Market Watch for Week of 8/24/2009

[billhart22]

You understand it correctly Bill

Cool, Matt...Well, QASP didn't get damaged that bad. It sure shook off the shorters and flippers, which is a good thing. Do you still have any mglg?

[stang3O2]

I never bought any I'm holding SIRI EVFL QEDN SYMW

[Dr. Dave]

I know that if you have 25K in a day trading account, that you can use that, because you have backup funds. You can use that until you run out of cash and then it goes to your cash account until the clearing of the funds that you have.

In other words, you can use your own money in the account until you have used it up, then it comes out of your cash "Cash". The money still takes time to clear. They don't give you a free pass. They just want your money in an account to reap from you. There isn't really that much difference, but adds flexibility. Am I wrong?

If I were a swing trader, then it would really matter. If I were a shorter, then I would be responsible to pay for my losses, plus pay the difference to close.
In addition, they mark your losses up. Your losses could cost you big time. In addition, they will charge you an interest rate depending upon your financials.

I don't think there is a real advantage to having a margin account, especially on the shorting side. JMHO. I wouldn't dare to short stocks, but that is just me. I am not comfortable with that.

When you short a stock, nothing happens on the margin side, as long as you have the funds to cover the difference and they don't force a sell...

ie. if you have $1000 in your account and you short $500 of stock, then you would end up with $1500 in your account. If the price goes the wrong way, and the stock is worth $600, then you are "down" $100, but in the clear since technically, you started with $1000, and if you covered that moment, you'd have $400 debit, leaving you $900 in the account. So, there aren't any margin fees... now if the stock more than doubled in price, like 110%, where if you covered, it would cost $1100, then you may get a margin call... and be left on the hook for an extra $100 + interest on that. Not interest on the whole $1100. Generally, you won't get into trouble shorting big board stocks, if you follow sound money management and stop loss rules. ie. I wouldn't put 100% of my account in GOOG going long, and rack up a 75% loss (we'll I guess there are some that do that), and so going short, I likewise wouldn't go short 100%, and let it slip to a 75% loss... it would be a pretty rare case for a stock like that to shoot up 75% in a day... while it may happen, I'd more likely bet on it to drop 75% in a day.

But back to having a margin account, not having to wait 3 days is nice. I don't use, or haven't had to use margin. Take that back, once when I did go in 100% on my account, I had a buy that by the time it triggered, I did have some margin, but it was for less than $50, and it ended when one of the other stocks settled. So I was tagged for a day or two of interest... but that only happened once, and was thru a crappy broker. Scottrade never did that to me.

I think the key is, don't dump your whole account into the market whether with a cash account or margin. Especially on the big boards with all bets in the same direction.

One other thing on that $1000 example, if you had another big board stock in your account... say $300 of another stock (long), that changes your buying power, giving you extra before the margin call... I think this is the case, as if you are long, and we are talking all big board stocks, that on average, since the stocks move together, the chance that the two stocks are moving in the same direction is high, so as you lose on the short, you gain on the long, so they give you the cushion.

[billhart22]

When you short a stock, nothing happens on the margin side, as long as you have the funds to cover the difference and they don't force a sell...

ie. if you have $1000 in your account and you short $500 of stock, then you would end up with $1500 in your account. If the price goes the wrong way, and the stock is worth $600, then you are "down" $100, but in the clear since technically, you started with $1000, and if you covered that moment, you'd have $400 debit, leaving you $900 in the account. So, there aren't any margin fees... now if the stock more than doubled in price, like 110%, where if you covered, it would cost $1100, then you may get a margin call... and be left on the hook for an extra $100 + interest on that. Not interest on the whole $1100. Generally, you won't get into trouble shorting big board stocks, if you follow sound money management and stop loss rules. ie. I wouldn't put 100% of my account in GOOG going long, and rack up a 75% loss (we'll I guess there are some that do that), and so going short, I likewise wouldn't go short 100%, and let it slip to a 75% loss... it would be a pretty rare case for a stock like that to shoot up 75% in a day... while it may happen, I'd more likely bet on it to drop 75% in a day.

But back to having a margin account, not having to wait 3 days is nice. I don't use, or haven't had to use margin. Take that back, once when I did go in 100% on my account, I had a buy that by the time it triggered, I did have some margin, but it was for less than $50, and it ended when one of the other stocks settled. So I was tagged for a day or two of interest... but that only happened once, and was thru a crappy broker. Scottrade never did that to me.

I think the key is, don't dump your whole account into the market whether with a cash account or margin. Especially on the big boards where all bets are in the same direction.

One other thing on that $1000 example, if you had another big board stock in your account... say $300 of another stock (long), that changes your buying power, giving you extra before the margin call... I think this is the case, as if you are long, and we are all talking big board stocks, that on average, since the stocks move together, the chance that the two stocks are moving in the same direction is high, so as you lose on the short, you gain on the long, so they give you the cushion.

Great info, Dave.

I have enough trouble just doing what I am doing without complicating things. I believe in the KISS rule. The more simple, the better!

[Ramsey]

Too funny...

You know, Dave, that (just about) every morning...I wake up thinking --

Man, I hope that Dave got up early *enough* today to do whatever it was that he needed to get up for...if he got up.

And then, the second thought is that I'd call him to make certain...but he doesn't leave his phone on, so it wouldn't matter. And, if his phone was on, then he wouldn't need a call.

My little *Seinfeld Episode* runs constantly and has a habit of being recurrent.

Yes, I'm a mixed bag of quandarous nuts


Mr. Ramsey <---- that's rich!



[QUOTE=Dr. Dave;49264]Good Morning Mr. Ramsey -

Yup, I'm up - I figured I couldn't go wrong with this option play....

[imromo24]

man you guys are chatty kathy's i can't even jump in..sorry keep hitting refresh as im watching spng and can't post cause now i have to do some work...oops better check spng again it mighta moved....

GLE!

ps. got more spng at .1782 this morning, brother got more at .1829 when he got out of work for a minute and it was moving down

[billhart22]

http://bxcapricorn.blogspot.com/2009...n-attempt.html

Tuesday, August 25, 2009
MGLG - Valuation Attempt
I have been buying MGLG.PK on the dip. Are they for real, or are they a scam? Let's boil them down.

They lease properties in Oklahoma and Tennessee, and have an office in Ontario. Why have an office in Canada? According to Investors Relations, "We are located in Canada because that is where most of our principals reside". The company only has five employees, since after acquiring a well, they develop partnerships with local operators. In Tennessee, they have teamed up with TMD Energy. Magellan has a 50/50 participation agreement with TMD Energy. TMD Energy owns the leases. The two companies share expenses and profits equally. TMD Energy sells their gas to Citizen's Gas in Tennessee.

Their website is a bit amateurish, and their Investor Relations' (Karen Willoughby) puts out press releases that are sporadic and often misleading. Back on June 1st, they announced that they had completed retrofitting their wells to provide a lower BTU delivery. Their properties were abundantly rich with BTU's, which you would think would be a good thing...turns out the premium they were receiving for their gas flipped and became a safety concern, as the Federal government via FERC decided that gas above 1100 BTUs must be brought down to below 1000 BTUs. The stock, back in Dec. 2008, was trading between 0.001 and .0025 when this occurred.

The news of a shut-in killed the stock price, and forced Magellan to issue stock to finance the retro-fitting. The stock dropped to 0.0001-0.0003 until May, when the retro-fit was expected to complete. As news was released, that Magellan was back to production mode, the stock went to 0.0027 on June 15th. In the press release announcing the return to production, it was stated that Citizens Gas would provide metered numbers in a few weeks. Those numbers were not provided on June 15th (two weeks from the June 1st PR), so investors sold off, dropping the price per share to 0.0005....which is where I come in.

I have been buying the dip, as I believe the Langford Lease is legitimate.

The Company intends to frac at least two of the wells at the earliest opportunity to increase natural gas production and is considering additional horizontal drilling to maximize long-term gas production from the Chattanooga Shale.

Reserve estimates indicate a conservative gas in place value of 3.198 bcfg/mi.2 for the area under the Cumberland Plateau. These calculations assume a gas content of 20 scf/ton of gas in the Chattanooga Shale. Miller Petroleum, Inc. is in possession of geochemical data that justifies this as a minimal gas in place number.

Their market cap is estimated by pinksheets.com at $4.682M with 7.8B shares outstanding, resulting in 0.0006 per share price.

They are authorized to print 30B shares, and on May 19th, have a 2.8B share float, which we joyfully trade back and forth.

Looking toward the future, I expect these Tennessee gas wells (along with Miller Energy's gas wells) to deliver natural gas to the TVA Rogersville 880 MW gas turbine plant. At the current time, only 10 MCF/day is consumed during winter time in Tennessee. Upon completion of that power plant, the consumption will be enormous in comparison. As TVA announced on August 10th:

TVA's announcement continued, "Once the necessary reviews and approvals are complete, construction of the plant is expected to begin in 2010 with full capacity availability in 2012."

Operation of this plant will require up to 160 million cubic feet of natural gas per day, year round. Game changer, pure and simple. The trick is for these guys to stay in business long enough to realize the windfall, and I'm betting they will, now that they have resumed their gas flows. I also believe that once flow data is released, the stock will explode.

Labels: MGLG

posted by BxCapricorn at 12:35 PM

[Dr. Dave]

Great info, Dave.

I have enough trouble just doing what I am doing without complicating things. I believe in the KISS rule. The more simple, the better!

Tell you the truth, now that I've been in the pennies for a while, I think it would be easier to short, than go long, but the broker won't let me, lol.

[billhart22]

Tell you the truth, now that I've been in the pennies for a while, I think it would be easier to short, than go long, but the broker won't let me, lol.

Lol, Dave -

Ya this is a shorter's dream! They carry a list of stocks that are available for shorting on Scottrade. I just don't remember where they are located.

[Dr. Dave]

Too funny...

You know, Dave, that (just about) every morning...I wake up thinking --

Man, I hope that Dave got up early *enough* today to do whatever it was that he needed to get up for...if he got up.

And then, the second thought is that I'd call him to make certain...but he doesn't leave his phone on, so it wouldn't matter. And, if his phone was on, then he wouldn't need a call.

My little *Seinfeld Episode* runs constantly and has a habit of being recurrent.

Yes, I'm a mixed bag of quandarous nuts

Mr. Ramsey <---- that's rich!

Is the boiler room open today, lol...