– The Stock Market Companion –
15MinuteStocks
Market Update
April 21, 2010
——- Stock Market Investing since the 1980’s ——-
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 Today’s SMC Watchlist

– Executive Summary –

The broader market (SP-500) and DOW (DJ-30) were basically flat today.  The NASDAQ and the NASDAQ 100 logged positive days – driven by Apple’s excellent earnings last night and 5% gap up this morning.

We are at the front end of the earnings season.  Before the open, the big companies which reported earnings were – McDonalds Corp (Ticker: MCD), Morgan Stanley (MS), Wells Fargo (WFC), Boeing (BA), and United Technologies (UTX).  All of them are doing well, if not very well.

Last night Apple Inc. (AAPL) blew the doors and windows out of the house with its excellent earnings.  APPL closed “slightly” positive – above its 5% gap up this morning.  So it held its gains but was not able to attract more investors willing to pay…up.

The market however did not advance strongly on this news.  This is a yellow/red flag in our minds. (See more of our deciphering, below)

 Ford Motor Co. reports earnings before the open on April 27th. (Source: Briefing.com)  Somehow we had tomorrow, April 22nd in our minds.  Please be alert for this misunderstanding and note April 27th as the correct day.  Tomorrow another enormous bunch of companies report earnings, but NOT Ford. 

(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	1,205.94	Index	Flat = -1.23 points
DOW-30	11,124.92	Index	Flat = +7.86 points
NASDAQ	2,504.61	Index	UP = +4.30 points
NASDAQ 100	2,034.53	Index	UP = +10.9 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.

Friday we wrote, “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.”   Friday, we re-classified the short term trend as lateral.

A high volume up-move will re-classify our short term trend as UP.

– Today’s Highlights –

We are still at the start of reporting for last quarter earnings.  We call it “earnings season”.  Recent tradition indicates that the season starts with Alcoa (Ticker: AA), reaches it’s zenith in the first several weeks of the new quarter, and then gradually the earnings releases diminish in frequency until the next quarter starts again with Alcoa.  Many do not understand that this whole idea of reporting earnings after each quarter, let alone within the first days of the last quarter, is a major accomplishment.  It takes a small army of account’s people and auditors to consolidate earnings for a corporation like Alcoa – across all business groups and partnerships.  It’s a remarkable achievement and it makes our lives as investors much easier in terms of knowing the facts.  On the other hand the market often acts counter-intuitively to the facts, which offers opportunity to those of us who enjoy such puzzles.

In the face of cold, hard facts there’s an appropriate market axiom – coined by John Maynard Keynes – that we keep in the forefront of our minds, which states – The market can remain irrational longer than you can remain solvent.

There was an earnings call that we were listening to live about a year ago from the excellent American steel company, Nucor Corp (NUE).  The CEO – a wise, careful presenter and seasoned business leader – was saying that earnings were not so good, and that his forecasts were not predicting an increase in orders.  As far as he was concerned, the stimulus plan put forth by Congress was poorly crafted and not going to influence his business favorably any time soon.  The business analysts from the investment houses that were in attendance simply didn’t believe him, and kept probing for signs of strength in the business with their steady stream of “rat-a-tat” questioning.  He had to repeat himself several times to get his message across about the actual business conditions.  The next days, the stock went up about 10% – for no logical reason at all – based on earnings.  Did you know that a 10% increase in the stock price of a company can mean a 100% increase in value of the near month, at the money call option?  There is always someone on the other side of the trade.  In the case of NUE, that person was probably shaking their head in disbelief while getting run-over by the stock of a company that had just reported lukewarm earnings.

We have experienced other times in market history when earnings such as those we have experienced with Intel Corp. (INTC), JP Morgan-CHASE (JPM), and Apple Inc. (AAPL) would have advanced the market strongly.  Not so today.  This makes us stop and think, “Hmm.”  We are not conspiracy theorists here at the Stock Market Companion, nor do we wish to feed flames of fear.  We are simply reading the bread crumbs and other signs that the market leaves in its wake in order to make the best decisions about where and how much of our money to put at risk at any given time.

We have been using the price characteristics of recent strong earnings companies – JPM, Citigroup (C) and Intel (INTC) – and the commodities sector (in this case: metals) to give us a measure of the enthusiasm of new buyers.  With the exception of INTC, we don’t like what we are seeing.  And today, INTC closed negative in spite of being in the same broad group of technology with the ROCK STAR (Apple Corp.), and being up after the close yesterday and now down for the day.  Not so good.

– Stock Investing Specifics and Strategies –

 

Please notice that we have not yet added new positions in any stocks since our entry in Ford Motor Co. last week.  We were surprise today to see that Ford Motor Co. does not report earnings until April 27th. (Source: Briefing.com)  We have been inaccurately operating under the understanding that Ford reports tomorrow.  The stock has more time to show us its stuff before we decide whether to exit prior to earnings.  It is our desire to hold this one through earnings.

The stock was a good performer today.  We believe that the kinds of problems that Toyota has had lay lasting seeds of concern among consumers.  We don’t wish such trouble on Toyota.  We simply want to monetize our thinking and understanding of the current issues and what they may mean in terms of market share and earnings gains for Ford Motor Co.  So far so good.  We are up 7.6% on our entry in Ford last week, and 78.7% (approx.) on the overall Ford Motor Co. story. 

Here too with Ford, John Maynard Keyne’s statement has relevance.  While Toyota’s problems were really hitting the evening news in late January through early February, Ford’s stock experienced some aggressive selling.

YRC Worldwide (YRCW) advanced today on news that its competitor – Arkansas Best – was successful in negotiating a 15% wage cut with the Teamsters. (Source: Reuters)  If it can hold onto it, today’s advance in YRCW’s share price puts the negative events of last week in the rear-view mirror.  “That’s a 10-4. Just keep the pedal to the metal.”

  When we get stopped-out of a stock like this – due to events like last week – we look for weakness or lateral “quietness” in the share price to get back on board.

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	+67%
2	US Natural Gas ETF	UNG	Holding	4/9/2010	-3%
3	Ford Motor Co.	F	Holding	4/14/2010	+8%

– 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	1.33 USD = 1 Euro	USD / EUR	Dollar = UP
Gold	1,146.4	Ounce	Gold = UP
Oil	$83.44	Barrel (West Texas Crude)	Oil = Flat
30 Yr. Fixed Mortgage	5.14	Percent	Flat
30 Yr. Bond Yield	4.7	Percent	Flat
1 Yr. CD	1.36	Percent	Flat

(Data Source : Finviz.com Financial Visualizations)

We wish you all a fine evening.

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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