– The Stock Market Companion –
30MinuteStocks
Market Update
April 16, 2010
——- Stock Market Investing since the 1980’s ——-
Published all Market Days
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 Today’s SMC Watchlist

– Executive Summary –

The markets were down hard today primarily due to the Securities and Exchange Commission (SEC) formally charging Goldman Sachs Group Inc. (Ticker: GS) with defrauding investors.  This allegation took place just after the market opened and took the markets by surprise.  For more about this and other significant events read more below.

(For our concise market assessments, market details, stock ideas, and SMC return on investments – see below)  

– Markets “At a Glance” –

(Please scroll down to the end of the report to see your favorite benchmarks – Dollar, Oil, Gold … closing prices and daily direction.)

Market	Price (Today’s Close)	Unit of Measure	Today’s Direction
SP-500	1,192.13	Index	Down = -19.54 points
DOW-30	11,144.57	Index	Down = -125.91 points
NASDAQ	2,481.26	Index	Down = -34.43 points
NASDAQ 100	2012.84	Index	Down = -25.80 points

– Market Trends –

Trend	SP-500	DJ-30	NASDAQ	NASDAQ 100
Short Term	*Lateral*	*Lateral*	*Lateral*	*Lateral*
Intermediate	Lateral	Lateral	Lateral	Lateral
Long Term	DOWN	DOWN	DOWN	DOWN

*Summary of terms from Trader Vic II-Principles of Professional Speculation (pg. 140-141)
*_________* Represents a change in trend rating.

OK – One day does NOT a trend make.  This is a quote from long ago that is often in our minds.  We do not know the origin of it, otherwise we would provide the credit where credit is due.

Nevertheless, we have no choice after such a significant market event to at least place a “lateral” designation on the market.  The financials have been a major driver in the recent advance off the February lows.  Today probably marks at least a pause in their advance and a possible diminishing value in some financials.  This will be a drag on the broader market.

– Today’s Highlights –

Many investors and others know that Goldman Sachs Group Inc. was linked strongly to the financial crisis that hit our country like a perfect storm in 2008 and 2009.  What has really caused many of us to be very disturbed about GS is the possible preferential treatment that they received from the US Treasury and other examples of having its “hand in the cookie jar”, and not feeling the heat.  To the contrary, they have been richly rewarded.

Today’s news about the SEC taking on GS formally – while difficult for the markets to adjust to – is from our viewpoint a step in the right direction.

For us, GS is a like a high school gang leader who has been orchestrating things for years that you – a teacher – know are very wrong, but you haven’t been able to catch him in the act or pin anything on him.  He is now entering his senior year and you are hoping that he is going to at last make a mistake.

While you are hoping to catch or link him to something, the school year begins in earnest.  Things start getting out of control. You can’t believe it when you learn that the school principal starts taking him out to lunch regularly to learn from him about “connecting with young adults”.  But it doesn’t stop there –  he gets elected as the class president, takes the homecoming queen to the prom, and – as a crowning achievement – even gets interviewed on national TV by Oprah for his commitment among the youth in the community and efforts to promote “world-peace”. You are now completely disgusted.

Things are so out of line and ridiculous that you begin second guessing yourself and wonder if you somehow had it all wrong.  To clear your mind, you’ve accepted a teaching position for next year with Australian Aborigines.  You are looking forward to a fresh start.

It’s now the next fall, and he’s literally on his way out of town heading for Harvard on a full-ride scholarship somehow paid for by the US Government. Then you hear from a friend that the local police pulled him over for rolling through a stop sign and they find out that the car he is driving is stolen.  Stay tuned.

While the news item of the day was the SEC formal charges against Goldman Sachs Group Inc. (Ticker: GS) of defrauding investors, here were some other important elements to the market climate today.

Bank of America (BAC) reported earnings that were very good, but loan delinquencies were on the increase and provisions for bad loans remained high. (Source: Forbes.com)

General Electric Co. (GE) reported earnings that dropped by a third. (Source: Forbes.com)

Consumer confidence numbers reported today showed a decline in April to the lowest level in 5 months.  According to the Bloomberg Businessweek – Consumers in the survey anticipated financial conditions will worsen, partly due to the new health care legislation, and said the recovery may be too slow to bring about bigger declines in the jobless rate.

 

– Stock Investing Specifics and Strategies –

As the SEC allegations became clearer this morning, we sent out an SMC Intraday Update to Subscriber Friends with this news –

About an hour ago the SEC announced FRAUD allegations against Goldman Sachs.  The market has experienced strong selling pressure across all sectors.   While this is clearly a sector specific issue = banking and finance, investors are heading to the sidelines across the board.

At this point we are holding our positions in – YRCW, F, and UNG.  We may change our mind in the course of the day if more selling develops.

The market has been looking for a reason to sell and test the mettle of buyers in this year long rally.  Today it has it’s first real good reason.

At this moment, Ford is at 13.50 and YRCW is at 0.62 and UNG is at 7.19

If the market fails to differentiate between sectors and the selling increases dramatically, we will exit.

We didn‘t sell our holdings in Ford, YRCW or UNG.  The market righted itself to a certain degree, and we like the intermediate term stories on Ford and YRCW so much that we don’t want to second guess ourselves too much with those.  UNG on the other hand may fail us, but the overall opportunity for UNG to bounce has our interest piqued.

Of course we could be wrong and be out of them on Monday if the market decides to sell off in earnest.  At this point the market showed us this afternoon that it would begin to differentiate between stocks that are related to Goldman’s woes (some of the financials) and those who aren’t.  Ford and YRCW recovered from their lows of the day.  Apple Inc. and Intel – although not currently SMC holdings – were only down around 1% today (approx.).

With YRCW, this week has been an excellent opportunity to see how the stock responds to company specific and market stresses.  We are pleased.  If the stock gets quiet and begins to look like it may want to advance further, we may increase our holdings.  We know however that a reverse stock split is coming soon and this will add to volatility in the stock.

We have purposefully stayed clear of financial stocks.  We have repeatedly said that their balance sheets are simply a complete mystery to – well – anyone.  Meanwhile we have had to sit through Bank of America (BAC) and others marching on up from their February lows.

On the other hand, when Barron’s came out with a favorable review of AIG we paid attention.   But we haven’t gotten on board. (Source: Briefing.com)

We have focused on stocks that we understood – Apple Inc. (AAPL), Dendreon (DNDN), Ford Motor Co. (F), and YRC Worldwide (YRCW) – and we have been rewarded.

We still like the semi-conductors due to Micron’s (MU) earnings over a week ago and Intel’s earnings this week.  We need good entries and days like today help us in that regard.

Please remember – at the Stock Market Companion we do not and cannot give individual investment advice. According to the State of Washington RCW 21.20.005 the Stock Market Companion is not a Registered Financial Advisor and we do not render any advice on the basis of the specific investment situation of a particular individual. This information is for a wide readership and is not intended for any particular individual,  and under no circumstances should our SMC Intraday Update, SMC 30MinuteStocks Market Update or Watchlist be considered an investment recommendation or plan for any specific individual.  By accessing this material, you agree that the Stock Market Companion will not be held liable for any actions taken by a subscriber or other parties.  Please seek the council of a broker or other licensed investment professional for accurate pricing and concerning the suitability of all investments that you may be considering. Disclosure : Please understand that the Stock Market Companion holds positions in the above mentioned securities.  Based on market related or personal events these positions may change without notice.      

– Stock Market Companion – Current Holdings –

Nr.	Co.	Ticker	Action	Entry Date	Current Gain (Loss)
1	YRC Worldwide	YRCW	Holding	2/26/2010	+46%
2	US Natural Gas ETF	UNG	Holding	4/9/2010	-2%
3	Ford Motor Co.	F	Holding	4/14/2010	+2%

– Stock Market Companion – Previous Holdings –

Nr	Co.	Ticker	Entry Date	Exit Date	Total Gain or (Loss)
1	ProShares Ultra Short SP-500	SDS	4/7/2010	4/9/2010	(-1.8%)
2	US Natural Gas ETF	UNG	4/5/2010	4/8/2010	(-8.2%)
3	Apple Inc.	AAPL	3/23/2010	4/7/2010	+5.7%
4	Ford Motor Co.	F	3/31/2010	4/7/2010	(-2%)
5	Somaxon Pharmaceuticals	SOMX	3/23/2010	4/6/2010	(-15.9%)
6	Dendreon Inc.	DNDN	3/23/2010	3/31/2010	(-1.4%)
7	ProShares Ultra Short SP-500	SDS	3/19/2010 (1/2 Position)	3/23/2010	(-1.5%)
8	Dendreon, Inc.	DNDN	2/11/2010	3/19/2010	+14.5%
9	General Electric Co.	GE	3/16/2010	3/19/2010	+1.4%
10	Apple Inc.	AAPL	3/5/2010	3/19/2010	+1.3%
11	Ford Motor Co.	F	2/25/2010	3/18/2010	24%
12	RINO International	RINO	3/3/2010	3/17/2010	3.1%
13	Nutri-System Inc.	NTRI	10/16/2009	12/28/2009	+79.7%
14	Palm Inc.	PALM	11/11/2009	11/27/2009	-8.6%
15	Research In Motion	RIMM	12/8/2009	1/5/2010	+6.8%
16	Simple Tech, Inc.	STEC	12/15/2009	1/5/2010	+62.2%
17	US Natural Gas ETF	UNG	12/10/2009	1/8/2010	+6%
18	Human Genome Sci.	HGSI	12/22/2009	1/8/2010	(-0.2%)
19	Ford Motor Co.	F	11/9/2009	1/12/2010	+48.6%
20	Western Refining Inc.	WNR	1/5/2010 (1/2 Share Count)	1/12/2010	(-5.5%)
21	RINO International Corp.	RINO	1/8/2010 (1/4 Share Count)	1/12/2010	(-5.1%)
22	Bank of America Inc.	BAC	1/4/2010	1/12/2010	+4.7%
23	YRC Worldwide	YRCW	1/12/2010 (1% only)	2/4/2010	(-17.1%)
24	Dendreon Inc.	DNDN	2/3/2010 (1/4 Share Count)	2/4/2010	(-2.7%)

* Gains (losses) do not include brokerage fees

– Benchmarks “At a Glance” –

US Dollar	1.349 USD = 1 Euro	USD / EUR	Dollar = UP
Gold	1,136.9	Ounce	Gold = DOWN (almost 2%)
Oil	$83.24	Barrel (West Texas Crude)	Oil = Down
30 Yr. Fixed Mortgage	5.17	Percent	Flat
30 Yr. Bond Yield	4.67	Percent	Down
1 Yr. CD	1.36	Percent	Flat

We wish you all a fine evening and weekend.  Spring is in full swing here on the shores of the great Columbia River.  Dogwood blooms are remarkable.  We are all looking forward to a family bike ride along the river.

Remember to invest on your own, but not alone.

Signing off for today, your –

Stock Market Companion

** Stock Market Companion Disclaimer **

The Stock Market Companion (SMC) Market Update and Watchlist are published documents to subscribers that show how we (SMC) are viewing the markets and what we are watching, investing in or selling today.  This information is for a wide readership and is not intended for any particular individual,  and under no circumstances should this Market Update or Watchlist be considered an investment recommendation or plan for any specific individual.  By accessing this material, you agree that the Stock Market Companion will not be held liable for any actions taken by a subscriber or other parties.  You understand that the Stock Market Companion holds positions in the above mentioned securities.  Based on market related or personal events these positions may change without notice.

Furthermore, the Stock Market Companion, Inc. is a content provider and publisher and not a registered broker-dealer or licensed investment professional.  Our intent is to publish very accurate market information for an audience of subscribers (1000+ subscribers).  By accessing the Stock Market Companion website and/or using the Stock Market Companion products and services such as this Market Update and accompanying Watchlist, you understand and agree that the material provided in the Stock Market Companion products and services is for informational and educational purposes only, and that no mention of a particular security in a Stock Market Companion product or service constitutes a recommendation to buy, sell, or hold that or any other security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.  To the extent any of the information contained in any Stock Market Companion product or service may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.  Before selling or buying any stock or other investment you should consult with a qualified broker or other financial professional to verify pricing information and to solicit advice as to the appropriateness of a given transaction or investment.<

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