We’ve traded LOCM successfully twice for solid gains. I picked up a 5k starter position Friday at $3.61.

Local.com is a leading online local media company, enables brick-and-mortar businesses to connect with online customers using a variety of digital marketing products. Their first-quarter loss widened as revenue declined and operating expenses increased, while the company’s weak forecast for the current quarter has brought shares down to what I believe to be support.

This morning they just announced completing the acquisition of the assets of Rovion, Inc., a wholly-owned subsidiary of DigitalPost Interactive, Inc. Local.com entered into a definitive agreement to acquire Rovion on April 4, 2011. Under the terms of the agreement, Local.com acquired the assets of Rovion for approximately $2.3 million in cash.

Shortly after the earnings collapse, the CEO picked up 75,000 shares at $3.58 per share.

Click here for all the filings on LOCM.

I believe we’ll start seeing a string of solid press out of LOCM now that the dust has settled from their earnings announcement. My entry at $3.61 was strategic for key reasons I’ll detail below.

First, support appears to be holding up at $3.58 leading me to believe this might be the bottom before LOCM starts to work back toward the $4.10 range where the gap down began. More importantly, there is more support on LOCM right at the $3.20 range which happens to be about 10% below my entry. This means if I’m wrong and $3.20 is support, I won’t be stopped out per my trading rules and can average down if I suspect it will bounce off that level.

Finally, I believe the future is bright for LOCM and despite the negative banter you’ll see on the message boards, they are in fact a candidate for a buyout at these prices. That will keep shorts on their toes, many of which I’m sure covered prior to earnings but jumped back in after earnings. Should they start to trip over each other, we could see an April 1st spike all over again in the near future.

So in summary, entry was Friday at $3.61 for 5k shares. If I suspect I’m right I may average up another 5k shares like last time. Gap down resistance is 10-15% higher and over 20% if it pushes through the gap in the short term. Should bad news hit I’ll keep my stop loss to 5% from entry, otherwise I’ll play the $3.20 support on any dip.