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[TTHQ Staff]

Gene Inger's Daily Briefing. . . . for Friday, February 2, 2007: Good evening; Brazen aggressiveness . . . might be a valid description not only to enemy tactics in the twin war zones of Iraq and Afghanistan, but also to characterize the 'solo Walks' witnessed continuing in both major Senior Averages, particularly as unaccompanied by higher-highs in the NASDAQ or similar market reflections, but accompanied by at least a couple dubious responses both to higher profitability and lower margins also (as we'd noted regarding Google on one hand and Amazon on the other late today). If there was anything particularly interesting in stock action on Thursday, it wasn't all the hype about the 'Goldilocks' scenario, but rather potential developments or actions in a couple stocks we keep an eye on: this time PURE Biosciences and… Ionatron. Tonight's remarks will be primarily via audio; with the exception of a thorough note or two about developments following our reflection on the anticipated progressive rallies for both of the aforementioned issues along with our daily-basis technical chart view. Daily action . . . sees little variation in our market perception required by higher level gains in the Senior Averages, and continues to see divergences even if invisible to all the cheerleaders. Nevertheless, while not being long-term bears (we haven't ascribed to that stance since late 1999 and early 2000), we do allow a spike-rollover transition for the big-cap areas with small-cap issues continuing to generally act independently. It would not particularly be surprising if the market were to celebrate the Employment Report (or absorb profit-taking) early Friday by rejoicing how nothing will pressure the Fed to hike rates (we argued against that before all the 'relief' remarks on that subject heard this week); a sign not of robust strength, but suggesting (to us) most big stocks are ahead of themselves. Margin compressions are evident in numerous companies already; not that anybody wants to talk about it. Insider selling in financial stocks (an area we'd warned becoming extended or vulnerable of late) is increasing, even if not reported more than in perfunctory manners, as even permabulls have obligation to. Again; we're not permabears; definitely not . . we're secular bulls! But this long-range continuing (five year) viewpoint we projected (alone and opposed to the bear-market rally crowd for a couple years) would be remiss if we didn't denote 'when' short-terms are extended, and ripe for correction; whether that correction occurs smoothly or not. In this case we wouldn't be surprised to see a different dichotomy, where money flow shifts again move to the under-exploited from the overdone stocks, as this evolves. In this environment of worldwide growth (the story we hear about perpetually from bulls of a certain stripe) we're not negative, but fault the omission of international changes; of liquidity issues (for instance) in China (not to mention the complicated relationship with that mushrooming nation); or the almost unnoticed slide in certain related ETF's. This week . . we addressed back-channel discussions ruminated ongoing between the U.S. and a clearly-belligerent Iranian regime; though not officially acknowledged. I omitted mentioning the rumored intertwining of Iran agents as Iraqi officials (not just a case of infiltration, but functioning at high levels in Iraq). That has not been discussed by mainstream media, though (like the climate control stories coming months after all of that was documented here and there) we suspect that -in time- we'll learn about it. What was heard (in-part remarks reserved for ingerletter.com members) was a story arguing the opposite; that reality checks didn't validate concerns of Iranian meddling in Iraq. We don't have resources they do, but suspect they're missing the boat on that one. For example; there's another report suggesting two senior Generals in the Iraqi Army are being investigated in connection with the well-reported murder of five U.S. officers in the Karbala police-checkpoint-pass-through attack, wearing US uniforms, as well as using stolen Suburbans. The attack's sophistication level; weapons seized by the U.S. Army in more than one situation too; are beyond that afforded insurgents domestically, and in a number of cases had 'manufactured in-Iran' dating from 2006. Combine the 'apologists' for Iran, presumably emboldened by the well-publicized U.S. strategy failures surrounding the initiation of the 'war' (as relates to Iraq only we note) elsewhere, or the faux-paux (or is it retreat in fear due to domestic consideration) by the French leadership regarding the proliferation of nuclear power to Iran, and you've probably got an effort (though not labeled as such) to neutralize what they fear is an oncoming movement toward engaging Iran militarily in the Persian Gulf within weeks. For sure there's implications for financial markets; as the entire situation or prognosis in our view goes way beyond debating the significance of long-delayed corrections in the case of the markets' Senior Averages. Short-term we're likely to see little of this in terms of market-moving impact as of yet; with the exception of an up-and-down turn, as soon as anytime now, in the wake of the Employment Report; whether we try for a further rebound next week or not. If we do reverse on Friday, we're likely to drop right at the week's start, and then rebound to lower peaks before settling back once again. Just recognize that: we've tried to emphasize we remain (barring exogenous events) bullish on the secular trend, but aren't in a camp which believes 'this time is different' to the extent of migrating to all-time-S&P highs (we continue anticipating it eventually, but not yet), without intervening corrections. Corrections will occur not to deny, but to actually assist, accomplishment of that longer-term upside prospect as we'd outlined. MarketCast (intraday audio-email) comments are un-enthralled as companies 'make their numbers' (often as low-key expectations intentionally or not aid achieving such goals); or they miss, but the stocks aren't upsetting anyone even if they crater. We're not blindsided by the prevalent 'bulletproof' market perspective so many have simply argue, but are aware of recent firming in Crude Oil prices, and note that the Chicago Purchasing and ISM data deny total euphoria; though again they ignore these since they can for now. If anything post-close 'good news' selling on a stock makes a point. Bits & Bytes . . . provide investors ideas in a few stocks, often special-situations, but also covers an assortment of technology issues (needed for assessment of general factors in tech overall, or as compelling developments call for) that are key movers in the NDX, SOX or S&P, plus ideas ingerletter.com thinks might merit further reflection. Level 3 (LVLT); Intel (INTC); Microsoft (MSFT); Northrop (NOC); InkSure (INKS); Ionatron (IOTN); Texas Instruments (TXN), LightPath (LPTH); plus Motorola (MOT); PURE Bioscience (PURE); and QPC Lasers (QPCI); plus the latest addition to the small group we monitor are commented upon daily via accompanying audio. Late Wednesday, PURE Bioscience announced its annual shareholders meeting; a follow-on to our discussing the company's recent developments in some detail. While it was entirely ruminating, and we realize the term 'soft-launch' may be too mild when discussing the 'private-label' retail rollouts at Home Depot and Sam's Club or others unknown about yet; we do understand that advertising is up to individual vendors of course. (These both are clients of an established distributor, 'Clean Control' from the Atlanta area.) We also suspected the company was close to filing a 'Treatment IND'. Well, to our delight; that's exactly what occurred Thursday morning. And it was 'bullet straight' at a preferred area for first FDA-required clearance: 'hand cleansing' uses. This follows recent publicity about their providing 'Staph Attack' to the San Diego fire and police as well as EMT folks, and the coverage on the local ABC TV station there. Do know that anything being applied to humans (internally or externally) does require FDA clearance when marketed for the specific intent; unlike 'natural' generic products that generally aren't going to achieve the US market penetration of an EPA and FDA cleared product(s). That means that while the 'hard-surface' cleaners need only EPA approval (as they have, in all 50 States), the hand-cleaner (or internalized uses too) are going to require FDA approval. While the company did not spell-out the durations of testing phases (and we aren't sure they're entirely sure about that as of yet), there is precedent to suspect, given the experience already with the product, that this may take some months-to-a-year, but hopefully not longer. Meanwhile (as this is expected in the timeline) we remain enthused that the hard-surface market will unfold this year. Here's today's announcement; which speaks volumes all by itself (abbreviated here): PURE Bioscience (PURE) and (privately held) Therapeutics, Inc. today announced the filing of an Investigational New Drug (IND) application with the U.S. Food and Drug Administration (FDA) by Therapeutics for a hand sanitizer based upon PURE's patented silver dihydrogen citrate (SDC) broad- spectrum antimicrobial. Therapeutics submitted the IND in late December 2006 on behalf of the PURE Bioscience/Therapeutics, Inc. collaboration to enable initiation of the first clinical trial of a product containing SDC as an active pharmaceutical ingredient. After reviewing the submission the FDA has determined the product testing in man may begin as proposed. "We are pleased to start 2007 with such an important development," stated Michael L. Krall, CEO of PURE Bioscience. The filing of an IND marks a major milestone in our growth plan as we expand beyond our EPA registered hard surface disinfectants to pharmaceutical applications of SDC. After months of development and formulation work with Therapeutics, Inc., we are very gratified to clear this hurdle with the FDA in our efforts to develop and commercialize the first human application for SDC." "Therapeutics looks forward to initiating clinic trials of the hand sanitizer containing SDC. We recognize the potential of this type of product and the benefit it may hold for health care providers and patients," stated Daniel Piacquadio, M.D., CEO of Therapeutics, Inc. PURE and Therapeutics' joint development initiative is intended to capitalize on the pharmaceutical potential of PURE's flagship bioscience technology, an aqueous antimicrobial, silver dihydrogen citrate (SDC). A patented new molecular entity, SDC is an electrolytically generated source of stabilized ionic silver that can serve as the basis for a broad range of products in diverse markets. SDC liquid is colorless, odorless, non-caustic and formulates well with other compounds. PURE granted Therapeutics a license to develop five SDC-based products for the treatment and prevention of dermatological and women's health related bacterial, viral and fungal mediated diseases and conditions. Therapeutics has assumed responsibility for funding and directing the testing and regulatory processes for these selected potential FDA-regulated SDC-based products and anticipates filing four additional product INDs over the next 23 months. (The above) covers the key segments other than general corporate descriptions from today's release. Inline with our thoughts coming off the indicated washout lows in the 1.70's a couple weeks back; we expected this sort of movement ideally, and actually in this case suspect we sort of 'grind' a bit higher for now given that so many skeptics probably didn't believe the FDA would permit any Treatment IND testing of silver-ions (an interesting story in its own right we suspect). Furthermore, we wouldn't be at all surprised if the company continued to periodically develop and announce more sales or retailing alliances (or distribution alliances), not to mention progress with already-known distributors such as in Tulsa, or the Enviroguard 'Tommy Thompson' group. Elsewhere; we congratulate key founders at Ionatron (IOTN) for backing-away from a controversial periodic sales plan they initiated last year. While we can't say that any particular correlation between the termination of further structured selling means that a period of progress is soon-at-hand; suspecting that wouldn’t be unreasonable logic. Here's that filing; which occurred late today; a couple hours after we mentioned to our MarketCast (intraday) members that while we don't wish to encourage rumors, one or more trading services circulated stories suggesting an Armed Forces 'deal' was either near or at-hand. We didn't and wouldn't promulgate rumors, but as action in the stock (which we thought for some time was regrouping and heading higher with a low-point having been achieved as suspected in the upper-middle 3's) was firmer, and volume growing, we simply let members know it was likely resulting from a rumor circulating. Then sometime later came this reported filing: "On January 31, 2007, Joseph C. Hayden, the Executive Vice President-Programs of Ionatron, Inc. (the "Company"), and Stephen McCahon, the Company's Executive Vice President-Engineering, each terminated their Sales Plan which previously entered under Rule 10b5-1 of the Securities Exchange Act of 1934 with a brokerage firm on August 23, 2006 and which had become effective September 1, 2006." (Balance reserved for ingerletter.com members. Certainly disruptive technology is a potential revolution in military approaches vs. conventional weapons, if initiated). P.S. Did shareholders watching Ionatron note the large number of job openings that, it appears very recently are being offered at the Stennis facility -so many thought not in use or- anticipated to be used for production of 'something'? We're not going to get all excited about Ionatron; but from the 3's we thought things would improve from the technical price perspective, and we can't help but wonder if fundamentals are now at last falling into place a bit more definitively, or telegraphing that they're about to soon. A columnist who regularly attacked the company..did he disappear at the NY Post ? ``` We can't answer detailed questions for you (how could we; companies release what they will when they do; ditto for the Departments of Defense or Homeland Security); but these are topics previously explored as part of our assessment of advanced tech stocks; notably for key reasons: we view Directed Energy Weapons and all related or sector products, of any 'pure play' or high-power solid-state laser-related companies, as new potentially important 'disruptive technologies' to benefit the U.S. defense; they're important as anything else able to shift the world into 21st Century technology. In summary . . events continue reminding us of risks Allied fighting forces face, given continued attacks on free peoples, by elements including organized terrorist forces in various countries. A world addressing terror threats continues, as domestic issues absorb us less as we focus on the Middle East crisis and World War III avoidance. McClellan Oscillator finds NYSE 'Mac' slipping as intervening rebounds currently at +54; NASDAQ's at +34 with complacency pervading ideas of sustainable extensions. It's also the case markets ignored 'negative divergences' in big-caps as more or less they're trying almost desperately to retain upside, as to forestall renewed correction. It isn't fair to suggest we dispute underlying bullish fundamentals; in fact we argued this thrust of a friendly monetary policy by the Fed when few others did during crucial 2001-'02 timeframes. It hasn't changed; but an excess of those joining the chorus of celebrants 'now realizing' this five-year-plus old fiscal philosophy developed, is what needs correcting. That's the point: we're not secular bearish; just expect a correction. Issues continue including oil, terror; the whole Middle East, Korea, and economics. As assessed for a couple weeks, extended rebounds were showing just exhaustion syndromes, and now without interpretation or forecast, increasingly negative action. Suspected these couple days of rebounds is stalling-out, as we get nervous ahead of (noted factors). Within days, Senior Indexes ideally migrate lower; considerably so it's logical to anticipate actually, especially if we spike up to reverse thereafter (outlined). Enjoy the evening, Gene Gene Inger, Publisher