Denderon Corporation (DNDN – Nasdaq)

Dear Bottarelli Research Member,

This past week, every commodity-driven company was taken out to the woodshed and beaten up badly. The strength of the commodity companies didn’t matter — nervous investors sold them all.

We’ve spoken about this several times over the last month, and we have been buying many of the strongest stocks amidst the selling pressure. The thinking behind this strategy is simple:

• Has the world population stopped growing?
• Do people in emerging countries no longer feel the need to eat?
• Have the world’s top emerging nations decided to stop building up their infrastructure?

Of course, the answer to all of these questions is a resounding “no.” Yet the financial media seems to indicate that a so-called “global commodity bubble” is now bursting. Please don’t believe this nonsense. We all know that the financial media can be red hot on a topic one day and then ice cold on that same topic a week later. Savvy investors like us must see through this background noise and realize that commodity bull markets can easily run as long as 10 years. Therefore, buying 2-month price dips like the one we have now continues to make sense.

After all, I do not buy into the idea that the global thirst for oil or food has dried up. Nor do I believe that the need for iron, coal, steel, or agricultural products has gone away. Therefore, our strategy of carefully picking up the top commodity-driven names for discounted valuations continues to be the best trading tactic. In fact, we’re being handed one of the best opportunities to pick up bargains like GTE, ICO, NOG, RIO, NCOC, DBA, MNEAF, BEXP and IVN (to name a few from our portfolio). I would continue adding shares to your positions in these companies.

Another major topic in the financial media is the continuing bail-out of more banks. Which ones will be next?

The bail-out of Freddie Mac and Fannie Mae is going to be huge, but now we have to address credit card debit, car loans, student loans, and the toxic CDO paper that’s still held by many financial institutions.

The Fed is doing nothing but printing more money, and we all know that this practice is inflationary (which, in turn, is bullish for metals like gold, silver and platinum). But the worst part is the fact that inflation is a “hidden tax.” Every American taxpayer is feeling the burden of paying this “hidden tax” more than ever before. In fact, when I heard that the Fed has now asked Merrill Lynch to step in and review the books on Freddie Mac and Fannie Mae, I found it pretty darn concerning. I would like to know who is looking over Merrill Lynch and their finances, wouldn’t you? I don’t like what I’m seeing right now, and that’s why I’ve asked Bryan to recommend another protective options play this week.

If you’re part of the Bottarelli Research Options service, then you know that Bryan has had tremendous success playing ultra-short positions, which move at a rate of twice the inverse of the major market averages. In other words, if the Dow moves down 2%, ultra-short positions move up 4%. And when you combine this double inverse action with the super-leverage of options, you have an incredibly powerful vehicle for making strong returns off any market downside. Therefore, Bryan will be recommending a new ultra-short position for you below.

But in terms of this week’s new small-cap pick, one of the biggest Bottarelli Research Small Caps winners of 2007 is once again presenting us with a very interesting situation. The investing play revolves around the advancement of a promising prostate drug called “Provenge,” which is a drug that I believe should be FDA-approved and on the market right now.

When we first recommended this company, an early panel hearing by the FDA’s own board resulted in a 17-0 vote for approval. On this news, the stock soared – and we enjoyed tremendous upside profits. But upon further review, the FDA came back and requested further clinical data, and this was a huge disappointment for investors, doctors, and men with late-stage prostrate cancer. When this happened, the stock fell sharply lower.

Let’s face it: There is nothing available on the market for late-stage treatment of this killer, creating an urgent market need to be addressed. (On a personal note, I’ve had prostate cancer touch my own family, which is why I’m so dedicated to getting an effective treatment to market.)

But despite the FDA set-back, this company has not given up. Rather, they’ve stayed the course and provided many additional studies and tests requested by the FDA. On July 16^th, for example, a Phase II trial was initiated in men with localized prostate cancer. These patients are scheduled to undergo a prostatectomy at the UCSF Helen Diller Family Comprehensive Cancer Center, and they’ve agreed to take this treatment six to seven weeks prior to their prostatectomy surgery. This trial aims to once again prove the effectiveness of Provenge in late stage prostrate cancer patients.

But the most promising aspect of this investment will occur in October of 2008. That’s when the Independent Data Monitoring Committee is scheduled to review the latest studies (outlined above) and present their findings to the FDA. If these results once again display results equal to or better than what the FDA concluded, the company will then work towards an amendment to the earlier findings. And at that time, I would expect the FDA would give them special clearance for the use of Provenge in men with late stage prostrate cancer. If this occurs, you better believe that the stock will catapult higher once again. In fact, the anticipation of positive news could be enough to push shares 50% higher. That’s why the timing of this alert is so critical. We have two months before we get this news, and it might even come out earlier than expected (as it did last time). Therefore, the time to get positioned is now.

The company is Denderon Corporation (DNDN – NASDAQ).Although this play is more speculative in nature, I certainly think the stock price could move aggressively higher, just like it did for us in early 2007. Let’s add shares of DNDN to our small-cap ledger under $6.00, and if we see another upside run over the $20.00 level, don’t even think twice about taking your profits!

UPDATES

Fushi Copperweld (FSIN – NASDAQ): Shares have come back down to their support level for the second time, but since they’re an infrastructure play, I continue to believe they’ll do well going forward. The telecom story will begin to receive more attention overseas, and FSIN will be a major beneficiary. Earnings are scheduled for mid-August, and this could be the trigger that pushed shares higher. Hold.

AIXTRON AG (AIXG – NASDAQ): After showing us a little gain, AIXG has pulled back. But don’t be fooled. AIXG is involved with cutting-edge technology that will soon come to fruition, especially as the push for LED lighting continues growing worldwide. For example, Formosa Epitaxy of Taiwan just made a repeat order, Changelight of China also placed new orders, and High Power Opto of Taiwna just reported a milestone order for high-power LEDs using AIXG technology. Hold.

China Precision Steel (CPSL – NASDAQ): I must admit, this one is a head-scratcher. They’re expanding their global presence, and every time they report earnings the stock price moves aggressively higher, but then it drifts back down in the weeks and months later. If shares can simply extend on the earnings momentum, then we’ll be in business. They’re scheduled to report their next round of earnings in mid-August, so I would look for another aggressive upside pop coming soon. Hold.

Minera Andes (MNEAF.OB): I mentioned above that inflation pressures will be bullish for metals. Therefore, this presents us with an opportunity to buy the best little metals companies around for sparkling prices. MNEAF is one such play. They just reported gross proceeds from their metal sales during the second quarter of 2008, and they were $63.7 million. Their San Jose project produced gross sales of approximately $74.6 million in gold and silver, mostly from the last three quarters. What we must remember is that they just started production late last year, and now their plan is to double this amount by the end of 2008. The stock price is so undervalued it’s not even funny. That’s why I would be adding shares to your position on the cheap. Remember: MNEAF is now a producer, and a quickly-growing one at that. Their amount of copper alone warrants the share price, and I expect copper prices to start firming up right along with gold, silver, and platinum. Buy.

Gran Tierra Energy (GTE – AMEX): Late last week, GTE announced that they had merged with their 50% JV partner Solona Resources on the Costayaco Field in Columbia. This merger offers both companies a much better business model than even before. GTE has now set the stage to do exactly what we expected, which is to move forward to become a premier international oil and gas exploration company. This is the point in a small company’s timeline when they become extremely profitable. Also, don’t forget that GTE has no debt. Therefore, the new addition of Solona Resources will help this little gem grow like a weed. Shares have pulled back to our original buy price, and that’s why we re-entered the stock once again. This will be the very first time I have ever said this in Bottarelli Research Small Caps, but feel free to back up the truck on GTE. The stage is set for them to become the Exxon of South America. Strong Buy!

Ivanhoe Mines (IVN – AMEX): This week, IVN announced a new IPO called Ivanhoe Australia, which will be 80% owned by IVN. Ivanhoe Australia is on a quest for iron-ore, copper, gold, and other base metals on a 2,250 square kilometer project in northwest Queensland (which is one of the world’s richest mineral-producing regions). Folks, this is music to my ears. Here is a company that holds vast mineral and coal deposits in China and Mongolia, and now they are using their muscle to advance in Australia. With this gem, we truly have caught a tiger by the tail, and hopefully they’ll be ready to roar very soon. Buy.

Northern Oil & Gas (NOG – AMEX): They reported strong earnings that included very promising developments on their Bakken Oil project. Revenues increased 165% in the second quarter of 2008 compared to the first quarter of 2008. They also decreased expenses by 20%, and they expect to add substantial production growth in fiscal year 2009. This little gem holds the key to 60,000 acres in the Bakken Oil project, and they could end up with as many as 90 wells pumping out potential reserves in excess of 45 million barrels of oil. Now, what really caught my attention is the fact they have achieved a 100% success rate on wells drilled during 2008 (26 to date). And folks, they are moving very quickly towards drilling even more. I would highly suggest using this sell-off to add to your position. Buy.

Finally, I must reiterate the fact that we have our eyes on several bargains right now, and the time to strike is coming quickly. Our sights are locked in, and you’ll be the first to know when it’s time to pull that trigger. So on that note, have a great weekend. And as always, be sure to give thanks for the abundance in your life.

Sincerely,

Increasing Our Protection With Ultra Short Dow 30 Pro-Shares

Plus: Playing DNDN’s Next Bounce

I spent the first three days of this week traveling to San Francisco to speak at Taipan’s Global Opportunities Investment Summit. Therefore, I will offer you a quick assessment of Dendreon before transitioning over into our new protective option position.

So let’s get started!

As long-term Bottarelli Research Small Caps investors know, Dendreon (DNDN – NASDAQ) was a stock that we originally recommended on January 19^th 2007 for $3.27 per share and watched it run all the way up to $24.27, good for a whopping 642.20% return.

The reason for DNDN’s run-up was simple.

DNDN’s drug candidates harness the immune system to fight cancer, and their most promising drug (as Mark mentioned above) is an active cellular immunotherapy called Provenge.

This drug has already completed two (2) Phase III clinical trials for the treatment of asymptomatic, metastatic, and androgen-independent prostate cancer. It’s also completed a Phase I clinical trial for the treatment of breast, ovarian, and colon cancers.

They have collaborative agreements with two of the biggest biotech companies on the planet, Genentech (DNA – NYSE) and Amgen (AMGN – NASDAQ), proving that Provenge has blockbuster potential. But obviously, the approval of Provenge is critical for DNDN’s financial performance. As a result, any hint at FDA approval (which could include strong clinical data) can send shares of DNDN aggressively higher. We have one such situation coming in October.

Not only that, but in recent months, the biotech sector has caught fire. One look at the Biotech HOLDRs (BBH – AMEX) chart clearly shows you the biotech strength during a period of broad-based market weakness.

This biotech sector strength, combined with the presentation of DNDN’s interim results in the second half of 2008, could provide the momentum that ignites another upside run in DNDN. Mark and I have conducted all of the research and due diligence on DNDN when we prepared our original recommendation back in January of 2007, and the “blockbuster” potential of Provenge has not changed. Therefore, we are now faced with another upside trigger in October, offering us the opportunity to ride shares higher on positive news. As a result, let’s get positioned to ride another upside move by adding a small position in DNDN now.

PLAY: Buy shares of Dendreon (DNDN – NASDAQ) at or under $6.00, good for the week.

At the same time, let’s also increase our protective position by adding September call options on the Ultra Short Dow 30 Pro Shares (DXD – AMEX).

The DXD seeks daily investment results that correspond to twice the inverse of the daily performance of the Dow Jones Industrial Average. Therefore, if the Dow falls 2%, the DXD gains 4%. By adding DXD calls, we combine the power of this ultra-short position with the super-leverage of options, resulting in a fantastic way to temper any forthcoming market losses by handing us a strong short-term gain. So, in addition to adding a small position in DNDN, let’s also increase our downside protection b adding DXD September calls as well.

PROTECTIVE PLAY: Buy the DXD September 61 Calls (DXD II) at market, good for the day. Place a protective stop limit at $1.40 and a pre-determined sell order at $4.80. This will limit your risk while also ensuring that you lock in intra-week gains on any forthcoming sell-off.

Sincerely,