NASDAQ

The SEC, along with the major U.S. stock exchanges, have "fixed" the problems with the reverse-merger industry.  By "fixed" I mean they've essentially done nothing at all...

A new proposal by Nasdaq has the market purists such as our friends at Nanex and all those (very few) who still care about how broken the market is and demand something be done about it, writhing in disgust, particularly this section:

\5\ The Exchange is also changing its policies and procedures under Regulation NMS governing the data feeds used by its execution system and routing engine. Current policies state that those systems use data provided by the network processors. In the future, those systems will use data provided either by the network processors or by proprietary feeds offered by certain exchanges directly to vendors.

Nasdaq's proposal admits that exchanges are supposed to use the SIP (CQS/UQDF) data for their execution system and routing engine! They want to formally change things to match what they've been doing all along so they can avoid fines and more! Why would you submit a proposal to change something you've already been doing? In other words, what the exchange is proposing, is already common practice. If exchanges are granted this proposal, Reg NMS, for all practical purposes, is no longer relevant, and there is no point in having the SIP calculate the NBBO, because it will have no meaning. Translated: the market will be, for all intents and purposes, officially two-tiered and terminally broken.

Harbin Electric is no stranger to controversy, and its stockholders over the past two years can be forgiven if they believe that jumping on a Six Flags rollercoaster may have been a little more fun, and potentially far more profitable. Well, to keep it interesting, here comes famed Chinese fraudcap hunter Alfred Little with its latest piece, this time alleging that not only long-time target DEER, but also HRBN, "committed multi-million dollar land fraud." Specifically, "In the case of HRBN, management claims they paid $23 million cash as of June 30th, 2011 as a deposit on $38 million of land use rights priced at 500,000 RMB per Mu, double the government’s offering price." Little continues: "Our report today provides concrete evidence consisting of multiple recorded phone calls, on site visits and emails with government officials proving beyond any doubt that HRBN and DEER are both guilty of conducting very similar fraudulent land use rights purchase schemes to steal money from their shareholders. HRBN’s auditor, Frazer Frost, failed to respond to our attempt to share our findings last week." And now is the time for the porn addicts to finally stand up and do something proactive instead of letting to blogosphere do their work for them: "This morning we handed over all our evidence to officials at NASDAQ and the SEC prior to publishing this report. We are hopeful regulators will halt HRBN and DEER until their financials are restated to reflect reality, in the same manner as PUDA and CTE were immediately halted after we published our findings (here) and (here)." The final nail: "In this report we prove that HRBN and DEER’s land frauds are just as brazen as the fraud conducted by PUDA and CTE and thus deserve the same fate." Longs have been warned.

After a brief lull, Alfred Little, whose track record in slaying Chinese fraudcaps is comparable to that of Muddy Waters (just recall the DEER in headlights), has released a report on what he believes is the latest Chinese publicly traded fraud: Sinotech Energy Limited (Nasdaq: CTE), where the catalyst is that its "largest customers and suppliers are likely nothing more than empty shells with little or no sales or income." Notably, this company breaks the mold of the surefire reverse merger frauds, and was actually taken public in an IPO by UBS, Citi and Lazard. Little's price target: somewhere between $0.00 and $0.63, a notable discount from the current price in the mid $3s. Below are the key highlights from the just released report as well as the full 30 page research report in its entirety.

It has been a while since we have presented Chinese fraudcap candidates. Today, courtesy of Glaucus Research we bring you the latest entrant to the alleged reverse merger fraudcap group: L&L Energy, Inc, (Nasdaq: LLEN). Is this company nothing but yet another Chinese fraud and poised to plunge by over 75%? Read the full report (Price Target <$1.00) and find out.

Equities up, gold down. Are we up for a false break out on the upside? by www.thetrader.se

There was a time when markets looked to pre-discredited titans such as John Paulson new position announcements and surged appropriately on any kind of news. Now, it is small, actually due diligencing outfits, such as Muddy Waters, which move stocks by up to 50% on mere position initiations. To wit, MW has just reported that is has started a short position in Spreadtrum Communications, (SPRD). "Muddy Waters, LLC has begun researching Spreadtrum, Communications Inc. (NASDAQ: SPRD), and we have taken a short position in it. (Please see our disclaimer below.) We have identified a number of issues in SPRD's filings, and we believe that there is a high risk of material misstatement in the reported financials. Our concerns are gravest regarding 2010 and 2011 numbers. The below link is to an open letter we have written to SPRD chairman Li regarding our concerns." Next up: stock implosion.

Tepper giveth (the escalator), Tepper taketh away (the elevator)

Utilizing The Applied Finance Group’s backtest system, we ran a strategy of investing only in companies with a market capitalization of greater than US$ 1 Billion and a dividend yield above 3%. The strategy has worked fairly well with the annualized returns over the last 12 years beating the overall universe. While the dividend paying strategy worked well, a strategy based on AFG’s valuation metric performed better.

As expected, the world's most grotesquely disguised LBO in the form of the debt-financed acquisition of the NYSE by Nasdaq and ICE, has been pulled, formally on grounds of regulatory approval concerns, realistically but due to "market conditions" manifesting in the form of a market downtick. This could very well be the market top.

In light of another fraud allegation against China Biotics which will likely soon join the Nasdaq trading halt page, we decided to take a quick look at the Nasdaq trading halts page. To our complete lack of surprise, Chinese fraud dominates with an iron fist: of 19 halted stocks (GFC has three classes of securities halted), 15 of the name are Chinese. Of these 15 Chinese names, none were on this list when we first warned of the imminent surge in reverse merger fraud back in November. Luckily, judging by the horrendous performance in recent Chinese IPOs, even with the criminal abdication of enforcement duty by the regulators, it appears that the gambling frenzy is over. Below we present the complete list of Nasdaq trading halts with Chinese names highlighted in red. No further commentary is necessary. And to all those who bought puts on these stocks, correctly predicting the names are nothing but mini ponzi schemes, please send your complaints to the SEC and the Nasdaq, which is more focused on raising HY debt to LBO any and every exchange still for sale, than actually monitoring what crap it floats.

In other market-shaking news, The Bernank says the Fed WILL act if inflation is "more than transitory." Apparently, he finally had to pick up the check at a restaurant this week or perhaps he pumped his own gas over the weekend.

In what could easily be the biggest news of the day, even more important than the most recent Chinese rate hike, the one stock that determines the broader stock market level more than any other, Apple, may well get crushed today as index arbs dump it following news that the Nasdaq 100 intends to announce a rebalancing which will see AAPL drop from a 20% to a 12% weighing. According to the WSJ, the move is akin to what various exchanges do when they hike margin rates to prevent commodity prices from surging: "The rebalancing was driven in part by the seemingly unstoppable rise in Apple shares, which are up more than fourfold in the past two years. The tech company's big weighting means that a change in fortune for the maker of iPhones, iPods and iPads has a huge impact on one of the most heavily traded indexes in the market. After the rebalancing, which takes effect May 2, Apple will make up 12% of the Nasdaq-100." Whether this will be the end of the company's relentless rise remains to be seen although any impairment in the sensitive ecosystem of technical factors that has so far prevented any fund from selling the company may well be impaired at this point, leading to the first bona fide sell off in the name in the past 3 years.

For now, the big fish are bailing out the little fish. Unfortunately, the US is the biggest fish of all and it's extremely unclear to see who exactly will be bailing us out when our rates start rising.

Yesterday at Apple Inc.’s (NASDAQ:AAPL) live press event in San Francisco, CEO Steve Jobs unveiled the much anticipated second version of the iPad (iPad 2), which will begin shipping March 11th. Despite Jobs’ recent health concerns (he is still on medical leave), the man behind the most innovative technology company in the world right now was determined to unveil the iPad 2 on his own, and looked relatively healthy while doing it according to several attendees, saying that “we’ve been working on this product for awhile, and I didn’t want to miss it.”
The iPad 2 is a very impressive gadget – much like its predecessor – and should push the company further ahead in the tablet race (Apple owns 90% of the tablet market share selling approximately 15 million devices in nine months during 2010), making it that much more difficult for competitors to catch up in the near term. Here are some highlights of the iPad 2: