Market Watch - week of Sept. 21st 2009

[billhart22]

This in NOT good news for the Sponge. It looks like it may be awhile till we get our money back.

SpongeTech(R) Delivery Systems, Inc. Announces Rescission of Investment Plans in GetFugu, Inc.
3 minutes ago - Businesswire

Related Companies
Symbol Last %Chg
GFGU 0.63 -7.89%
SPNGE 0.091 -14.23%

As of 2:40 PM ET 9/24/09
SpongeTech(R) Delivery Systems, Inc. ("SpongeTech" or the "Company"), "The Smarter Sponge(TM)", (OTCBB: SPNGE) announced today that the previously announced investment arrangement with GetFugu, Inc. has been rescinded.

On September 8, 2009, SpongeTech had announced that it was going to invest $4 million into GetFugu's mobile-based web search and e-commerce technology, and that SpongeTech would be the first company to utilize GetFugu's innovative mobile search platform.

An aggregate of $1,750,000 had been advanced to GetFugu in anticipation of the entry into a definitive investment agreement. GetFugu has advised the Company that it currently does not have the funds to repay the $1,750,000 and that it is seeking alternative financing sources to fund a reimbursement

Give me a break...they spent spongies money..... Alternative sources usually mean "stock". I guess none of them have ever heard of an escrow account.

[Dr. Dave]

Here is the deal:

You can make up to 4 round trips in a week and not be considered a day trader, however, you cannot put the money back into the same stock until it clears. You can purchase another stock, but you cannot sell it until the original money clears.

Anything above and beyond that takes a margin (day trading) account. I do not know how that works with a person's finances.

I am curious....do you need to have $25,000 physical dollars in your account to open a margin account, or do you just get a line of credit for that?

Cleared for day trading is where you need $25000 cash balance

Margin is a completely separate thing (but you likely need margin to day trade.. in fact, they allow more margin so you can do it I believe). So you can get a margin account without that number.

Margin works like this - but the numbers won't be right, but you'll see what I mean.

Say you have $2000 in your account and no stocks...

your account will look like this:

Buying power (margin + cash balance) = $2000
Cash Balance = $2000

Then you buy $500 of AAPL and say they allow (this is the part where the numbers may be wrong) 50% margin on that... your account will look like:


Buying power = $1750 (here you get an extra $250 loan cause you own $500 of AAPL, so that's the collateral)
Cash Balance = $1500 (you have $500 in AAPL, so this amount is the same you are seeing in a cash account)

So now you can buy $1500 of stock (with commissions included) and not go into margin... same as with a cash account), or if you are brave, you can go into margin, which I don't recommend, and buy $1750 of stock)

Now you buy $1000 of SIRI (I assume this is marginable) - but since it's under a buck, they only give you 25% of the amount to be marginable)

Buying power = $1000 (ie. $500 cash + $250 from AAPL + $250 from SIRI)
Cash Balance = $500

Now you can buy $500 more of stock just as you would with a cash balance and not be in the margin (loan zone), or $1000 stock, but $500 of it would get loan charges).

Now you buy $200 of MGLG.... that likely isn't marginable...

so

Buying power = $800 ($300 cash + $250 AAPL collateral + $250 Siri collateral)
Cash Balance = $300

Now say you want $500 more of SIRI right then and there, but don't want to be on margin...

Sell $300 of AAPL, buy $500 SIRI

Cash Balance = $100 ($300 original cash + $300 AAPL = $600, then buy $500 SIRI, so $600-$500 = $100)

Buying power = $700 [$100 cash + $100 (50% of AAPL remaining) + $500 (25% of SIRI)]

So you could buy $700 of stock now, but $600 would have loan interest.

Truthfully, I never look at the buying power, I only look at the cash balance, so it's not that complicated, if you just look at the cash balance, just like you do in your account, you'll be fine. If you trade within the 3 day settlement period, you'll still get the free ride message, but it won't matter, or shouldn't... not sure what margin you get for pennies, if any). Which in that case, you may want to call the broker and see if margin will even help to get your trades without the settle restriction if you are only buying penny stocks.

Also, one other thing, there is buying power listed for marginable stocks, and not marginable.

But like I said, I don't read it.

[Alaska Guy]

Give me a break...they spent spongies money..... Alternative sources usually mean "stock". I guess none of them have ever heard of an escrow account.

Ouch....spnge is taking a beating.... I see it now they spent some of spnges $$$ and now can't pay it back

[candleman]

Ouch....spnge is taking a beating.... I see it now they spent some of spnges $$$ and now can't pay it back

Yes, the sponge is taking a bath.....

[Dr. Dave]

Speaking of SIRI, here's one of my ancient charts - I drew it out in april, and only dragged out some of the lines since

it is my support/resistance chart - I think we had 3 days were prices pierced the 0.68, 0.69, 0.70 resistance...

The line has been holding for a month now...

Coulda gone in big on the last pennant, and cashed out there... but my days of going in big are gone... but next time we get something like that, I'll likely double up, which still isn't as big as I used to go, lol.

[Alaska Guy]

Yes, the sponge is taking a bath.....

Heck! I might need one of these sponges for the bath I'm taking on this right now! 

[candleman]

Wow, almost 3 billion shares have traded hands so far.

Not bad for a company that only has 385 million shares outstanding.....

I wonder how they do that???

[billhart22]

Cleared for day trading is where you need $25000 cash balance

Margin is a completely separate thing (but you likely need margin to day trade.. in fact, they allow more margin so you can do it I believe). So you can get a margin account without that number.

Margin works like this - but the numbers won't be right, but you'll see what I mean.

Say you have $2000 in your account and no stocks...

your account will look like this:

Buying power (margin + cash balance) = $2000
Cash Balance = $2000

Then you buy $500 of AAPL and say they allow (this is the part where the numbers may be wrong) 50% margin on that... your account will look like:


Buying power = $1750 (here you get an extra $250 loan cause you own $500 of AAPL, so that's the collateral)
Cash Balance = $1500 (you have $500 in AAPL, so this amount is the same you are seeing in a cash account)

So now you can buy $1500 of stock (with commissions included) and not go into margin... same as with a cash account), or if you are brave, you can go into margin, which I don't recommend, and buy $1750 of stock)

Now you buy $1000 of SIRI (I assume this is marginable) - but since it's under a buck, they only give you 25% of the amount to be marginable)

Buying power = $1000 (ie. $500 cash + $250 from AAPL + $250 from SIRI)
Cash Balance = $500

Now you can buy $500 more of stock just as you would with a cash balance and not be in the margin (loan zone), or $1000 stock, but $500 of it would get loan charges).

Now you buy $200 of MGLG.... that likely isn't marginable...

so

Buying power = $800 ($300 cash + $250 AAPL collateral + $250 Siri collateral)
Cash Balance = $300

Now say you want $500 more of SIRI right then and there, but don't want to be on margin...

Sell $300 of AAPL, buy $500 SIRI

Cash Balance = $100 ($300 original cash + $300 AAPL = $600, then buy $500 SIRI, so $600-$500 = $100)

Buying power = $700 [$100 cash + $100 (50% of AAPL remaining) + $500 (25% of SIRI)]

So you could buy $700 of stock now, but $600 would have loan interest.

Truthfully, I never look at the buying power, I only look at the cash balance, so it's not that complicated, if you just look at the cash balance, just like you do in your account, you'll be fine. If you trade within the 3 day settlement period, you'll still get the free ride message, but it won't matter, or shouldn't... not sure what margin you get for pennies, if any). Which in that case, you may want to call the broker and see if margin will even help to get your trades without the settle restriction if you are only buying penny stocks.

Also, one other thing, there is buying power listed for marginable stocks, and not marginable.

But like I said, I don't read it.

Hey Dave,

Thank you for the great explanation. It works totally different than I had imagined. I didn't realize that the cash and margin were so intertwined. I am going to read that a few more times and let it really soak in.

Again, thanks for the big explanation.....it really helped!

[candleman]

QASP is qasping for air too. Down to 2 cents again.

This is not a good day!!!!

[billhart22]

Speaking of SIRI, here's one of my ancient charts - I drew it out in april, and only dragged out some of the lines since

it is my support/resistance chart - I think we had 3 days were prices pierced the 0.68, 0.69, 0.70 resistance...

The line has been holding for a month now...

Coulda gone in big on the last pennant, and cashed out there... but my days of going in big are gone... but next time we get something like that, I'll likely double up, which still isn't as big as I used to go, lol.

Dave you got your fibs in there right.... 1.08 is 100% then taking off from there is correct. 1.50 and 2.77 are subjective, but overall you nailed it!