The bulls are back in control after a minor correction. The bears find themselves having to accept small drops in price and immediately liquidate short positions with small profits as the bulls continue to buy all dips. There is no reason to believe this pattern will change any time soon.

By the same token, the risk/reward ratio remains favoring the bears as rallies are toiled and limited though numerous. It does seem though that the overall market rally is not across the board, meaning that there are some stocks that are "bucking the trend" and not following the indexes. As such, it is those stocks that are presently tradeable on the short side and that offer better risk/reward ratios than purchases, though all short trades require fast profit taking.

This week there are 2 mentions. One is a short position in a stock that has been "spinning its wheels while the indexes rally" and the other a purchase in a stock that is likely not tied in to the overall market and shows a decent risk/reward ratio and probability rating.

SALES

ZBRA Friday Closing Price 105.82

ZBRA made an all-time high at 119.47 in June 2015 and then proceeded to fall precipitously over the following 11 months to 46.13 (a 61.4% drop). The stock then began a recovery phase that started in July 2016 and that lasted 11 months until June 2017 and that took the stock back up to 109.30 where selling interest was again found, causing the stock to drop back down to 94.78 over a period of 9 weeks. Once again, buying interest was found at that price and the stock over the next 2 weeks rallied back up to 108.99 where a negative reversal occurred, having made a new 11-week high but then closing in the red.

For the past 4 weeks since ZBRA generated a negative reversal and successful retest of the previous 2-year high, the stock has been backing and filling within a $6 trading range but this last week, likely with the help of the index market, the stock spiked up and closed on the highs of the week, suggesting further upside above last week's high at 105.98 will be seen. This rally will either turn out to be the 3rd retest of the all-time high at 119.47 (1st retest was at 109.30 and second retest was at 108.99) or depending on the index market, a resumption of the uptrend.

What the action seen the past 2 years suggests is that 1) the stock is very volatile, 2) there is strong selling interest on rallies above $100, 3) the all-time high now has at least 2 successful retests and possibly 3 (if the stock fails to get above the most recent high at 108.99 and goes below last week's low this week or below this week's low the following week, and 4) downside objective could be just about anything.

In looking at the chart of ZBRA for the past 2 years, one thing jumps out immediately and that is that between $85 and $110 movement has been swift and without many obstacles or delays, both when rallying and when falling, meaning that if the bears have now gotten their edge back and the indexes are to fall, that a drop down to that support area could occur in a matter of a couple of weeks.

To the downside and on an intraweek basis, ZBRA shows minor support around the 101.75 level and then stronger and more pivotal at 99.59. Further support is found at 97.82 and decent at the reversal week spike low at 94.78. Below that level, there is no support until 84.32.

To the upside and on an intraweek basis, ZBRA shows minor resistance at 106.54 and minor to decent at 107.35. Above that level, there is decent to perhaps strong resistance at the double high at 109.30/108.99.

ZBRA will likely get up to the 106.50-107.30 area of resistance this week but that level should bring in the selling interest unless the index market continues to run unabated to the upside. Given the 2 successful retests of the all-time high that was made 15 months ago, the probabilities favor the bears. This sell mention has now been around for the past 8 weeks and it is now likely that the desired entry point will be reached this week for the first time.

Sales of ZBRA between 106.30 and 107.30 and using a stop loss at 109.35 and having at least a 93.00 objective would offer a 4-1 risk/reward ratio.

My rating on the trade is a 3.25 (on a scale of 1-5 with 5 being the highest).

PURCHASES

BHTG Friday Closing Price - 6.80

BHTG is a waste management company that has come up with a novel idea to get rid of waste by using a leasable machine to "digest" the waste and turn it into water that can be disposed of via the drain.

BHTG has been trading for almost 2 years but 6 weeks ago broke out above its all-time high, suggesting that the concept is gaining a foothold among traders. The negatives is that the stock is traded "Over the Counter" and has small volume (average of about 25k per day), which is something that needs to be considered strongly before trading.

Nonetheless, the first week of August BHTG broke above its 2 year weekly closing high at 4.75 and quickly doubled in price to 9.50 over a period of only 2 weeks. Since that high was made, the stock came back down and closed at 4.78 4 weeks ago, suggesting the breakout has now been tested successfully.

BHTG rallied up to 7.65 2 weeks ago but closed on the lows of the week on Friday, suggesting further downside below last week's low at 6.80 will be seen this week. Intraweek support is found between 6.11 and 6.20 that has a high probabilities of being seen this week.

To the upside and on an intraweek basis, BHTG shows resistance at 7.65, at 9.50 and psychological at $10.

BHTG put out a sponsored comment (see below) on the Investor Daily website that explains the potential outlook for this company. It is mostly a sales ad for the company and its product but it does give all the pertinent facts of the potential benefits of this novel way to get rid of waste.

SPONSORED COMMENT:

I am reasonably confident that we can all agree that food waste, garbage, and pollution is a generational problem that is spiraling out of control. There is a lot riding on a sustainable solution for this problem and huge financial windfalls for companies helping to solve it.

The $475 billion dollar waste industry has no incentive whatsoever to change. It gets paid by the pound to pick-up, ship, and bury of all the food waste in America. These Waste Managements (WM) of the world have had a monopoly on garbage and all the profits from it… until now!

Now, it's obvious that there's a need for sustainable disposal solutions with over 1 billion tons of produce being thrown away per year. One company has already stepped up to the plate to take on this challenge, and may quite possibly have found the most efficient and environmentally friendly solution to date.

This company could possibly be one of the best investment opportunities we have come across in years. CREDIT SUISSE seems to think so as well, as BioHiTech was one of only eight companies chosen for The Credit Suisse Private Innovation Circle conference. BHTG has been public just over a year and it is now trading on the OTC stock exchange in the USA, which makes it one of the very few, publicly listed companies with solid growth and fundamentals in the OTC Markets. In fact, we would be surprised if it isn't trading on a major exchange in the near future! What is so amazing about the BHTG solution is you don't have to pick-up, ship or bury your food waste anymore. That's right, all the things that the industry giants are being paid billions of dollars for, are no longer needed.

BHTG offers a high-tech alternative to the dumpster, compactor and truck. The company sells a cabinet-based system called the Eco-Safe Digester that looks a little like a conventional compactor: pour your food waste in the top, shut the door and let nature do its work. However, that's where the disruption begins. Each Digester unit has the capacity to process up to 2,400 pounds of trash (worth $72 to a hauling company) per day into clean drain-safe water. A potential savings to each customer of over $18,000 per year.

BHTG estimates there are 250,000 potential locations to deploy their digester system in the United States and an additional 200,000 locations in the International markets.

The entrepreneurial genius here is that BHTG offers the Digester at a surprisingly low start-up cost and then captures recurring revenue every month on every unit in the field. A busy restaurant diverting its trash out of the landfill might see the investment pay for itself in a matter of 4 months. That proposition is why BHTG has already deployed enough Digester units to keep 70 million pounds of wasted food out of landfills every year. Revenue is coming off a low base because the company is new, but the top line is rising at a healthy 86% year over year as both recurring monthly fees - rental, service and parts - and core order flow keep ramping up. While the company is still at a pre-profit stage, the burn rate is level as management focuses on taking the business to the next level. Either way, every Digester in the field raises the recurring revenue bar by at least a few hundred dollars a month. We usually associate "recurring revenue" with the technology sector and not with the world of recycling, but that's ultimately the secret of BHTG's initial success. While management has deep roots in increasingly green corners of the waste management world, the overall footprint here looks more like a subscription-based software play that just happens to sell clean food disposal instead of bits and bytes.

The Digester is built to communicate with a full suite of mobile management apps. You can talk to your trash machine but, more importantly, BHTG can also access the logs to identify problems and flag the repair crew before kitchen or stockroom staff notice. More responsive deployment, tighter service times and higher customer retention: this is why Wall Street is chasing the Internet Of Things.

Look at BioHiTech Global's Eco-Safe Digester Recurring Revenue Economics Model:

Now, for just one eco-safe digester, it would bring in an annual recurring cash flow of $8,640 in leasing revenue. The direct sales would bring in an annual recurring cash flow of $2,640 per unit.

If there are 1,000 units deployed, assuming the units are all leased, the model would bring in over $8 million annually. This is being scaled up rapidly with 86% growth in Top line revenue and digester deployment, it is not hard seeing them get to 5000 units deployed over the next couple of years, that's 43.8 Million dollars of recurring revenue!

Purchases of BGTH below 6.20 and using a stop loss at 4.65 and having a 10.00 objective will offer a 3-1 risk/reward ratio.

My rating on the trade is a 2.75 (on a scale of 1-5 with 5 being the highest). The low rating is mostly because it is a low volume stock that is traded over the counter.