ISSUE No.

60 – DECEMBER 22nd, 2013

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Per the terms of membership, this letter is strictly confidential.

Good Sunday afternoon World 40 members!

SQUEEZE!
Message in the forum

In case you need a reminder, there are only 3 more days until Christmas! It’s now time for us
to focus on 2014’s biggest potential winners. History suggests that 2014’s monster gainers
will come from stocks with solid, long-term, low level bases.

As we have seen time and time again this year, the biggest thrusts have occurred in those
stocks that have been held below their 10 month moving averages for the longest period of
time.
While a stock is “setting up” below its Magic Line (10 month moving average or otherwise),
we DO NOT want to see the stock temporarily cross above the line. We want to see the stock
stay BELOW the line as long as possible.

A stock in a 10 month squeeze could see a modest breakout. A stock in a 15 month squeeze
might get Cramer exited. A stock in a 20 month squeeze might make your year. A stock in a
25 month squeeze could multi-bag several times over. And stocks in 30, 35 month (or more)
squeezes can be life-changing.

It probably goes without saying, but stocks that have been squeezing for 20, 25, 30 months
WITHOUT stock dilution generally have a much higher thrust than those with dilution. Think
about it for a second- if management continues to issue more and more shares every 6
months or so, the chart becomes distorted. With continuous dilution, companies can keep
their stock under the 10MMA basically forever.

As discussed in my AKS reports earlier this year, we were seeing a monster 25 month
squeeze with 7 tight monthly closes. I suggested several times that AKS would be the
“Institutional Stock of the Year” given its chart pattern and liquidity profile (Institutions
generally cannot get into the biggest winners due to low market caps and low trading
volumes). AKS was/is a very rare beast in that regard.

AKS certainly hasn’t been the only monster squeeze play in town. QTWW, BWEN, PLUG,
FNMA, X, KWK, ALTI, ASTC, DRYS, FRO, SBLK (basically any shipper) among others have
all squeezed hard of late.

Fortunately, the squeezing ain’t done. There are several other stocks that continue to
marinate and have not yet squeezed. When a stock doesn’t move higher when it is
“supposed to”, 99% of investors get immensely frustrated, make a firm decision to “never buy
this junk stock again” and move on to the next “hot stock”.

But we LOVE MAXIMUM FRUSTRATION and EXTENDED MARINATION.

Why?

Because….

THE LONGER THE BASE……

THE BIGGER THE SPACE!

And most importantly…….

THE MORE THE SQUEEZE…..

THE MORE THE CHEEZE 

Let’s look at some charts!

RECENT SQUEEZE PLAYS

We saw a 25 month squeeze for AK. The best stocks often have a “breakout fakeout” (to
ensure that short-term “breakout” traders lose money) in the first month out of the squeeze.
AKS was no exception. The move has accelerated of late. With such sqeeze setups,
unexpected “great news” almost always comes out of left field shortly after the breakout
begins.
QTWW is closing in on a 400% 4 month move as the squeeze unfolds.
I discussed FNMA privately at $0.26 and on Twitter around $0.80 based on the extremely
powerful chart pattern. The chart suggested extremely powerful returns. But every “smart
money” investor I contacted suggested FNMA had no future. I don’t have a position in it, but
the chart continues to suggest FNMA has a future.

FTEK’s squeeze was ignited due to great earnings. I wanted to see a higher backlog to
attract the momentum crowd. The stock has disregarded backlog and has marched higher on
its phenomenal technical squeeze setup.
ALTI squeezed roughly 400% and after a 2.5 month pullback, it may be ready for round 2.
BORN broke out of a 31 month squeeze in September. Like many other Chinese ADR’s, it
might be getting ready for round 2.
ASTC has squeezed 500% in 2 months and continues to be in bull mode. A bit too extended
here for my blood.
X has been on my radar for a year now. It has marinated and marinated and marinated a little
more for good measure. Patience is usually well rewarded for plays like this. X has not
disappointed.
Similar to AKS, KWK had a 26 month squeeze. In September’s KWK letter, I said fair value
was $6. If natural gas prices continue to surge, fair value would of course be higher.
We have discussed the shipping sector to death. I don’t think I’ve ever seen a sector with
such a powerful long-term setup. The longer the base, the bigger the space. Shippers have
a S*&T-TON of space over the long-term.
I tweeted about BWEN back in January or February when it was in the $2’s. The setup was,
and continues to be amazing. This is the prototypical “Ski-Ramp” pattern.
PVA caught my eye time and time again in August and September in the high $4’s. What a
schmuck I was. For some reason, I was under the impression that it was a casino stock (not
a sector that interested me), so I never looked into it. Turns out, it’s a natural gas play! As
we know, I absolutely LOVE natgas.
We discussed FRO’s 30WMA “institutional weekly closes” around the $2.25 level. The stock
was setting up for a big move. The funny thing was that on the FRO message boards, even
the long-term holders hated the stock and said there was no fundamental reason for the stock
to move higher. This is precisely what you want to see at major turning points.
After marinating for 26 months beneath its 10MMA, CECO finally broke out and moved nearly
300% off the lows. The education stocks look very juicy here.

PLUG formed an outstanding low level base for nearly 3 years. Coming out of its base, the
stock moved 450% within a month.
POTENTIAL FUTURE SQUEEZE PLAYS
STXS squeezed beneath its 10MMA for 26 months. It finally broke through and surged nearly
1,000% in a few sessions. It has pulled back and based on the top side of its 10 MMA for
about 5 months now. It may be ready for round 2.
DSCO has an unbelievable 3 year low level base. The stock started moving in October, but
after a nice retracement, it may be ready for more upside.
As you know, I’m not a big fan of stocks that end in “sciences” or “therapeutics”, but ECTE is
forming a pretty potent pattern. Look at the recent monthly volume and take a gander at the
RSI below.
I could show you pretty much any shipping chart and they all look spectacular. PRGN is no
exception.
This stock has huge breakout written all over it. SCON has been forming a SWEET low level
base for a LONG LONG time. 2014 could be SCON’s year.
CTIC has been forming a picture-perfect low level base for several years now. It broke out in
September and has been basing since. It may be ready for round 2.
SICK, SICK chart  Not a question of if. The question is when?
I would probably have to throw down 8 to 10 Irish car bombs before I would touch NEWL, but
nonetheless, the chart pattern suggests it could pop big.
“Widow-maker” AUMN has been squeezing for an unheard of 32 months now. If gold miners
ever regain their luster, this one could have a monster run.
PLNR has a beautiful 5 year low-level base. Keep an eye on this one.
After a 27 month squeeze, EBR finally broke out in September. It has been resting on top of
its 10MMA. This one may be ready to resume its uptrend.

EMKR has a great looking low level base. This is not my favorite play by any means but it
could have significant upside should it move out of the base.
After 5 years of hibernation, ETFC has FINALLY been making its move out of its base. ETFC
is significantly levered to the price of housing. This is the kind of stock to be in to play the
rebound in housing.
As with most aluminum plays, CENX appears ready to go. Beautiful 2.5 year base could be
broken in short order.
If this were a stock and had no “contango decay” built into it, I would absolutely load the boat
for a monster run.
I’ve been watching this one for a couple years now. It may finally be ready to go.
Treinta y dos meses.
Same Same, but different 
NBG has pretty much been squeezing for 49 months. Given all of the dilution, I have no idea
how to value it. But the chart says it could move big.
AND OTHER STOCKS OF NOTE

AMD has broken out and has been basing on its 10 Month for about 8 months now. This one
could be ready.
Not a great low level base but 29 months nonetheless.
Take a gander at where the AFOP decline stopped. Yes, the 10MMA to the penny.
A play on Detroit housing going from $1 to $100.
Dilute, dilute, dilute….and dilute some more MCP! Chart looks decent though.
Time for a 10MMA test?
After a “BEAT-down”, this one just tested its 10MMA. If you like it long-term, this is where I’d
be buying.
Yummy potential 2014 powerhouse! Cheap valuation 
Keep an eye on this one in the New Year.
This former high flyer could resurrect in 2014.
HIMX is about as extended as it has ever been from its 10MMA. As traders enter en-masse,
this is now the opposite of a low-risk entry. I would be a buyer in the upper $7’s here.
Keep an eye on this one. I love the name of the company. Nice low level base setting up.

Wow. That was quite a list! Hopefully, you were able to find 1, 2, 3, or 20 squeezers of
interest heading into 2014 

Enjoy your Sunday everyone.

Jesse