Corporation, together with its subsidiaries, provides wireless interactive entertainment, media, and community services to mobile phone users in the People's Republic of China. It also involves in the development, distribution, and marketing of consumer wireless value-added services, including wireless application protocol, multimedia messaging services, short messaging services, interactive voice response services, and color ring back tones. In addition, it offers interactive entertainment services, such as mobile games, pictures, karaoke, electronic books, mobile phone personalization features, entertainment news, chat, and message boards; and through Kong.net offer news, community services, games, and other interactive media and entertainment services; and sells advertising space in the form of text-link, banner, and button advertisements. Further, the company develops and publishes mobile games, including downloadable mobile games and online mobile games cons isting of action, role-playing, and leisure games. As of December 31, 2009, it had a library of approximately 300 internally developed mobile games. Additionally, it develops online games; and provides consulting and technology services, as well as media and net book services. The company was formerly known as Communication Over The Air Inc. and changed its name to KongZhong Corporation in March 2004. KongZhong Corporation was founded in 2002 and is headquartered in Beijing, the People?s Republic of China

Advisors' Opinion:

• [By Seth Jayson]

  Calling all cash flows
  When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Kongzhong (Nasdaq: KONG  ) , whose recent revenue and earnings are plotted below.

Top 10 Growth Stocks To Own For 2014: ATA Inc.(ATAI)

ATA Inc., through its subsidiaries, provides computer-based testing services in the People?s Republic of China. It offers services for the creation and delivery of computer-based tests utilizing its test delivery platform, proprietary testing technologies, and testing services; and provides logistical support services relating to test administration. The company?s computer-based testing services are used for professional licensure and certification tests in various industries, including information technology (IT) services, banking, securities, teaching, and insurance. Its e-testing platform integrates various aspects of the test delivery process for computer-based tests ranging from test form compilation to test scoring, and results analysis. ATA also provides career-oriented educational services, such as single course programs, degree major course programs, and pre-occupational training programs focusing on preparing students to pass IT and other vocational certification tests; test preparation and training programs and services to test candidates preparing to take professional certification tests in securities, futures, banking, insurance and teaching industries; online test preparation and training platform for the securities and banking industries; and test preparation software for the teaching industry. In addition, the company offers HR select employee assessment solution, an online system that utilizes its proprietary software and an inventory of test titles to help employers improve the efficiency and accuracy of their employee recruitment process. As of March 31, 2010, it had contractual relationships with 1,988 ATA authorized test centers. The company serves Chinese governmental agencies, professional associations, IT vendors, and Chinese educational institutions, as well as individual test preparation services. ATA Inc. was founded in 1999 and is based in Beijing, the People?s Republic of China.

Hot Small Cap Companies To Own In Right Now: EZchip Semiconductor Limited(EZCH)

EZchip, a fabless semiconductor company, engages in the development and marketing of Ethernet network processors for networking equipment. Its products include network processor chips, evaluation boards and network-processor based systems, and development software toolkits. The company offers network processors for use in forming the silicon core of networking equipment, such as switches and routers; and for voice, video and data integration in various applications. Its network processors are single-chip solutions, which enable its customers to design multi-port line cards, such as processing and classification engines, traffic managers, media access controllers, as well as a range of specialized hardware blocks that accelerate various functions. The company offers Evaluation systems which enable customers to test NPU-based systems; and toolkits that assist customers in creating, verifying, and implementing solutions based on its network processors. It provides a library f eaturing data plane code for a range of applications, which include Metro Ethernet protocols, Multi-Protocol Label Switching, IPv4 and IPv6 routing, Access Control Lists, GPON/EPON OLT functionality, Network Address Translation, and Server Load Balancing. The company sells its products directly, and through contract manufacturers and distributors to network equipment vendors. It markets its products in Israel, China, Hong Kong, the Far East, Canada, the United States, and Europe. The company was formerly known as LanOptics Ltd. and changed its name to EZchip Semiconductor Ltd. in July 2008. EZchip Semiconductor Ltd. was founded in 1989 and is based in Yokneam, Israel.

Advisors' Opinion:

• [By Lisa Levin]

  EZchip Semiconductor (NASDAQ: EZCH) shares climbed 5.80% to $23.53. The volume of EZchip Semiconductor shares traded was 635% higher than normal. EZchip Semiconductor's PEG ratio is 1.57.

• [By Jake L'Ecuyer]

  EZchip Semiconductor (NASDAQ: EZCH) was also up, gaining 7.16 percent to $24.11 after a Cisco (NASDAQ: CSCO) announced a new product that would not threaten the company as previously thought. Equities Trading DOWN
  Shares of Cypress Semiconductor (NASDAQ: CY) were down 16.05 percent to $9.91 after the company lowered its Q3 forecast.

• [By Paul McWilliams]

  Paul McWilliams: Oh, absolutely. Another company that most investors probably have never heard of is a tiny little Israeli semiconductor company named EZChip (EZCH).

• [By Evan Niu, CFA]

  What: Shares of EZchip (NASDAQ: EZCH  ) have jumped today by as much as 13% after the company reported first-quarter earnings.

  So what: Revenue in the first quarter totaled $15.3 million, topping the Street's forecast of $15.1 million. Non-GAAP net income per share came in at $0.23, which was right on target with expectations.

Hot Small Cap Companies To Own In Right Now: OCZ Technology Group Inc(OCZ)

OCZ Technology Group, Inc. designs, develops, manufactures, and distributes computer components for computing devices and systems worldwide. It primarily offers solid state drives, flash memory storage, memory modules, thermal management solutions, AC/DC switching power supply units, and computer gaming solutions. The company?s products are used in industrial equipment and computer systems; computer and computer gaming solutions; mission critical servers and high end workstations; personal computer (PC) upgrades to extend the useable life of existing PCs; high performance computing and scientific computing; video and music editing; home theatre PCs and digital home convergence products; and digital photography and digital image manipulation computers. OCZ Technology Group, Inc. offers its products to retailers, on-line retailers, original equipment manufacturers, systems integrators, and distributors. The company was founded in 2002 and is headquartered in San Jose, Califo rnia.

Advisors' Opinion:

• [By Rich Duprey]

  The not-so-great and wonderful OCZ
  There was no company-specific news that caused solid-state-drive maker OCZ Technology (NASDAQ: OCZ  ) to fall almost 8% Wednesday. But an article that appeared on Seeking Alpha �questioning whether the company had six months or less to live before it filed for bankruptcy seemed to coincide with its fall.

Hot Small Cap Companies To Own In Right Now: Achillion Pharmaceuticals Inc.(ACHN)

Achillion Pharmaceuticals, Inc., a biopharmaceutical company, engages in the discovery, development, and commercialization of treatments for infectious diseases. The company focuses on the development of antivirals for the treatment of chronic hepatitis C; and the development of antibacterials for the treatment of resistant bacterial infections. Its drug candidates for the treatment of chronic HCV include ACH-1625, a protease inhibitor, which is in phase IIa clinical trial for the treatment of chronic HCV; ACH-2684, a pangenotypic protease inhibitor, which is in phase I clinical trial for the treatment of chronic HCV infection; and NS5A inhibitors for the treatment of chronic HCV infection, including ACH-2928, which is to enter a phase I clinical trial, as well as various additional NS5A inhibitors in preclinical development. Its pipeline of product candidates also includes ACH-702 and ACH-2881 for drug resistant bacterial infections; elvucitabine for HIV infection; and AC H-1095 for HCV infection. The company was founded in 1998 and is based in New Haven, Connecticut.

Advisors' Opinion:

• [By Keith Speights]

  Hold horrors
  Achillion Pharmaceuticals (NASDAQ: ACHN  ) takes the worst spot this week. Shares plunged 62% on bad news from the U.S. Food and Drug Administration.

• [By Keith Speights]

  2. Achillion Pharmaceuticals (NASDAQ: ACHN  )
  Achillion recently experienced a delay in the game that it had hoped to play. The FDA placed a clinical hold on hepatitis C drug sovaprevir after patients in a phase 1 drug-drug interaction study with the drug combined with ritonavir-boosted atazanavir were found to have elevated liver enzyme levels. Shares dropped 25% in one day as a result.

• [By Keith Speights]

  Liver quivers
  Achillion Pharmaceuticals (NASDAQ: ACHN  ) ranks as the top drop of the week. Shares plunged 24% on news that the Food and Drug Administration placed a clinical hold on experimental hepatitis C drug�sovaprevir.

Hot Small Cap Companies To Own In Right Now: Rackspace Hosting Inc(RAX)

Rackspace Hosting, Inc. operates in the hosting and cloud computing industry. It provides information technology (IT) as a service, managing Web-based IT systems for small and medium-sized businesses, as well as large enterprises worldwide. The company?s service suite includes dedicated hosting comprising customer management portal and other management tools that manage data center, network, hardware devices, and operating system software; and cloud computing that enables customers to provide and manage a pool of computing resources, as well as delivery of computing resources to business when they need them. It offers cloud servers, cloud files, and cloud sites, as well as cloud applications, such as email, collaboration, and file back-ups; and hybrid hosting that provides a combination of dedicated hosting and cloud computing services. The company also offers customer support services. It sells its service suite through direct sales teams, third-party channel partners, an d online ordering. The company was formerly known as Rackspace.com, Inc. and changed its name to Rackspace Hosting, Inc. in June 2008. Rackspace Hosting, Inc. was founded in 1998 and is headquartered in San Antonio, Texas.

Advisors' Opinion:

• [By Brian Pacampara]

  Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, Web-hosting company Rackspace Hosting (NYSE: RAX  ) has earned a respected four-star ranking.

Hot Small Cap Companies To Own In Right Now: bebe stores inc.(BEBE)

bebe stores, inc. engages in the design, development, and production of women?s apparel and accessories. Its products include a range of separates, tops, dresses, active wear, and accessories in career, evening, casual, and active lifestyle categories. The company markets its products under the bebe, BEBE SPORT, bbsp, and 2b bebe brand names targeting 21 to 34-year-old woman. As of July 2, 2011, it operated 252 retail stores, and an online store at bebe.com in the United States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Japan, and Canada, as well as 60 international licensee operated stores in south east Asia, the United Arab Emirates, Israel, Russia, Mexico, and Turkey. The company was founded in 1976 and is headquartered in Brisbane, California.

Advisors' Opinion:

• [By Ben Levisohn]

  Bebe Stores (BEBE) reported a loss of 14 cents a share, more than the 13 cent loss forecast by analysts, and said it would experience a loss in the low- to mid-teens during the current quarter.

Top 10 Biotech Stocks For 2014

The Wall Street Journal calls Carlsbad, Calif.-based Life Technologies (NASDAQ: LIFE  ) an $11 billion "company you never heard of." As the Journal reports, a buyout group including private-equity powerhouses Blackstone (NYSE: BX  ) , Carlyle Group (NASDAQ: CG  ) , and KKR (NYSE: KKR  ) is putting together an $11 billion bid to acquire the lab research equipment manufacturer. But as it turns out, Life is doing a bit of acquiring itself.

On Friday, Life announced that it has purchased South Korean reagents distributor KDR Biotech, its own primary distributor on the Korean Peninsula, for an undisclosed sum. Life averred in a statement that it will continue selling plastic ware and similar products -- which it does not itself produce but which KDR had been in the business of distributing -- in South Korea going forward. Life also intends to absorb all of KDR's current employees, and to also take on its CEO as an "external advisor" during the integration process.

Top 10 Biotech Stocks For 2014: Bioanalytical Systems Inc.(BASI)

Bioanalytical Systems, Inc. provides drug discovery and development services for pharmaceutical, biotechnology, academic, and government organizations primarily in North America, the Pacific Rim, and Europe. The company operates in two segments, Contract Research Services and Research Products. The Contract Research Services segment offers various services, including product characterization, method development, and validation; bioanalytical testing to measure drug and metabolite concentrations in complex biological matrices; stability testing to establish and confirm product purity, potency, and shelf life; in vivo sampling services for the continuous monitoring of chemical changes in life; and pharmacokinetic and safety testing services, as well as provides screening and pharmacological testing, preclinical safety testing, formulation development, regulatory compliance, and quality control testing services. The Research Products segment offers analytical products compris ing liquid chromatographic and electrochemical instruments with associated accessories; in vivo sampling products, such as Culex family of automated in vivo sampling and dosing instruments; and Vetronics? products consisting of instruments and related software to monitor and diagnose cardiac function, and measure other vital physiological parameters in cats and dogs. The company was founded in 1974 and is headquartered in West Lafayette, Indiana.

Top 10 Biotech Stocks For 2014: DiaMedica Inc (DMA)

DiaMedica Inc. (DiaMedica) is a development-stage company. The Company is a biopharmaceutical company engaged in the discovery and development of drugs for the treatment of diabetes and related diseases. DiaMedica's compound, DM-199, is a recombinant human protein for the treatment of both Type I and Type II diabetes and their complications. DiaMedica is starting a Phase I/II clinical trial for DM-199. DM-199 is a recombinant human protein, which improves glucose control, protects beta cells through the expansion of a population of antigen-specific immunosuppressive cells (Tregs), and proliferates insulin producing beta cells through the activation of certain growth factors. The Company�� DM-204 is a G-protein-coupled receptor agonist (GPCR) monoclonal antibody to treat Type II diabetes and some of the associated complication's. activating a receptor resulted in insulin sensitivity, insulin secretion and vasodilation.

Top 5 Gold Stocks To Buy For 2014: Inergetics Inc (NRTI)

Inergetics, Inc., formerly Millennium Biotechnologies Group, Inc., incorporated on November 9, 2000, is a holding company for its sole operating subsidiary, Millennium Biotechnologies, Inc. (Millennium). The Company through its subsidiary Millennium, engages in the research, development, and marketing of specialized nutritional supplements as an adjunct to medical treatments for select medical conditions, as well as for athletes seeking improved recovery and advanced performance. The Company markets products, which are targeted toward immuno-compromised individuals undergoing medical treatment for diseases, such as cancer, as well as wound healing and post-surgical healing and geriatric patients in long-term care facilities among other conditions. In January 2013, the Company acquired Bikini Ready and SlimTrim brands from Whole Products Group.

The Company�� product portfolio include, Resurgex Select, Ready-To Drink Resurgex Essential and Ready-To-Drink Resurgex Essential Plus. Resurgex Select is a whole foods-based, calorically dense, high-protein powdered nutritional formula developed for cancer patients undergoing chemotherapy or radiation treatments. Resurgex Essential and Resurgex Essential Plus represent Millennium�� Ready-to-Drink product line and are being sold into the Long-Term Care geriatric markets.

Resurgex Select

Resurgex Select is a whole foods-based nutritional product that is designed to be used throughout the course of cancer treatment (chemotherapy, radiation, etc.), as many times patients lose weight and cannot consume adequate nutrition. This product combines dietary fiber (3 g), low sugar (5 g), and high protein (15 g) with no added antioxidants to be a high-calorie (350 calorie) supplement. It is available in three flavors (Vanilla Bean, Chocolate Fudge, and Fruit Smoothie) and each can be mixed with water, milk, juices, or in soft cold foods, such as yogurt, apple sauce or pudding.

Surgex

Surgex (www.surgexspor! ts.com), is a nutritional support formula that aims to address the concerns of many elite athletes who suffer from symptoms, such as fatigue, lean muscle loss, lactic acid buildup, oxidative stress, and stressed immune systems. This formula is designed to improve recovery parameters in efforts to enhance the performance of professional and collegiate athletes.

Resurgex Essential

The Essential line is a ready-to-drink alternative to Ensure and Boost designed to be marketed into the long-term care channel. Resurgex Essential has 250 whole food calories containing no corn syrup or corn oil. The product also contains fruit and vegetable extracts, and FOS Fiber to provide calories and taste.

The Company competes with Nestle and Abbott Laboratories Inc.

Top 10 Biotech Stocks For 2014: Fuse Science Inc (DROP)

Fuse Science, Inc. ( Fuse Science), incorporated on September 21, 1988, is a consumer products holding company. The Company maintains the rights to sublingual and transdermal delivery systems for bioactive agents that can effectively encapsulate and charge many varying molecules in order to produce complete product formulations which can be consumed orally, applied topically or delivered otherwise sublingually or transdermally, thereby bypassing the gastrointestinal tract and entering the blood stream directly. The Fuse Science technology is designed to accelerate conveyance of medicines or nutrients relative to traditional pills and liquids and can enhance how consumers receive these products. In December 2012, the Company launched its initial DROP products, PowerFuse, an energy formulation in a concentrated drop and ElectroFuse, an electrolyte formula in a concentrated drop, online, with the expansion into targeted retail distribution channels.

The Company is developing formulations and devices, which are compatible with alternative delivery systems for energy, medicines, vitamins and minerals, among other bioactives. These alternative systems include, but are not limited to, sublingual, transdermal and buccal drug delivery methods. use Science has developed and continues to advance, in conjunction with its scientific team, sublingual and transdermal delivery systems for bioactives that can effectively encapsulate and charge varying molecules in order to produce product formulations which can be consumed orally, applied topically or otherwise delivered sublingually or transdermally, thereby bypassing the gastrointestinal tract and entering the blood stream directly. The delivery technology is consists of encapsulation vesicles and ion exchange permeation enhancers. This technology utilizes a gradient across the mucosa membrane to help deliver the bioactive more efficiently through the mucosa.

The Company�� products consist of EnerJel, PowerFuse and ElectroFuse. Ene! rJel is a topical product leveraging some of its technology, which is designed to address muscle fatigue and soreness, before, during and after physical activity. The product contains a natural anti-inflammatory and energy source which is directly applied to the problem area. PowerFuse contains natural ingredients, causes no sugar crash with zero calories and less than half the caffeine of an eight ounce cup of premium coffee. It is available in a great tasting Berry Blast Flavor. ElectroFuse contains natural ingredients, causes no sugar crash with zero calories, is easily portable and is available in a great tasting Salty-Sweet flavor.

Top 10 Biotech Stocks For 2014: Navidea Biopharmaceuticals Inc (NAVB)

Navidea Biopharmaceuticals, Inc. (Navidea), formerly Neoprobe Corporation, incorporated in 1983, is a biopharmaceutical company focused on the development and commercialization of precision diagnostic agents. As of December 31, 2011, the Company�� radiopharmaceutical development programs included Lymphoseek (Lymphoseek, Kit for the Preparation of Technetium Tc99m for Injection), a radiopharmaceutical agent for lymph node mapping; AZD4694, an imaging agent, and RIGScan, a tumor antigen-specific targeting agent. In January 2012, the Company executed an option agreement with Alseres Pharmaceuticals, Inc. (Alseres) to license [123I]-E-IACFT Injection, also called Altropane, an Iodine-123 radiolabeled imaging agent, being developed as an aid in the diagnosis of Parkinson�� disease, movement disorders and dementia. In August 2011, the Company sold its gamma detection device line of business (the GDS Business) to Devicor Medical Products, Inc.

Lymphoseek

Navidea�� pipeline includes clinical-stage radiopharmaceutical agents used to identify the presence and status of disease. Lymphoseek (Kit for the Preparation of Technetium Tc99m for Injection) is a lymph node targeting agent intended for use in intraoperative lymphatic mapping (ILM) procedures and lymphoscintigraphy employed in the overall diagnostic assessment of certain solid tumor cancers. The lymph system is a component of the body�� immune system. The key components of the lymph system are lymph nodes-small anatomic structures that contain disease-fighting lymphocytes, filter lymph of bacteria and cancer cells, and signal infection in response to heightened levels of pathogens. In Navidea�� Phase III clinical studies of Lymphoseek, it detected over 99% of positive nodes identified by vital blue dye (VBD). As of December 31, 2011, Navidea, in co-operation with UC, San Diego affiliate (UCSD), completed or initiated five Phase I clinical trials, one multi-center Phase II trial and three multi-center Phase II trials inv! olving Lymphoseek. Two Phase III studies were completed in subjects with breast cancer and melanoma. During the year ended December 31, 2011, data from NEO3-09 were released, which indicated that all primary and secondary endpoints for the study were met. As of December 31, 2011, third Phase III clinical trial for Lymphoseek in subjects with head and neck squamous cell carcinoma (NEO3-06) was in progress.

AZD4694

AZD4694 is a Fluorine-18 labeled precision radiopharmaceutical candidate for use in the imaging and evaluation of patients with signs or symptoms of cognitive impairment such as Alzheimer's disease (AD). It binds to beta-amyloid deposits in the brain that can then be imaged in positron emission tomography (PET) scans. Amyloid plaque pathology is a required feature of AD and the presence of amyloid pathology is a supportive feature for diagnosis of probable AD. Patients who are negative for amyloid pathology do not have AD. AZD4694 has been studied in several clinical trials. Clinical studies through Phase IIa have included more than 80 patients to date, both suspected AD patients and healthy volunteers. No significant adverse events have been observed. Results suggest that AZD4694 has the ability to image patients quickly and safely with high sensitivity.

RadioImmunoGuided Surgery

As of December 31, 2011, RIGScan had been studied in a number of clinical trials, including Phase III studies. Navidea has conducted two Phase III studies, NEO2-13 and NEO2-14, of RIGScan in patients with primary and metastatic colorectal cancer, respectively. Both studies were multi-institutional involving cancer treatment institutions in the United States, Israel, and the European Union.

The Company competes with Pharmalucence, Eli Lilly, Bayer Schering, General Electric and GE Healthcare.

Advisors' Opinion:

• [By Keith Speights]

  3. Navidea Biopharmaceuticals (NYSEMKT: NAVB  )
  Some investors were likely befuddled by Navidea's stock action earlier this year. The company received FDA approval in March for Lymphoseek, its radiopharmaceutical agent used for imaging lymph nodes in patients with breast cancer or melanoma. That was great news, but shares dropped quickly and still haven't returned to previous levels.

• [By Sean Williams]

  Diagnostics can also play an important role in early and late-stage breast cancer diagnoses. Navidea Biopharmaceuticals (NYSEMKT: NAVB  ) had Lymphoseek, its external lymph-node imaging and intra-operative lymphatic mapping diagnostic device, approved by the Food and Drug Administration earlier this year to help doctors stage cancer. Discovering whether breast cancer has invaded adjacent lymph nodes has never been easier or safer thanks to Lymphoseek, and it can dramatically aid physicians in determining the best course of action for breast cancer patients.

• [By Sean Williams]

  Another prime example here would be Navidea Biopharmaceuticals' (NYSEMKT: NAVB  ) Lymphoseek which is an injectable agent used in external lymph-node imaging and intra-operative lymphatic mapping. In English this means it will dramatically improve the staging and treatment options for patients with breast cancer. Being that breast cancer was also listed as a commonly misdiagnosed cancer, this is a big step in the right direction for patient care.

Top 10 Biotech Stocks For 2014: InterMune Inc.(ITMN)

InterMune, Inc., a biopharmaceutical company, engages in the research, development, and commercialization of therapies in pulmonology and fibrotic diseases. In pulmonology, the company focuses on therapies for the treatment of idiopathic pulmonary fibrosis (IPF), a progressive and fatal lung disease. It markets pirfenidone, an orally active drug that inhibits the synthesis of TGF-beta under the Esbriet name in the European Union, as well as in a Phase III clinical trial in the United States. Pirfenidone is also approved for the treatment of IPF in Japan, where it is marketed by Shionogi & Co. Ltd. under the Pirespa trade name. The company?s research programs focus on the discovery of small-molecule therapeutics and biomarkers to treat and monitor serious pulmonary and fibrotic diseases. InterMune, Inc. was founded in 1998 and is headquartered in Brisbane, California.

Advisors' Opinion:

• [By Rich Smith]

  On Thursday, the Securities and Exchange Commission charged a former vice president of finance, accounting officer, and controller of InterMune (NASDAQ: ITMN  ) with insider trading.

• [By Keith Speights]

  Lunging forward
  Intermune (NASDAQ: ITMN  ) announced second-quarter earnings on Wednesday. Higher-than-expected revenue helped shares advance almost 16% for the week.

• [By Brian Pacampara]

  What: Shares of biotechnology company Intermune (NASDAQ: ITMN  ) surged 13% today after its quarterly results and outlook topped Wall Street expectations.

• [By Lee Jackson]

  InterMune Inc. (NASDAQ: ITMN) continues to soar on the strength of global sales of its top drug Esbriet. The company is still seeking FDA approval to sell Esbriet in the United States. Before approval can take place, the company is awaiting top-line results from the phase 3 ASCEND study. InterMune expects to release these results during the second quarter of 2014. This could be a huge catalyst. UBS has a $15 price target, which should rise soon, and the consensus is at $16.

Top 10 Biotech Stocks For 2014: Oncolytics Biotech Inc (ONCY)

Oncolytics Biotech Inc. (Oncolytics), incorporated on April 2, 1998, is a development-stage company. The Company is focused on its research and development of REOLYSIN, which is its cancer therapeutic. REOLYSIN is developed from the reovirus. This virus has been demonstrated in tumour cells bearing an activated Ras pathway. Oncolytics is directing a clinical trial program with the focus of developing REOLYSIN as a human cancer therapeutic. The clinical program includes clinical trials, which it sponsors directly along with Third Party Clinical Trials. Third Party Clinical Trials are clinical trials that are being sponsored by other institutions. As of December 31, 2011, the United States National Cancer Institute (NCI), the University of Leeds and the Cancer Therapy & Research Center at the University of Texas Health Center in San Antonio (CTRC) were sponsoring part of its clinical trial program.

The Company�� clinical trial program has included human trials using REOLYSIN alone, and in combination with radiation and chemotherapy, and delivered via local administration and/or intravenous administration. Oncolytics uses contract toll manufacturers to produce REOLYSIN. On December 31, 2011, the Company had two wholly owned subsidiaries, Oncolytics Biotech (Barbados) Inc. (OBB) and Valens Pharma Ltd. Oncolytics Biotech (US) Inc. and Oncolytics Biotech (U.K.) are wholly owned subsidiaries of OBB.

Advisors' Opinion:

• [By Sean Williams]

  With this in mind, I feel it'd be prudent of biotech-savvy investors to give Oncolytics Biotech (NASDAQ: ONCY  ) a closer look.

  The big risks
  I'm quite aware that there are a lot factors that'd raise a red flag with Oncolytics. Similar to Affymax, you could say that Oncolytics has put all of its eggs in one basket with its lead experimental drug, reolysin. According to Oncolytics' website, including its U.K., Canadian, and U.S. studies, reolysin as either a monotherapy or combination therapy is the basis for all 31 clinical trials! Obviously, if reolysin proves ineffective or unsafe, Oncolytics is going to be a world of hurt.

• [By Maxx Chatsko]

  T-VEC is not your traditional biologic drug. It is actually a bioengineered form of the herpes virus that, once injected into cancerous tumors, replicates, and produces an immune-stimulating protein that puts a bulls eye on cancer cells throughout the body. Despite its promise and intriguing mechanism of action, T-VEC is not in further development at Amgen. However, Oncolytics (NASDAQ: ONCY  ) has shown promising results for its bioengineered form of reovirus called Reolysin. Initial phase 3 results showed that 86% of patients taking the drug had reduced tumor mass or growth after six weeks of treatment. �

Top 10 Biotech Stocks For 2014: Alnylam Pharmaceuticals Inc.(ALNY)

Alnylam Pharmaceuticals, Inc., a biopharmaceutical company, engages in discovering, developing, and commercializing novel therapeutics based on RNA interference (RNAi). Its core product programs under clinical or pre-clinical development include ALN-TTR, a Phase I clinical trial program for the treatment of transthyretin-mediated amyloidosis; ALN-APC, a Phase I clinical trial program for the treatment of hemophilia; ALN-PCS for the treatment of severe hypercholesterolemia; ALN-HPN, a pre-clinical development for the treatment of refractory anemia; and ALN-TMP, a pre-clinical development for the treatment of hemoglobinopathies, including beta-thalassemia and sickle cell anemia. The company?s partner-based programs comprise ALN-RSV01, a Phase II clinical trial program for the treatment of respiratory syncytial virus infection; ALN-VSP, a Phase I clinical trial completed program for the treatment of liver cancers; and ALN-HTT, a pre-clinical development for the treatment of Huntington?s disease. It has strategic alliances with Novartis Pharma AG; F. Hoffmann-La Roche Ltd; Takeda Pharmaceutical Company Limited; Isis Pharmaceuticals, Inc.; Medtronic Inc.; Kyowa Hakko Kirin Co., Ltd.; and Cubist Pharmaceuticals, Inc. The company was founded in 2002 and is headquartered in Cambridge, Massachusetts.

Advisors' Opinion:

• [By Sean Williams]

  RNAi therapeutics expert Alnylam Phrmaceuticals (NASDAQ: ALNY  ) also delivered big gains this week to the tune of 22% after reporting very encouraging mid-stage data for ALN-TTR02, its treatment targeting TTR-mediated amyloidosis. Its experimental drug ALN-TTR02 delivered a 93% reduction in TTR rates in patients, which is perfectly consistent with its early stage results that demonstrated a reduction in TTR rates of 94%. Peak sales estimates, should the drug be approved, range from $800 million to up to $2 billion, but I'd caution investors keep a level head on their shoulders in the meantime.

Top 10 Biotech Stocks For 2014: Oxford BioMedica PLC (OXB)

Oxford BioMedica plc is a biopharmaceutical company developing gene-based medicines and therapeutic vaccines. The Company�� LentiVector platform products include ProSavin, RetinoStat, StarGen, UshStat, EncorStat, Glaucoma-GT and MoNuDin. Its 5T4 Tumour Antigen produces TroVax and Anti-5T4 antibody. The Prime Boost�� product includes Hi-8 Mel. Its GDEPT platform produces MetXia and Anti Angiogenesis platform produces EndoAngio-GT. The Company is developing four LentiVector platform product candidates for the treatment of ocular diseases: RetinoStat for wet age-related macular degeneration (AMD); StarGen for Stargardt disease; UshStat for Usher syndrome type 1B, and EncorStat for corneal graft rejection. TroVax is a therapeutic vaccine that stimulates the immune system to destroy cancerous cells expressing the 5T4 tumour antigen. On February 25, 2011, the Company purchased a freehold property, United Kingdom comprising a manufacturing facility.

Top 10 Biotech Stocks For 2014: Sanofi(SNY)

sanofi-aventis engages in the discovery, development, and distribution of therapeutic solutions to improve the lives of everyone. The company offers a range of healthcare assets, including a broad-based product portfolio in prescription drugs, OTC/OTX, generics, vaccines, and animal health. It has a strategic alliance with Regulus Therapeutics Inc. to discover, develop, and commercialize micro-RNA therapeutics, initially in fibrosis. The company was founded in 1970 and is headquartered in Paris, France.

Advisors' Opinion:

• [By C.R. Jackson]

  Fanapt was discovered by Hoechst Marion Roussel in 1995 as a novel atypical antipsychotic agent. Hoechst was a German life-sciences company that became Aventis Deutschland after its merger with France's Rhône-Poulenc in 1999. When the company joined with Sanofi-Synthélabo in 2004, it became a subsidiary of the Sanofi-Aventis (SNY) the French pharmaceutical conglomerate. In 1997, Hoechst sold the research rights to Titan Pharmaceuticals (TTNP.OB). Then Titan quickly sold the worldwide rights to Novartis in 1998. Novartis then sold the Phase 3 development rights for loperidone to Vanda in 2004. Vanda originally attempted to get FDA approval for Fanapt in 2008, but the FDA refused to approve iloperidone. The agency required an additional clinical trial.

• [By Keith Speights]

  Aegerion Pharmaceuticals (NASDAQ: AEGR  ) received FDA approval in late 2012 for Juxtapid in the treatment of HoFH. Soon afterward, the FDA approved another drug targeting HoFH, Kynamro, which was developed by Isis Pharmaceuticals (NASDAQ: ISIS  ) and marketed by Sanofi's (NYSE: SNY  ) Genzyme unit.

• [By Keith Speights]

  3. Buying businesses
  Buffett doesn't buy a stock. He buys a business. His aim is to buy a "wonderful company at a fair price." Sanofi (NYSE: SNY  ) seems to have hit that mark. Berkshire Hathaway bought shares in the French pharmaceutical company back in 2006 and added to its position each year through 2010. Even through Sanofi's share prices were declining during much of that period, Buffett kept on buying. As with Glaxo, he saw the long-term potential for the business and cared less about how the stock was performing in the shorter term.

S&P 500 surges to record on Fed bets after debt deal

U.S. stocks rose Thursday, sending the Standard & Poor's 500 Index to a record, as speculation grew that the Federal Reserve will maintain the pace of stimulus after Congress ended the budget standoff.

American Express Co. rallied the most in nearly two years after reporting third-quarter profit that beat analysts' estimates. Newmont Mining Corp., the second-largest gold miner, jumped 4.6% as the price of the precious metal surged. International Business Machines Corp. sank 6.4% after posting its sixth consecutive drop in quarterly sales. Goldman Sachs Group Inc. dropped 2.4% as the bank reported a 20% drop in revenue.

The S&P 500 rose 0.7% to 1,733.15 at 4 p.m. in New York, surpassing the previous record of 1,725.52 from Sept. 18. The Dow Jones Industrial Average fell 2.18 points to 15,371.65, held down by IBM and Goldman Sachs. About 6.6 billion shares changed hands on U.S. exchanges, 12% above the three-month average.

“The taper seems a little bit further out, certainly than anybody expected eight weeks ago and maybe even just a couple of weeks ago,” Walter Todd, chief investment officer at Greenwood Capital Inc., said in a phone interview from Greenwood, S.C. He helps manage $950 million. “It keeps a lid on rates and provides more liquidity for risk assets like stocks. People are back to focusing on the individual company dynamics that occur during earnings season.”

The S&P 500 gained 2.4% during the 16-day government closure that ended Wednesday after President Barack Obama signed a bill to fund the government through Jan. 15 and extend the borrowing authority through Feb. 7.

Shutdown effects

Investors will now weigh the shutdown's effects on corporate earnings and economic growth as the impasse fueled bets that the Fed will delay reducing its $85 billion in monthly bond purchases.

Pacific Investment Management Co. said the central bank will postpone tapering. The Fed “may now have no choice but to stay longer in its intense policy experimental mode –- due both to the likelihood of weaker data and to a perceived need to take out insurance for the economy against future political dysfunction,” said Pimco Chief Executive Officer Mohamed El-Erian in a CNBC blog posting.

The “fiscal shenanigans” undermined the case for tapering, Dallas Fed President Richard Fisher, an opponent to increasing stimulus, said today. Kansas City Fed President Esther George, who has voted this year against expanding stimulus, said the Fed has enough data to assess the economy's strength and should taper even amid fiscal “uncertainty.” The central bank next convenes Oct. 29-30.

Broad rally

The Fed stimulus has helped the equity gauge surge 156% from its March 2009 low. The index has jumped 22% this year and climbed to its previous intraday record of 1,729.86 on Sept. 19, a day after the Fed unexpectedly delayed tapering at its last policy meeting.

The rally i! n stocks this year has pushed valuations to a three-year high and is the broadest since at least 1990. The S&P 500 trades at 16.5 times reported operating profit, a 17% increase from the beginning of 2013, according to data compiled by Bloomberg. Some 445 stocks in the gauge have posted year-to-date gains through yesterday, data show. The second-broadest advance in the period was in 1995, when 434 stocks in the benchmark gained through Oct. 16.

Equities could come under pressure as companies from Knoll Inc. to NCI Inc. have said they expect the shutdown to affect revenue in the last three months of the year.

Revenue slowdown

“We are going to see a lower equity market and a longer period of lower rates” if corporate earnings start to deteriorate in the fourth quarter, BlackRock Inc. Chief Executive Officer Laurence D. Fink, who as head of the world's biggest money manager oversees $4.1 trillion in assets, said today on “Market Makers” with Erik Schatzker and Stephanie Ruhle.

Knoll, an officer furniture maker, estimates about $10 million of government business to be pushed into next year, CEO Andrew Cogan said. Stanley Black & Decker Inc.'s shares yesterday dropped 14%, the most since 1992, after the toolmaker reduced its full-year profit forecast in part because of the shutdown. Campbell Soup Co. has seen consumers pull back after a year that included higher payroll taxes, along with the impasse in Washington, CEO Denise Morrison said.

Growth impact

Profits for S&P 500 companies probably grew 8.8% in the fourth quarter, according to analysts' estimates compiled by Bloomberg as of Oct. 11.

S&P Ratings Services Wednesday said the shutdown has shaved at least 0.6% off of fourth-quarter 2013 gross domestic product growth, or taken $24 billion out of the economy. IHS Inc. of Lexington, Massachusetts, reduced its GDP growth estimate for the period to 1.6%, from 2.2% in September.

(Don't miss: Advisers disgusted with D.C. politics after budget drama)

The U.S. economy wi! ll expand! by 1.6% this year, according to economists surveyed by Bloomberg. That would be the slowest rate of annual growth since 2009.

Consumer pessimism

A report Thursday showed Americans in October were the most pessimistic about the nation's economic prospects in almost two years as concern mounted that continued political gridlock will hurt the expansion. The monthly Bloomberg Consumer Comfort Index expectations gauge plunged to minus 31, the lowest level since November 2011.

“So far, we think earnings will be resilient, even to what happened in Washington,” Andres Garcia-Amaya, global market strategist at JPMorgan Chase & Co.'s mutual funds unit, said in a phone interview. His firm oversees $400 billion. “Short term, you might still have the sour taste of what happened the last couple of weeks. Fundamentally, the economy still has plenty of pent-up demand. The balance sheets of the consumer are actually in decent shape.”

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, sank 8.4%, after falling yesterday by the most in more than two years. The index has retreated 25% this year.

Third-quarter results

Profits for companies in the S&P 500 probably increased 1.4% during the third quarter as sales rose 2%, according to analysts' estimates compiled by Bloomberg. Some 24 companies in the index reported results today.

Nine of 10 main groups in the S&P 500 advanced Thursday. Phone, utility and materials stocks rallied at least 1.3% to pace gains.

IBM plunged 6.4% to $174.83 for the biggest drop in the Dow. Third-quarter revenue fell 4% to $23.7 billion, $1 billion less than analysts had forecast in a Bloomberg survey.

Goldman Sachs fell 2.4% to $158.32. The world's most profitable securities firm before the financial crisis said earnings were little changed as the bank cut costs in response to a 20% drop in revenue. The firm increased its dividend 10%.

IBM and Goldman are the second and third-biggest weightings, res! pectively! , in the price-weighted Dow. Goldman was added to the gauge last month. The difference between today's move in the Dow and S&P 500 was the biggest since April, according to data compiled by Bloomberg.

(Bloomberg News) Like what you've read?

Wall Street focus shifts from politics to data

NEW YORK — With the stroke of President Obama's pen, the major storyline on Wall Street will shift from "political risk" to plain old everyday market risk.

Once Obama signs off on the congressional bill that will reopen the government and extend the debt ceiling through early 2014, the "Will the U.S. default?" narrative that's been trending on Wall Street will give way to more traditional market-moving themes such as:

• Will Google's earnings top estimates?

• When will the Federal Reserve start tapering its bond purchases?

• How's the economy holding up?

The market cheered the apparent end of the budget impasse Wednesday. The Dow Jones industrials rose 206 points to 15,374. The broad market saw a $275 billion paper gain, Wilshire Associates says.

STOCKS: Dow jumps more than 200 points on debt deal

DEBT DEAL: Congress passes deal to raise debt ceiling, reopen government

But since the market "never priced in the bad scenario, it's unlikely to storm away to the upside," says Rod Smyth, chief investment strategist at RiverFront Investment Group.

With political gridlock done for now, Wall Street money managers and analysts can get back to evaluating asset prices based on such things as corporate earnings, home sales and consumer confidence, says Doug Cote, chief investment strategist at ING U.S. Investment Management. "Now the focus will be on business fundamentals," he says.

Here's what investors will be watching:

• The economy. The big question is how much has the more-than-two-week government shutdown hurt the economy? says Nicholas Sargen, chief investment officer at Fort Washington Advisors.

Investors will closely analyze fresh economic releases, including those issued by the federal government, which stopped compiling and reporting key data during the 16-day shutdown.

Economists have cut fourth-quarter GDP growth estimates to 2% from 2.3%, BlackRock says. But this "drag" isn't enough to do "lasting damage" to the ec! onomy, argues Sargen. He likens the disruption to a "natural disaster," a one-time event the economy will overcome.

ECONOMY: Political uncertainty keeps slowing economy's rise

By avoiding default, the market will be spared the "tail-risk scenario of a 2014 global recession," Smyth adds.

• Corporate earnings. The third-quarter profit reporting season is underway, but has been overshadowed by the debt showdown. "What I'm looking for," Cote says, "is another quarter of positive year-over-year growth."

Analysts are expecting profit growth of 3.1%, S&P Capital IQ says.

Cote expects "corporate profits to continue to drive stocks higher." But he says he'll be listening to CEO guidance about the future to determine if the political paralysis puts estimated fourth-quarter profit growth of 9.2% in jeopardy.

• The Fed. The central bank opted not to start dialing back its market-friendly bond-buying program in September, citing the fiscal impasse in Washington. The negative hit to growth will likely sideline the Fed even longer, pushing back their first taper to December at the earliest, analysts say.

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"The Fed will still be there to lube the economy," says Sargen.

If there's a negative, it's that the budget deal is temporary, and divided lawmakers will return to the bargaining table, setting the market up for more political gridlock in 2014, Sargen warns.

How a Fast-Growing RIA Gets Referrals

It’s all about the client experience.

When Schwab Advisor Services reported the findings of its most recent benchmarking survey, it revealed that some of the fastest-growing RIAs owed their success to a talent for making clients happy and thereby getting solid referrals.

These best-in-class RIAs saw net organic growth rise five times faster in 2012 than all other firms. And regardless of size — whether they managed $250 million to $500 million, $500 million to $1 billion or more than $1 billion — these fast-growing firms generated an average of 36% more new clients from referrals than all other firms, said Jonathan Beatty, senior vice president of Schwab Advisor Services’ sales and relationship management, when the findings were released.

“These firms have black-belt status at relationship marketing,” Beatty said at the time. “The client experience floats all the way through the system.”

Sounds good. But what does the day-to-day client experience actually look like for one of those fast-growing RIAs in the Schwab survey?

According to Scott Swenor, CFO of boutique RIA Manchester Capital Management, a survey participant that Schwab identified as excelling in the client experience, referrals start with his firm’s clear understanding of its specific value proposition and ideal client profile. (In 2012, Swenor noted, Manchester had $2.5 billion in assets under management and 15% AUM growth.)

From there, Swenor said in a phone interview on Thursday, Manchester follows a written plan that extends across the firm’s four locations nationwide when it approaches people for referrals.

“Strategically, we set the concept of getting referrals through existing clients and centers of influence as a priority,” Swenor said. “We seek out a select number of law and accounting firms that can provide a mutually beneficial client experience if it fits in with our ideal client profile.”

“The client priority is ingrained into the firm's culture, business model, employee rewards, strategic direction, policy and procedures,” Manchester Capital Management says in a comment on the firm’s culture.

At the same time, Swenor said, each of the firm’s four offices in Manchester, Vt.; Montecito, Calif.; New York City; and Charlottesville, Va., has the freedom to develop its own business development and marketing plan.

“These plans speak to referrals and how each office identifies referral sources,” Swenor said. “Each office knows their existing and potential future relationships.”

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In the Vermont office, for instance, where Swenor is based, “we’re good at deep relationships with just a few centers of influence because so much of wealth management is relationship-based,” he said. “Rather than going shotgun to have as many as possible, we have fewer but deeper relationships. It speaks to long-term relationships and secondly, a two-way street of having conversations so that we refer to our clients and they refer to us. Not all of our clients are looking for a new lawyer or accountant, and not all of their clients are looking for a wealth manager, but there are opportunities over time.”

The Vermont office has identified its ideal client profile — and written up that profile as a one-page document that spells everything out — as a multigenerational family with $10 million or more in investable assets that feels comfortable delegating investment-making decisions and family office services to the firm.

In comparison, Swenor said, the New York office counts many trust and estate attorneys among its centers of influence. And professionals in the newest office, in Virginia, are now building relationships by sitting on philanthropic boards of three or four local organizations and holding charitable events. “It develops an interactive and engaged audience that allows us to showcase our thought leadership without it feeling like a paid commercial,” Swenor said.

The Basics: Swenor’s Tips for RIAs on How to Get Referrals

1) Understand your specific value proposition and ideal client profile. First, determine your firm’s strengths and weaknesses, then use that knowledge to shape your ideal client profile. “Don’t try to be everything to everybody,” Swenor said.

2) Pay attention to your centers of influence (COIs). Keeping tabs on the people and firms that your firm comes into contact with on a regular basis is an organic way to boost market access and credibility — and a potential source of referrals, according to Swenor. “There is a mutual benefit in finding the right firms, individuals and settings after you know what you want,” he said, pointing to the advantages of finding potential referral sources in firm-to-firm meetings with like-minded accounting and legal services groups.

3) Make referrals a strategic priority by putting a formal plan into place that’s known throughout the organization. “Each of our office leaders has completed a three-page business development and marketing plan with a consistent measurement of prospects, COI referrals, public relations, events and expanding relationships with existing clients,” Swenor said.

---

Read Schwab Reveals Secret of Fastest-Growing RIAs at ThinkAdvisor.

Reviewing Little-Known IRA Traps

IRAs seem to be simple things when we open them and begin annual contributions. Over time, as we move from the accumulation years, trickier rules kick in. This is where many people inadvertently lose portions of their nest eggs to taxes and penalties. Others simply miss opportunities they didn’t know were available. Here’s a review of some opportunities to consider and traps to avoid.

Establish a Roth for a youngster. A child or grandchild who worked over the summer or part-time during the year could use some encouragement and a bonus. You can contribute to a Roth IRA for the child as a gift. In 2013 you can contribute up to the lower of $5,500 or what the youngster earned from working. (Investment income doesn’t count.) This amount will be a gift that qualifies for the annual gift tax exclusion of $14,000.

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The Roth IRA, even if you make only one contribution, can compound over the years to provide a nice foundation for retirement. Then, money can be withdrawn tax-free. Or, the youngster can withdraw the contributions tax-free any time, such as to pay for college or use as a down payment for the first home.

Check your IRA custodial agreement. Your IRA is supposed to be protected from creditors under the bankruptcy law. But the protection doesn’t apply if you committed a prohibited transaction. Many people are inadvertently committing prohibited transactions with their IRAs that void the bankruptcy protection, according to a recent court decision.

Here’s how a technicality can cause trouble for an IRA. The IRA owner opened an IRA with a major brokerage firm. He had no other accounts at the broker and didn’t intend to use margin lending in any account, but he didn’t check the box on the application to decline margin lending that was standard with that custodian. The agreement also provided for cross-collateralization, meaning that if he took out a margin loan and couldn’t pay it from other assets, the IRA could be used to pay the loan. This, according to the court, amounted to pledging the IRA to back a loan, which is a prohibited transaction.

He eventually won on an appeal, where the court ruled there isn’t a prohibited transaction unless a loan actually takes place. But it was a long, expensive process, and there’s no guarantee other courts will rule the same way. To be safe, you should avoid any IRA agreements that provide for cross-collateralization of loans. Many IRA custodians are in the process of removing such language from their documents.

The IRS is monitoring contributions and distributions. A congressional research report found that many IRA owners are violating either the contribution limits or required minimum distribution rules. The IRS could generate a lot of money in taxes and penalties by more closely enforcing the rules. So, you have to be sure you don’t contribute too much to IRAs during the year and that you withdraw the right amounts.

Of special interest to my readers are the required minimum distributions rules after age 70½. The investigation found that a lot of people don’t take the required minimum each year. The penalty for that is 50% of the amount you should have withdrawn but didn’t. For a refresher on how to calculate your RMD and the deadlines, see back issues of Retirement Watch or IRS Publication 590.

Inherited IRAs. Be sure your heirs have good information about how to handle an inherited IRA, because the rules can become very tricky.

For example, when an heir decides to move an inherited IRA to a different custodian, the rollover must be directly from one trustee to another. With other IRAs, you can receive a check from the IRA custodian and take up to 60 days to deposit the same amount with the new custodian. But the 60-day rule doesn’t apply to inherited IRAs. If it’s not a trustee-to-trustee transfer, the entire amount is treated as a distribution even if you deposit it in a new IRA within 60 days.

Also, September 30 of the year after the original owner’s passing is an important date. By then, the IRA custodian needs to be notified who the beneficiaries are and who is the “designated beneficiary,” whose age is used to determine required distributions.  Also, if a non-individual, such as a charity, a trust, or the estate, was named as a co-beneficiary, the entire IRA must be emptied within five years. But if that beneficiary is paid its full share by the Sept. 30 deadline, it no longer will be a beneficiary. Required distributions then are scheduled over the life expectancy of the oldest beneficiary.

There are a host of other things heirs need to know about inherited IRAs. I compiled them in my report, Bob Carlson’s Guide to Inheriting IRAs. You can read more about it by going to www.RetirementWatch.com and clicking on the Bob’s Library tab.

Stocks Higher on Debt-Deal Optimism as Treasuries Gain Ground

NEW YORK (TheStreet) -- Major U.S. stock markets were advancing Friday following yesterday's second-biggest gains of the year as signs of constructive discussions in Washington bolstered confidence the government won't allow the U.S. to default on its debt obligations.

The S&P 500 was gaining 0.3% to 1,697.13 after the benchmark's biggest jump since Jan. 2, while the Dow Jones Industrial Average was adding on 0.3% to 15,175.38. The Nasdaq was also up 0.3% to 3,773.72. 

House Republicans offered to end the government nine-day-old government shutdown in exchange for budget cuts, according to reports from the Associated Press. Republican leaders have been pressing President Obama to cut funding for the Affordable Care and Patient Protection Act before they would agree to raise the limit on federal borrowing to pay for government expenditures and programs previously approved by Congress.

In equity trading, Safeway (SWY)was the most prominent gainer in the broad market as shares jumped 5.57% to $33.28 following the supermarket operator's announcement that it will by early 2014 exit the Chicago market where it operates 72 Dominick's stores and that the move will result in a cash tax benefit of $400 million to $450 million. Excitement swirling the announcement was helping to distract from its third-quarter misses.

Oil refiners such as Tesoro (TSO)and Valero Energy (VLO)were also gaining ground. Tesoro was popping 4.43% to $45.45 while Valero was jumping 3.2% to $36.69 supported by easing concerns about an economic fallout from the Washington debates and the impact on demand for refined petroleum products, as well as a proposal by the U.S. Environmental Protection Agency proposal to ease its ethanol mandate next year to a requirement that 15.21 billion gallons of ethanol and biodiesel be blended into motor fuels. That's down from the current 18.15 billion gallon requirement and would substantially reduce costs for oil refiners.

As faith in the government's global creditworthiness looked like it was gradually being restored, both long and shorter-dated Treasuries moved higher. The benchmark 10-year Treasury was gaining 6/32, diluting the yield to 2.662%, while the one-month bill was unchanged with the yield at 0.226% after popping for much of the morning.

On Thursday evening, during a 90 minute discussion, House Republicans proposed a temporary, six-week increase to the debt limit so that the U.S. may keep borrowing money to pay its bills while a bigger deficit reduction deal was discussed. The president said he was open to further discussions and also urged for an immediate end to the government shutdown.

The Reuters/University of Michigan's consumer sentiment index indicated a drop to 75.2 in the preliminary October reading from 77.5 in September versus economists' average expectation of 76, reflecting the psychological impact of the tension in Washington as the government shutdown heads into its 11th day.

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-- Written by Andrea Tse in New York >To contact the writer of this article, click here: Andrea Tse.>

Will The Hobbit Trilogy Send Time Warner Higher?

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With shares of Time Warner (NYSE:TWX) trading around $66, is TWX an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Time Warner is a media and entertainment company. The company operates in three reporting segments: Networks, Film, and TV Entertainment and Publishing. Networks consist of television networks and premium pay and basic tier television services and digital media properties. Film and TV Entertainment consists of feature film, television, home video, and video game production and distribution while Publishing consists of magazine publishing. Through its segments, Time Warner is able to move audiences around the world. With such a large and growing audience, look for Time Warner to continue to drive profits through its media and entertainment.

Time Warner’s Warner Bros. has spent an estimated $561 million on the Hobbit trilogy so far, making it one of the most expensive franchises to date and nearly doubling the amount spent on the Lord of the Rings trio of films. The first Hobbit movie brought in more than $1 billion, and the second is scheduled for release this December.

T = Technicals on the Stock Chart are Strong

Time Warner stock has seen positive progress in recent years but is now trading near the top-end of a multi-year range. The stock is at highs for the year but multi-year resistance may be in sight. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Time Warner is trading above its rising key averages which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Time Warner options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Time Warner Options	24.24%	66%	65%

What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
October Options	Flat	Average
November Options	Flat	Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Mixed Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Time Warner’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Time Warner look like and more importantly, how did the markets like these numbers?

	2013 Q2	2013 Q1	2012 Q4	2012 Q3
Earnings Growth (Y-O-Y)	92.86%	27.12%	57.94%	10.26%
Revenue Growth (Y-O-Y)	10.25%	-0.57%	-0.35%	-3.20%
Earnings Reaction	-0.37%	-0.50%	4.10%	4.17%

Time Warner has seen increasing earnings and decreasing revenue figures over the last four quarters. From these numbers, the markets have had mixed feelings about Time Warner’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has Time Warner stock done relative to its peers, News Corp. (NASDAQ:NWSA), Walt Disney (NYSE:DIS), Comcast (NASDAQ:CMCSA), and sector?

	Time Warner	News Corp.	Walt Disney	Comcast	Sector
Year-to-Date Return	38.93%	0.25%	31.15%	22.16%	7.31%

Time Warner has been a relative performance leader, year-to-date.

Conclusion

Time Warner provides media and entertainment through a variety of mediums to consumers and businesses all around the world. Hobbit, the company’s most expensive franchise to date, earned close to $1 billion on its first film and is set to release the second later this year. The stock has been moving higher in recent years and is now trading near highs for the year. Over the last four quarters, earnings have been rising while revenues have been decreasing, which has produced mixed feelings among investors about recent earnings announcements. Relative to its peers and sector, Time Warner has been a year-to-date performance leader. Look for Time Warner to OUTPERFORM.