StockBullz.com

Stockbullz.com Weekly Stock Newsletter #13

June 9, 2006

Dear Canadian Stock Investor,

It’s been a depressing market recently, I won’t lie about that.

It is hard to keep on waking up, looking at the markets and prices and keep seeing them lower almost everyday.

But in my opinion, this is the price we have to pay for having such a positive and profitable market for too long the first few months of the year.

When this negative time is done, I am sure we will have another prolonged rally to the upside.

I am a firm believer in the principle that there is “nothing new under the sun”. Therefore things that have happened in the past should repeat themselves. And in the stock market, investors always overdo buying on the upside and overdo selling on the downside.

So yes, I do think the selling has been overdone recently but we can profit from this by buying temporarily undervalued shares in the mining sector especially.

If you were kicking yourself for not buying shares in September or December or even January, I think now is a good time to slowly start pulling out the wallets.

Notice how I say slowly. That’s because I am not sure yet how long it will take to start moving up again. The summer is throwing me a curve ball in which logic says that the summer months are usually slow and sideways with low volume and not too much price changes.

However, every time you think a pattern like this emerges, the market loves to throw everybody off and do the exact opposite.

So, in other words, if the market is up 5-10% from current levels in a month, I wouldn’t mind speculating that the big money might start to take notice and think about deploying some of their cash into stocks that are showing strength.

Another thing that has the potential to delay the uptrend for a week or two is the upcoming World Gold, PGM & Diamond Investment Conference this Sunday and Monday in Vancouver.

So far this year, every time there has been a big conference like this, the markets have been down slightly before and after.

Will it happen again this week? I would think so. Maybe company insiders use the conferences as selling opportunities to lock in profits to excited retail investors who only see 10-baggers in their eyes and not reality.

Reality is that after our nice commodity bubble is done in 5-10 years time, most junior resource companies will either go bankrupt or sell their properties for whatever they can get for them and go after the next hot sector.

Yes that is a harsh reality but we must be aware of it. If you don’t believe me, search for all those high flying tech stocks you were day trading in 1999 and 2000. See how many you can find now…

But as long as we lock in profits all the way up to the pinnacle we will make tons of money.

And that is one of the most important lessons I think we have to take from this brutal recent shakeout in the markets. When times are great, we must slowly take profits. Then when the prices drop, we should think about deploying those profits back into temporarily depressed stock prices.

If you remember, that was the theme from the Calgary conference about 2 months ago. Most of the newsletter guys who I respect were telling people to take profits. I perhaps like many other people in the audience did not understand this principle to its full extent.

But now with this shakeout, I know exactly what they meant.

Now making mistakes is not pleasurable for sure but as long as we learn from them and don’t do them again, I think that is one of the best ways to learn.

The best way is of course to learn from others’ mistakes but I find it’s not always easy to do this.

So now let me make some comments on some of the companies I’m following.

Wavefront is a stock that has not been getting any love from the market in recent months. I think it is a good entry point because once they get their news reels rolling, the price should improve.

However, one very interesting piece of news that came out of the people there is that they are acquiring Top Gun Sand Pumps and Rentals.

I will phone the company to find out more about this company they have acquired and if this company can bring any cash flow and/or profits effective immediately. However, here is a blurb from the news release about the company:

Top Gun has been in operation since 1995 as an oil service company in the heavy oil industry, operating in western Canada. Top Gun offers rentals and sales of sand pumps and associated well bore pumping and cleaning equipment. Top Gun also possesses patents (and has patents pending) related to its Continuous Sand Extraction with Surge ("CSES") tools that permit large volumes of sand to be produced from heavy oil production wells where in many instances conventional pumping equipment fail. During the pumping process the CSES tools can, on the down stroke, inject liquids into the perforations by incorporating the Company's DeepWave(SM) technology, thereby allowing for longer-term sustainable production.

Furthermore, here are some comments from the CEO’s of both companies:

Wavefront President and CEO Brett Davidson commented, "We are opening another chapter in our business plan to grow the Company and expand its technology offering. The acquisition of Top Gun fits well within the overall strategy of adding intellectual property that augments the Company's DeepWave(SM) process. Top Gun's CSES technology has been demonstrated to increase production in heavy oil wells producing large volumes of sand.

Mr. Davidson further commented, "Management has been following Top Gun's progress and is impressed with the penetration rate of their technology in the Canadian Heavy Oil Market. With an established track record of performance, management believes Top Gun is poised for considerable growth and the Company will look to expand operations as well as pursue licensing opportunities to gain royalty revenue. As the Company progresses in its business plan, we continue to evaluate the acquisition of oil field, production technologies, and companies that present opportunity to build shareholder value."

Top Gun President Tyler Scott stated, "We are very excited to become a member of the Wavefront group of companies. As an agent representing the Company over the past two years, we have seen first hand the results the DeepWave(SM) process has offered our customer. In our opinion, DeepWave(SM) is extremely valuable to the world energy markets. We recognize the technological strengths of the Company and maintain that working within the organization is the most effective approach to further Top Gun's technology offering and market potential."

The most important piece of info in the whole news release is the following: Top Gun's CSES technology has been demonstrated to increase production in heavy oil wells producing large volumes of sand.

If that is true then Wavefront will have the opportunity to revolutionize both heavy and light oil collection and production.

Another piece that most people will overlook is the fact that Top Gun management is willing to accept 50% of the payment in Wavefront shares. If the management was not confident in its own technology or that of Wavefront’s they would only do a 100% cash deal.

I am surprised that Silver Wheaton is experiencing so much weakness. The fact that is recently listed on the NYSE should help it experience extra boost when Americans finally wake up and figure out that there is a huge commodity bull market. With Silver Wheaton one of the best Silver plays, I think it will get a lot of buying from the Americans.

Regarding US Gold, be very careful here. The idea by McEwan seemed brilliant when first announced but it seems that stalling by the junior companies is creating a very awkward situation. I am extremely interested in seeing how this plays out.

Actually, for us Canadians, we are very fortunate to have the world’s best selection of junior resource stocks anywhere in the world in my opinion. And the fact that there is 300 million Americans just across the border willing to speculate in anything from tech stocks to real estate will create yet another spectacular bubble in resource stocks in the coming years.

That’s about it for this week. Thank you for taking the time to read this and I wish you luck in your investing decisions,

Mike

Stock	Date Recommended*	Price Then ($)	Price Now ($)	Return (%)
Top 2 Picks
SVM	Jan. 26, 2006	5.82	12.60	+116
NUC	Dec. 23, 2005	1.60	2.15	+34
Solid Growth
SLW	Jan. 3, 2006	6.85	8.48	+24
Speculation
MSV	Mar. 5, 2006	3.84	3.58	-7
SQI	Apr. 14, 2006	0.59	0.45	-24
WEE	May 10, 2006	2.60	2.10	-19
Ideas
PDN	Dec. 8, 2005	1.70	3.33	+123
UUU	Dec. 22, 2005	1.93	2.50	+30
ABG	Jan. 4, 2006	1.73	2.63	+52
POE	Dec. 17, 2005	2.22	3.85	+73
American Ideas
USGL	Apr. 14, 2006	8.19	7.18	-12

*Note: Many of these picks were recommended on my old blog first.

Disclaimer: This letter is merely someone’s opinion. It should not be taken as investment advice. Through viewing this publication or accessing our site, you agree to hold Stockbullz.com, its operators, owners and employees harmless and to completely release them from any and all liability due to any and all loss (monetary or otherwise), damage (monetary or otherwise), or injury (monetary or otherwise) that you may incur. It’s your money, so you are ultimately responsible for any gains/losses you may incur. Do your own due diligence! Writer may own positions in some of the mentioned stocks.