Kodiak Oil Big Winner for Small-Caps

Stocks extended their gains for a second day in a row with all major indices closing up, though below a one percent gain.

The Dow finished the session at 9,398, up 37 points; the Nasdaq closed today at 2,009, up 11 points; and the S&P 500 finished at 1,012, up 7 points.

The Russell 2000 index, a composite of the leading small-cap stocks, closed at 575, up 4 points.

Small-cap price movers were lead by Kodiak Oil (Amex:KOG), up 30%. Following KOG were Dot Hill Systems (Nasdaq:HILL), up 22%; Pacer International (Nasdaq:PACR), up 16%; BioSante Pharmaceuticals (Nasdaq:BPAX), up 16%; and ACADIA Pharmaceuticals (Nasdaq:ACAD), up 16%.

*****Last week's better-than-expected payroll data is being offset by new jobless claims today. 558,000 people filed new claims for unemployment benefits. That was more than the median estimate of 545,000.

The number of people collecting unemployment fell by 141,000 and that lowers the unemployment rate. That sounds good, but I don't think it is. Most likely, benefits for these 141,000 have run out. So what little money they had coming in is now gone and they've just stopped asking. 

*****The most direct effect of massive unemployment is less spending and less revenues for America's retailers. Wal-Mart (NYSE:WMT) beat earnings but missed on revenue. That basically means Wal-Mart fired a bunch of people to cut costs, then those people spent less at the store.

Overall, retail sales were down 1% in July after a 0.8% rise in June. With the unemployment rate still expected to rise to over 10%, and likely to stay at high levels for a few years, there's not a lot of upside for the retail sector.

*****SmallCapInvestor PRO members are just a few pennies away from knocking down another 100% winner. This time, it's a Chinese organic fertilizer company. The stock has been on a tear for the last month. And despite the fact that it's nearly doubled, the forward P/E is 17 and the PEG ratio is .45. In other words, there are more gains to come.

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*****I probably shouldn't do this, but TradeMaster Daily Stock Alerts technical analyst Jason Cimpl is alerting his readers to breakouts in the biotech sector. A couple names he's watching are Orexigen (Nasdaq:OREX) and Jazz Pharmaceuticals (Nasdaq:JAZZ).

Jason thinks Jazz is good for a 21% move from current levels, so if you're looking for a short-term trade from TradeMaster, this might be a good one.

Be on the look-out for tomorrow's SCI Daily as Jason will once again provide readers with video charting of the week's movements and most importantly, his outlook for how to trade for profits in the coming week. Look for this in tomorrow's issue of SCI Daily.

*****Investors are ignoring short-term weakness in oil demand and focusing on the long-term fundamentals. Oil prices are back over $71 a barrel today despite the highest reserve levels since 1991.

Barclay's expects oil prices to average $76 a barrel in the third quarter. And don't forget, hurricane season is looming. Oil stocks should be bought on dips.

Ian Wyatt
Editor
SCI Daily

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