This from Payout Trader editor Charles Delvalle (who, by the way, is bullish on US equities in the medium term):

Truth is the economy is still circling the drain, albeit at a slower pace. The real reason why the Institute of Supply Managements Factory Gauge showed better than expected numbers was because of the 12% increase in government spending due to fiscal ‘stimulus’ programs.

The June report showed up at 48.9 – just shy of the 50 mark. If the ISM rises above 50 it signals growth in manufacturing; less than 50 signals contraction. This 50 mark is extremely important, because most economists look at it to determine whether we are in a recession or not. In the whacky world of economic theory when that number jumps above 50 it signals a rebounding economy.

As more stimulus funds filter into the market over the next few months – and more companies decide to restock their historically low inventory levels – we’ll see the ISM Factory Gauge rise above 50 – fueling positive GDP growth and, most likely, one heck of a stock market rally.

Charles may be bullish on stocks, but that doesn’t mean he believes the recovery hype and bunkum. Charles – a technical trader whizz – lives in Salem, Oregon, with his fiancée. But he keeps in regular email contact with Notes HQ via email. This from an email we got from Charles:

How is the economy supposed to grow once the government stops spending money? Is the consumer supposed to magically come back and spend all of their hard earned savings? Not a chance. Consumers will be busy repairing their balance sheet for years to come.

Let’s not forget the US economy is more leveraged than at any time in history (even more so than during the Great Depression). That means we simply can’t expect things to quickly go back to normal just because the government has promised to spend nearly a trillion dollars in ‘stimulus’ funds.

The most obvious example of stimulus failing is Japan. Japan’s stimulus plans gave the country plenty of bridges to nowhere and nicely paved roads – and two lost decades to show for it!

As Will’s father, Bill, put it in the Daily Reckoning yesterday stimulus spending is just another way of spending what you haven’t earned. At the same time as it shoddily papers over the cracks of the current debt deflation, it’s setting the economy up for a new bout of demand destruction.

When you borrow in order to consume, what you are really doing is consuming something today that you would have normally consumed in the future. You spend money you haven’t earned yet on something you’re not really ready to buy. You’ve heard the expression, ‘time is money.’ That’s why borrowing money is really borrowing time. Later, you have to make it up. You have pay off the debt. When you do, you take money out of current consumption; you’ve already consumed it!

This is what economists refer to as “demand destruction.” It’s what happens in a depression. People are replacing what they took from the future. They’re can’t consume because they’ve already spent their money in the last boom. Demand collapses.

We’ve seen that happen in the last two years. Savings rates went from zero to 7%. Sales have declined (the latest revisions show them off more than was previously thought.) Profits are shrinking.

This is, of course, a completely natural and necessary adjustment. You can’t take things from the future without putting them back eventually. The future won’t stand for it. But the feds, in their benighted confusion, fight the problem like a farmer who plows backwards to fool the crows. They think the problem is too little demand. So, they try to add demand… with tax cuts… spending programs… low rates… easy credit… cash for clunkers and other fixes. What do these policies achieve? Do they really increase demand? No, they can’t do that… that would require a richer population with more money to spend. What they try to do is to move demand forward.

The problem, of course, is that too much demand has already been moved forward. But they’re nevertheless trying to steal even more of it… taking away demand that would normally show up two, three, four… ten years from now. That car that you might buy next year, for example. With the ‘cash for clunkers’ program, you might make the purchase now instead of waiting until you actually have the money. Or, that new parking lot behind the town hall. We won’t really need it for a few years, but heck, if they’re giving away money now… Or how about that trip to Europe? With a big tax rebate check, you might decide to take it on your 20th wedding anniversary, rather than wait ’til your 25th.

That doesn’t mean you can’t make money from the trillions of dollars Washington is throwing around. Our friends at Street Authority have worked out how to do exactly that. It allows you to get in on the health care, infrastructure and energy companies bound to see their shares rise as a result of government spending. Click here for details.

The Movement for the Emancipation of the Niger Delta (MEND) said its fighters struck the Shell Forcados platform in the Delta state at about 0230 GMT.

There was no immediate independent confirmation but Shell said it shut in some oil production at its western operations in the Delta while it investigated reports of attacks.

U.S. crude for August delivery rose to a high of $70.06 per barrel, up 90 cents, before slipping back slightly to $69.75 by 1230 GMT.

London Brent crude was up 60 cents at $69.52.

“The Nigerian supply disruptions brought in some buying,” said Christopher Bellew, broker at Bache Commodities in London.

On Friday, four militant Nigerian factions said they would accept in principle an amnesty offer from President Umaru Yar’Adua, raising hopes Africa’s top oil producer would halt a battle with rebels.

Pipeline bombings, attacks on oil and gas installations and kidnapping of industry workers over the past three years have prevented Nigeria from pumping much above two-thirds of its installed oil output capacity of 3 million barrels per day.

The loss of output have been a supportive factor at a time when global recession has bitten deep into oil demand.

DEMAND FORECAST CUT

The IEA, adviser to 28 industrialised countries, has cut sharply its medium-term forecast for oil demand, saying there was a chance of an extended contraction, but added the threat of a supply crunch had only receded, not gone away.

Based on a higher economic growth scenario, the IEA predicted on Monday product demand would grow by 0.6 percent, or 540,000 bpd on average, between 2008 and 2014, taking demand from 85.8 million bpd to 89 million bpd.

The IEA’s previous medium-term forecast, issued in December, had forecast growth of a million bpd a year from 2008 to 2013.

Algerian Energy and Mines Minister Chakib Khelil said on Monday oil demand was still weak due to the weakness of the U.S. and European economies and world oil stocks remained high.

Khelil said an increase in OPEC oil production was hard to envisage, despite rising crude prices.

European stock markets crept higher on Monday with financial and energy companies responding to an improving economic outlook for the euro zone.

Dealers said macro-economic data would continue to have a major impact on sentiment in the oil market.

U.S. consumer confidence data on Tuesday leads a heavy calendar of economic data this week, including China’s Purchasing Managers Index on Wednesday and a U.S. jobs report and manufacturing data on Thursday.

The U.S. data will help determine whether an oil market rally, which has lifted prices more than 50 percent this year on hopes of economic recovery, has any legs.

In the first big number for the week, industrial output from the world’

LONDON, June 29 (Reuters)

Take two days off and look what happens… the recession has bottomed.

At least that’s what “they” would have you believe. While we locked ourselves in our bimonthly editorial meeting the last two days, we missed some new “the worst is over” calls. Here’s the rundown:
“The pace of economic contraction is slowing,” declared the Federal Open Market Committee yesterday after emerging from a two-day meeting of their own. Even though Mr. Bernanke and his brood say, “economic activity is likely to remain weak for a time,” the vibe from the FOMC statement was decidedly rosy.

Of course, inflation “will remained subdued for some time” and the group will leave rates near zero “for an extended period.” Same old story at the Federal Reserve. The rest of the Fed announcements were nonevents… new age lending programs and quantitative easing will neither increase nor decrease before their next meeting in August.
Despite all the data out this week — new and existing home sales, GDP, jobless claims — only one has given the Street a jolt: durable goods.

Orders for items meant to last a few years increased 1.8% from April to May, smashing Wall Street’s expected 0.4% growth. Never mind that orders in the first five months of 2009 are down 27% compared to 2008… May’s number is another green shoot! Hooray!

“I get figures on 70-odd businesses, a lot of them daily,” said Warren Buffett yesterday. “Everything that I see about the economy is that we’ve had no bounce. The financial system was really where the crisis was last September and October, and that’s been surmounted and that’s enormously important. But in terms of the economy coming back, it takes awhile. There were a lot of excesses to be wrung out and that process is still under way and it looks to me like it will be under way for quite a while. In the [Berkshire Hathaway] annual report, I said the economy would be in a shambles this year and probably well beyond. I’m afraid that’s true…

“I had a cataract operation on my left eye about a month ago and I thought maybe now I’ll be able to see green shoots. We’re not seeing them. Whether it’s retailing, manufacturing, wherever. We have a big utility operation. Industrial demand is down like we’ve never seen it for a simple thing like electricity. So it hasn’t happened yet. It will happen. I want to emphasize that. But it hasn’t happened yet.”
Speaking of Buffett, his annual charity lunch auction is proving to be an annual sign of the times. Last year, the oversized $2.1 million winning bid for a lunch with Buffett came from a Chinese fund manager — three times the previous year’s winning bid. This year, with only one day remaining, bids for the eBay auction are up to “just” $350,000.
The U.S. economy didn’t contract quite as much as reported in the first quarter, the Commerce Department announced today, adding to the optimistic mood. The government arm finalized first-quarter GDP numbers today. Their initial report detected a 6.1% contraction. The first revision was a 5.7% fall, and now Commerce claims the economy shrank just 5.5% in the first quarter of the year.
The OECD has drastically revised its growth expectations for the U.S.

“Signs have multiplied that U.S. activity could bottom out in the course of the second half of this year,” said Jorgen Elmeskov, the OECD’s acting chief economist. The group now forecasts a 2.8% U.S. economic contraction in 2009 and 0.9% growth in 2010 — a huge revision from their most recent call of a 4% decline this year and zero growth in 2010.
As far as the stock market goes, we timed our two-day break well… since Monday’s swift sell-off, major indexes have gone nowhere. Despite all the data and the latest FOMC meeting, the Dow sank 0.2% Tuesday and 0.3% yesterday… yawn… stretch.
“This sideways trade for the last few weeks is typical of summer markets,” writes our commodities trader Alan Knuckman, “even in an anything but a typical year for investors. Everyone is so conditioned for strong moves in either direction it has left many unable to handle an undefined trend.

“The stall has disappointed many market watchers — with some calling for a new downturn. Over my years I have found it better to follow the trend without trying to catch the turn. Don’t be too proud to miss some of it. Most of the money is made in the middle of a trend, and that’s where we’ll stay here at Resource Trader Alert.

“Volume seems light and something is needed to spark movement after the large bull run. The S&P 500 channel — with lows last week at the 899 level (as a support level) and highs at 925-plus — is an area to watch closely for future clues. At the same time, Treasury bond futures weekly highs at 117 and lows at 114 have held traders in check. The breakout for either asset class will light the way down the future path for the markets.

“For now, let’s wait and see what trend develops. Have some wine, and let the market sort things out.”

When the next trend emerges, will you know what to do? Have Alan be your guide, here… at Resource Trader Alert.

(For a closer look into the psyche of our resource trader, be sure to check out today’s P.S.)
Commodities have succumbed to selling pressure. Since peaking at $987 in late May, gold has been in a state of steady decline. It found a temporary bottom early this week at $919 an ounce and has since inched back up to $935.

Oil fell from a recent high of $72 a barrel to as low as $66 this week. While the front-month contract has recovered to about $68 this morning, we detect a dark cloud forming over the sector.
“Oil had a strong climb,” reports Byron King, “and pushed up over $70 per barrel just a few weeks ago. Then oil met with market resistance. So the price of oil retreated into the current $60 range. Could oil go lower? Yes, at least in the short term. Oil could drop back into the $50s, despite its traditional strength during the summer driving season. You might see gasoline prices pull back 10-20 cents per gallon, which will make that trip to the gas station a buck or two cheaper.

“A pullback like that in oil prices will take the steam out of recent stock market gains for oil producers and oil services. So if you want to take any oil profits, now is probably a good time.

“No, this is not a sell recommendation for the oil sector, or any company in the energy side of the Outstanding Investments portfolio. What I’m saying is that we might have a pullback in an otherwise long-term, generally rising trend for energy. Thus, if you are of a trading mind, then take your recent energy gains now. Book some profit, and hold onto the cash for later buying opportunities. Otherwise, don’t be shocked if the energy stocks take a summer swoon.

“Longer term? Oil is headed upward in price. That’s just plain baked into the cake. Half of the world’s daily oil use is now going to developing countries. And by definition, developing countries are… developing. They are using more and more oil, or how else do you think they are developing? So even if oil use in the developed world just stays flat, that oil will still find a market.”

Outstanding Investments remains one of the greatest values of our industry. If you’re not a subscriber, get with the program,here.
The U.S. housing market is back to underperforming expectations. We saw the latest existing home sales and new home sales numbers this week — both failed to meet the Street’s forecast.

The National Association of Realtors reported 2.4% growth in existing home sales Tuesday, to an annual rate of 4.7 million. The stock market — no longer satisfied with meager housing growth — wanted a rate of 4.9 million and suffered a small sell-off.

Even though sales managed to increase in back-to-back months for the first time since 2005, existing home prices are still plummeting, distressed sales are still booming and the market is still saturated with a 9.6-month supply of homes… a positive sign that the free market still works, but hardly reason to call a bottom.
And new home sales are still slipping into the abyss.Sales of new houses fell another 0.6%, to a 342,000 annual rate, the Commerce Department said yesterday. That’s down 32.8% from last year — we hasten to add, a time when the housing market was already in the dumps. Making matters worse, Wall Street analysts were calling for a 2% rise in new home sales. And like existing home sales, the price of new homes is still falling (down another 3%, to $221,600), and inventory is still at a lofty 10-month supply.

Check out this chart of new versus existing home sales. Both have historically moved in near lock step, with the exception of last two years. If this trend is destined for a “regression to the mean,” we wouldn’t be surprised to see new home sales level out and existing sales take a turn for the worse.

The dollar’s still stuck in a range. The dollar index took a quick trip below the infamous 80 score yesterday after the FOMC’s announcement, but has since climbed back up to 80.6… not far from where it’s been for the last two weeks.
Today’s “take it for what it’s worth” dollar quote, from IMF chief economist Olivier Blanchard:

“For the U.S., it is absolutely no question that a sustained recovery has to come from a large increase in exports, that may not be very easy to do. This may require fairly substantial adjustments in the dollar.” Hmm…
“I’m a raving fan of The 5, but come on,” writes a reader, referring to Monday’s issue, “couldn’t you muster a better defense of capitalism to the latest apologist?

“It is not capitalism that allowed derivatives and excessive debt levels. It is the distortion of a fractional reserve fiat currency system that is a statist addition to it that did. In a free market with a gold standard, every security bought must be funded with actual value, rather than leverage levels being allowed to explode. It is the printing press, credit creation and the statist monetary system, and not capitalism, that is the source of this crisis.”

The 5: Heh, well, there you have it.

P.S. We feel obligated to share this photo with you, if only to legitimize Addison’s recent iPhone purchase. During our marathon editorial meeting yesterday at 14 West, the fire alarm sounded. The whole building cleared out to a nearby park. Most were content with a break… we’d been vetting our ideas nonstop for the last few hours, and the alarm was a welcome excuse to relax, grab some coffee, have a smoke, etc.

Not for Alan Knuckman, editor of Resource Trader Alert. We didn’t ask how many trades he managed to fire off during the 10-minute alarm, but it was quite clear that he was in the zone. You can take the man out of Chicago… but don’t expect him to stop trading:

Curbside commodity options, fueled by Big Gulp

P.P.S. Did you learn from 2008? If so, you’re actively seeking ways to hedge your portfolio from another market fall. We’ve gathered our favorite strategies for playing the next bear market here, in our latest special report.

Source: Bernanke’s Forecast, Buffett’s Green Shoots, Can’t Miss Data, Taking Oil Profits and More!

The summer sun is seducing stir-crazed American families tired of penny-pinching. Add to that a strong dollar and I predict that those who can will travel.

Now, as swine flu continues to make the news, it will perhaps prompt some to avoid cruise lines and foreign travel to “high-risk” destinations.

That leaves European and domestic travel and as airlines have taken a hit lately, I chose that industry to sort through for just the right bargain.

JetBlue Airways Corporation (NASDAQ:JBLU), Deutsche Lufthansa AG (ADR) (OTC:DLAKY) and Air France – KLM (ADR) (OTC:AFLYY) look to be ready to bounce, but not as high as these two airline stocks…

Cleared for takeoff

On the domestic front, AirTran Holdings Inc. (NYSE:AAI) has felt the recession like other airlines. It announced earlier in the week that it anticipates a drop in second quarter revenue of perhaps as much as 7%.

And like its competitors, it will seek to mitigate the loss by cutting capacity around 8%.

But Airtran is small and consolidated. But the most compelling aspect of this stock is its fundamentals. Its got a forward P/E of 5.52 and a tiny PEG of .18.

The price and most importantly, the timing, are just right to invest in this company.

I recommend you buy shares of AirTran Holdings Inc. (NYSE:AAI) at or under $5.75 and hold on for 20% gains in the next 6 months.

My other pick is British Airways plc (ADR) (OTC:BAIRY). To cope with declining business, the company asked pilots to accept a pay cut in return for shares. The pilots agreed.

I think they were right to… The companies P/E of 4.02 is just where I like it to be, and the current share price is under half of its 52-week high.

British Airways is set for a rebound.

I recommend you pick up shares of British Airways plc (ADR) (OTC:BAIRY) under $23 and hold on for at least 20% gains in the next 6 months.

Source: The Best Way to Play a Strong U.S. Dollar

My article for Investor’s Daily Edge on 04/09/09 recommended the iShares MSCI Brazil Index (EWZ).  This Exchange Traded Fund holds a nice basket of Brazilian stocks and seeks to mirror the Brazilian stock market as measured by the MSCI Brazil index.

If you took my advice, you’d have seen a big short-term gain as the Brazilian ETF rose over 22% in less than two months.  Our staff here at Investor’s Daily Edge strives to give you information that can help you accumulate wealth and enhance your financial well-being.

If you missed this opportunity to get into EWZ, it’s not too late.  This Brazilian ETF has the potential to run much higher as Brazil is one of the best emerging markets to invest in.  Let me explain:

During a recent trip to Brazil, I observed an economy that is flourishing.  Brazil is a country that is blessed with a bounty of natural resources.  Two hundred million Brazilian people are striving to live a better life and they are well on their way to becoming a developed country like the U.S. or Japan.  I foresee Brazil becoming a global superpower within 20 years.

Brazil is an agricultural and commodities powerhouse with large and well-developed mining, manufacturing, and service sectors.  The world’s population is exploding and Brazil’s rich farmland has the potential to feed the budding masses.  Plus, Brazil has plenty of oil deposits; in fact, they just found another 8 billion barrels in the Tupi offshore oil field.  They have plenty of natural resources that they can export to the rest of the world.  And, once the world finally pulls out of this economic crisis, you will see commodity demand and prices skyrocket… Brazil will be sitting pretty.

Brazil continues to push industrial and agricultural growth and development of its vast interior.  Exploiting huge natural resources and a large labor pool, Brazil is at the moment South America’s top economic power and is expanding its presence on the world stage.

Brazil’s ethanol industry is powerful and is on the rise. The country turns a good portion of their sugar cane crop into alcohol fuel for their cars.  The world is seeking alternative sources for traditional fuels and Brazil is well positioned to deliver.

America was Brazil’s top trading partner until last month, but China surpassed the U.S.!  And, China is looking to widen its exposure to Brazil’s massive amounts of natural resources.  From 2006 to 2008, China/Brazil trade surged at an average annual growth rate of 50%.

China is securing energy resources to power its economy by providing a loan to Brazil’s Petrobras which will supply China with 150,000 barrels of crude a day this year and 200,000 barrels in 2010.  Brazil and China recently signed multiple accords to promote trade, investments and cooperation between the two nations.  And this bilateral trade will be done using Brazil’s currency the “Real” and China’s currency the “Yuan”, not the U.S. dollar.

Brazil’s economy has been quite stable under President Lula da Silva.  He is pushing further economic reforms to reduce taxes and increase investment in infrastructure.  Brazil’s debt achieved investment grade status early in 2008, which in turn encourages more foreign investment.

Plus, Brazil has a growing tourism industry due to their amazing beaches and friendly people.  Check out this incredible picture of Rio.

Not only is Brazil a beautiful country, but it’s a great place to invest for the long run.

Again my favorite way for you to play Brazil is the iShares MSCI Brazil Index (EWZ).  This Brazilian ETF offers excellent profit potential.  Pick some up today…

Source: Invest in Brazil Now!

The stock market might bounce for a while, global currencies might stabilize for a while, but don’t be deceived, large problems remain…very large problems. And the price to fix these problems will run into the tens of trillions of dollars. That’s the kind of price tag that could ruin a national currency or two…even the world’s reserve currency.

While equities continue to go up and up, most of us are left scratching our heads. Is this the real thing or will it go down in history as ‘just’ another bear market rally? Not so long ago, the entire financial system stared Armageddon in the face. Now, only a few months later, equity markets behave as if all the worries of yesterday have been washed away.

The dangerous conclusion to draw from the experience of the past few weeks is that all is now well and dandy and it is time to load up on stocks again. I cannot emphasize it strongly enough: The bull market of March-April 2009 is almost certainly a bear market rally. As one of my partners pointed out the other day, NYSE saw four 20%+ rallies between 1929 and 1932. Bear market rallies can be extremely powerful and hence deceiving.

But the problems are not over yet. Not by a long stretch. It will take longer than 18 months to unwind the excesses of the past 25 years. Analysts at Morgan Stanley reckon that the 15 largest banks, which between them have shrunk their balance sheets by about $3.6 trillion so far in this crisis, will shed another $2 trillion in 2009. The US financial sector debt load (as a % of GDP) is now 117%. In the early days of the great bull market in 1982, the same number was 22%. Households are not much better off than the banks, with total household debt now at 96% of GDP vs. 47% in 1982.

The IMF reckons that both European and US banks – but in particular the European ones – are well behind the curve in terms of recognizing their credit crunch related losses. According to the IMF, there is at least another $1.5 trillion to come.

As the recession bites into the lives of ordinary people, banks will face losses not only on sub-prime mortgages but on all loan products. In fact, sub-prime is indeed a small fraction of the total loan book for the US banking sector. Prime and Alt-A mortgages, together with commercial real estate loans total about seven times the size of the subprime market.

Delinquencies are now on the rise on all mortgage products; however, whereas sub-prime started to deteriorate as early as 2007, it is only recently that delinquencies related to Alt-A mortgages have taken off, and prime and jumbo loans are only now starting to suffer.

These defaulting mortgages pose a very serious threat to the U.S. economy, but they are only part of the economic crisis worldwide. By far my biggest concern at the moment is the enormity of the debt problem facing most OECD countries. In the March issue of the Absolute Return Letter, I referred to an important study conducted by Carmen Reinhart and Kenneth Rogoff back in December of last year.

Reinhart and Rogoff studied every banking crisis of the past generation and made some startling observations. One in particular caught my attention. According to the authors, governments inevitably underestimate the ultimate cost of a banking crisis, because the indirect costs (such as falling tax revenue in subsequent years) end up much higher than predicted.

The IMF estimates that the cost of the current crisis to the United States will eventually reach 34% of GDP or close to $5 trillion. However, the Obama administration, through its various implicit and explicit guarantees, is already using a number close to $9 trillion. And Reinhart and Rogoff’s historical average of 86% of GDP implies an ultimate cost of over $12 trillion!

The true cost is important, because it has to be financed through new bond issuance, and it is my thesis that the sheer size of this tsunami will eventually overwhelm the world’s bond markets. Even using the relatively conservative IMF estimates, the twelve largest industrialized countries of the world will have to issue about $10 trillion worth of new bonds to cover the cost of the current crisis.

However, if you (like me) believe that IMF underestimates the true cost of this crisis, Reinhart and Rogoff offer a more realistic approach. Using their least costly case study (Malaysia 1997) as our best case scenario, the true cost comes to $15 trillion. If one uses the average of 86% instead, the cost jumps to a whopping $33 trillion. I didn’t even bother to produce a worst case scenario – it all got too depressing!

I need to put the $33 trillion into perspective. Total global savings (loosely adjusted for the big losses in 2008) are probably somewhere in the region of $100 trillion. In other words, financing this crisis could absorb one-third of total global savings.

Hence it comes down to the price at which governments can attract sufficient demand from people like you and me. One of two things may happen. Either this crisis will ignite such a bout of deflation that investors will happily own government bonds yielding 2-3% or the deflation scare goes away ultimately, the global economy recovers and bond investors demand much higher yields for taking sovereign risk. I am not yet sure which scenario will prevail, but I do know that both are quite bad for equities longer term.

There is a third route, of course. Governments could print money for themselves, which they could then use to purchase their own bonds. We call that process inflation…and it is already underway.

Source: He Who Borrows the Most, Wins

Penny Stock Winner #1: Digital Ally, Inc. (NASDAQ:DGLY)

Ready to benefit from stimulus buying

Digital Ally, Inc. supplies video imaging and storage products for security and law enforcement applications.

When I first mentioned this company to TFN readers back in January, its revenues had increased 65% over the year prior.

The stock then climbed over 15% until March when the company accompanied their stellar results with grim predictions for the future.

Delays with some of their products and declining economic conditions caused them to suspend their fiscal year 2009 guidance.

The share price came crashing down within days and hasn’t recovered.

The perfect purchase price

Now is a great time to pick up shares (or buy more shares, if you’re still holding on from our original recommendation).

As the stimulus money for local police departments and other law enforcements agencies gets doled out, Digital Ally should see profits rolling in.

Then there’s the international market…

In mid-April, the company signed a lucrative contract with the British Airport Authority for Digital Ally’s DVM-500 in-car surveillance systems.

The company is also launching a pilot program for its equipment with the Saudi Arabian Police.

Proactive approach

Digital Ally received repeated requests for assistance from U.S. police departments and other services in relation to how they could receive federal funding for their products.

The company has now pulled together instructions and resources to assist agencies to prepare the paperwork they need for grants to purchase the company’s products.

I recommend you buy shares of Digital Ally, Inc. (NASDAQ:DGLY) under $2.25 and hold on for double-digit gains by the end of the year.

Penny Stock Winner #2: ThermoGenesis Corp. (NASDAQ:KOOL)

Supplying today’s stem cell research

ThermoGenesis Corp. processes, stores and supplies stem cells retrieved from bone marrow, blood and tissue. Their clients include researchers, hospitals and blood banks.

The biotech’s automated, semi-automated and single-use products allow for the retrieval of autologous stem cells and would-healing proteins from a patient’s blood in less than one hour.

The future of medical treatment

Research indicates that stem cells instinctively go to an injured area and aid in the repair process.

Stem cells use as a standard treatment is not as far off as you think…

Just a few weeks ago, for the first time in the U.S., a stroke patient was treated with his own stem cells. The patient has missed the three-hour window for the standard clot removal treatment.

Knowing of the research regarding the possible regenerative quality of stem cells, medical personnel removed bone marrow stem cells from his leg, purified and intravenously returned them.

Other items of interest:

• ThermoGenesis’s subsidiary, Vantus Veterinary Stem Cell Laboratories, is tackling equine health by harvesting, processing and preserving stem cells of horses for the orthopedic injury therapies.
• The company recently brought J. Melville Engle on board as CEO. With 30 years of management experience in the healthcare industry, Mr. Engle should be able to bring the company to the next profitable level.

I recommend you pick up shares of ThermoGenesis Corp. (NASDAQ:KOOL) under $0.80 and hold on for 20% gains by the end of the year.

Penny Stock Winner #3: Denison Mines Corporation (TSE:DML)

Long-term uranium gains

Canadian Denison Mines’ share price has remained low large due to weak uranium prices.

In mid-April, 19.9% of the company was sold to Korea Electric Power Corp. (NYSE:KEP). KEPCO will also receive 20% of its annual production through 2015.

This greatly reduced the company’s debt levels.

Later in April, Denison announced it had signed a contract to provide 5 million pounds of uranium over 5 years beginning in 2011 to an unnamed customer.

The miner has another three long-term sales contracts and is aggressively looking for more.

Get in while the getting’s cheap

Uranium prices appear to be ready to climb once again.

Perhaps because of the world sees uranium as the lesser of evils for their energy needs.

This is the most speculative of our plays, and you need to be able to buy off the Toronto market, but it’s worth your consideration.

I recommend you buy shares of Denison Mines (TSE:DML) under $2.50 for 20% gains.

Source: Three Penny Stocks You Need to Own Now

This from Laura:

Lithium is becoming the commodity of choice for investors — for good reason. Car makers are choosing lithium-ion batteries for their much-anticipated hybrid and electronic vehicles. And the $2 billion the U.S. intends to invest in that technology will help ease the way.

At car shows globally, everybody’s talking lithium…

• GM announced it would build a plant to manufacture lithium-ion (Li-ion) batteries for the Chevy Volt scheduled to debut in 2011.
• BMW plans to launch its remodeled Li-ion battery-powered 750i luxury sedan to the Japanese in 2010. This year, the company is producing 500 all-electric MINI Es, also with Li-ion batteries, for leasing in select cities.
• Toyota (NYSE:TM) hopes to launch plug-in hybrid Priuses with Li-ion batteries later this year.
• Mercedes-Benz anticipates launching its S400 Blue HYBRID with a Li-ion battery next year.
• The (NYSE:F)Ford Escape plug-in hybrid with the same power technology is slated for 2012.
• Then there’s the Tesla Roadster, Chyrsler EcoVoyager, Dodge ZEO, Jeep Renegade and the Saturn Flextreme.

Government money to the tune of $2 billion has been earmarked for hybrid technology. And with the greater demand for all these Li-ion car batteries, miners, processors and battery manufacturers stand to profit.

Read the Full Article Here: Lithium stocks on the rise

Apartment rentals are down for the first time in six years and nearly 96% of renters surveyed said they would be moving this year. Most said it was due a desire to be in a new neighborhood or city, but many simply wanted more for their money.

Then there’s the real cost-saver of rooming with another and splitting the bill. Listings for roommates on craigslist.org increased from 255,900 in 2007 to 421,000 in 2008.

A quick look at the Dow Jones Equity All REIT Total Return Index shows REITs crashed right along with the market in September.

These Trusts used to lay the investor’s golden dividend egg. If REITs distribute 90% of their income, they are not required to pay corporate taxes… so pay out they did.

But this profitable goose is cooked…

None of the following multifamily REITs have reclaimed anywhere near their Fall of 2008 share price. A quick snapshot of some of the bigger players since Oct. 1, 2008 is telling…

- American Campus Communities, Inc. (NYSE:ACC), Equity Lifestyle Properties, Inc. (NYSE:ELS), and Senior Housing Properties Trust (NYSE:SNH) are down over 30%…

Read the full article here at TFN: Avoid Apartment REITs

We said, “Unmanned surveillance and intelligence-gathering technologies will play an even greater role as a new administration seeks to remove U.S. troops out of harms way.” Read the full article here: http://www.todaysfinancialnews.com/editors-pic/argon-st-stst-may-hold-the-key-to-future-earnings-in-a-war-weary-world-6327.html

In a conference call today, Argon ST executives announced that their Q1 2009 results have topped analysts’ estimates.

First quarter revenue came in at $84 million — 13% higher than the same period last year. Analysts had anticipated revenue to come in at $83.1 million.

Operating income was also up 13% from Q1 of 2008 at $7.6 million.

Fully diluted earnings per share was 24 cents on 22 million shares, whereas analysts had predicted just 22 cents. The first quarter of last year earnings was 19 cents on 22.3 million shares.

Best of all, the company is maintaining its 2009 fiscal year guidance numbers of $375 to $395 million in revenue, $34 to $38 million in operating income and $48 to $53 million for the adjusted EBITA.

The news has sent the share price up about 10% today. Our recommended entry price was at or under $19. If you got in then, I recommend you sell when the stock hits $22.80 and bank the 20% gains.

Source: Q1 Profits Up for TFN Editor’s PIC Argon ST (STST)