Watch Northstar Neuroscience (NSTR) @ $1.48

After the company announced that its EVEREST study failed to confirm positive results of cortical stimulation therapy for stroke motor recovery, the stock was pummeled from +$8 to just over $1.  

Looking at its balance sheet though, shows the company has over $80M in cash and investments and ZERO debt, giving it a book value of just over $3.00.

The company will be providing an update on how it intends to move forward with the data, as cortical stimulation therapy has shown potential for treatment of depression and tinnitus.

Given such a strong balance sheet, and the continued belief that the therapy has some value, this looks like a very solid risk/reward play here at $1.48 with little downside risk and potential for a 100% gain on any news.

From the co. last press release on 1/22/08:

"On December 31, 2007, we had more than $80 million of cash and investments, which we believe is sufficient to pursue other applications of our cortical stimulation therapy and further investigate EVEREST results.  We are encouraged by the additional evidence of a strong safety profile of cortical stimulation demonstrated in the EVEREST trial.  Based on clinical results achieved to date in other feasibility studies, we continue to believe that cortical stimulation holds potential for the treatment of depression and tinnitus.  These disorders involve different patient populations and distinctly different brain targets than our stroke motor recovery indication.  In the coming weeks we intend to provide more detail about our plans going forward."

Bloodiest Of Days Coming...

have a feeling we may see the bloodiest of days on the nasdaq, dow, and s&p very soon.  todays action following the FEDs 50bp cut in both the fed funds and discount rate gave us a huge tell that there are NO buyers in the market, just a few shorts covering, and the short covering was nothing to write home about.  at this point after several failed bounces, increasing concerns over bond insurers, and the market realization that FED monetary policy isn't the silver bullet to cure our problems we are possibly nearing a day where everyone just wants out of the market all together....in other words true capitulation. there is simply no reason to put a bid under the market right now. why? because there are no other buyers out there.  we saw it today. the risk associated with holding stocks overnight far outweighs any possible reward.  hence no bids in stocks, increased short selling, and increased liquidation of long positions. with regard to long positions, it is still going to take some time to unwind those long positions as funds across the globe were buying US stocks on dips just a few months ago...hence it will take some time for global funds to adjust risk levels appropriately in line with weak or negative US growth.

therefore, watch for the VIX to take out that ~37 high on a -600-800 point DOW, -125-150 NAZ tank sometime in the next few weeks.