Fly or Flop: Electro-Optical Science (MELA)

Electro-Optical Science (NASDAQ:MELA) is a small cap ($122.14M) company that is pretty one dimensional. MELA is a firm that's goal is to produce a non-invasive way to diagnose melanoma. It has been public since late October of 2005, and traded side ways since. Currently MELA is trading right under $8 a share (7.93 close today) down from high close of $9.30 May 30th.

However, the price right now is really irrelevant. MELA is going to release results from the trials they are running with their flagship product, MelaFind, this year. If successful, MelaFind would essentially change the way melanoma is diagnosed. Currently, biopsies are performed in order to determine if a mole has cancer. However, this procedure leaves scarring and is expensive. MelaFind would be able to detect cancer without these side effects.

I'm no expert on cancer, medicine, or even health care companies. (Or really any companies for that matter.) But I can see that this company's product has the potential to be in huge demand. The question is whether or not the product will be approved. And that's a big question. If MelaFind doesn't pan out, the company is essentially worthless, at least until they made major changes. The stock would plummet. However, if it does work, there is no doubt it would be incredibly lucrative for any stock holders. A buy out would be a big possibility, which could double or triple current price. Also, the company has enough cash to potentially market MelaFind themselves.

Analysts appear to be optimistic about the company. It has an average rating of 1.7 (1 being strong buy, 5 being strong sell) according to Yahoo Finance. Recently the company briefed investors on the PreMarket Approval (PMA) process at the Needham Biotechnology and Medical Technology Conference in New York. The President & CEO Dr. Joseph Gulfo mentioned he is looking forward to a "busy" end of the year.

I think that the prospects of this company are pretty good. There is a sizable chance that the product could fail, but the studies already performed have yielded great results. Right now melanoma detection is a crude science, which basically involves carving up the patient. Melafind is poised to change all of this. Also, if it succeeds, MELA will see huge growth. There are no other products to suck away profits, this company has put all its eggs in the MelaFind basket.

Check out the Electro-Optical Science website for more.

You can see the Needham Biotech presentation on the Investor Relations section.

Day Trades

While Day Trading seems risky, (Pussy) its way more fun than long term investing and can make money a hell of a lot faster than waiting months or years for investments to pan out. Shit, I lost an average of 4.5% today on my long term picks. Day trading can be a way to suplement the income. The things I look for in a day trade are 1) Small price, 2)Volitility 3)Enough Volume 4)Patterns. The basis of day trading is just buy low sell high, but having a stock that you can be pretty sure of what is about to happen, based on what usually happens, makes trading it waaaay easier. Two stocks that I day trade are ECC Capital Corp and Zix Corp.


ECC Capital Corp (ECRO) is a OTC stock. They have declared bankruptcy or something idk, its a shitty company, but it pretty much meets all my requirements. It trades around .15 CHEAP. It moves one or two cents a day (thats like 6.67%-13.33% a day) It has okay volume. Usually around 100,000 a day. It can be a problem however, and not being able to get a sell through is a huge red flag with day trading, and has been a problem for me. The reason I choose to trade it is that it has a very predictable pattern. Buy at .15, Sell at .17 or .18. The support at .15 is almost perfect, and this leads to an easy entry point. (See graph)



Zix Corp (ZIXI) actually is a company I think long term is a pretty damn good investment. They're a leader in email encryption, and I think they will suceed. However, currently they're not doing much, except being a sweet candiate for some day trade action. They meet all the epectations of a good day trade stock. They are cheap, trading in the $4 range. They are volitile, usually .1 to .3, or 2.5%-7.5%, a day. It has sufficient volume, with an Avg Vol of 641,000 on NASDAQ. Perhaps most importantly, it is an easy stock to trade because of its predictability. There is a definet support around $3.8 and a resistance in the $4.1-$4.2 range. (See graph)