– The Stock Market Companion –
15MinuteStocks
Market Update
May 13, 2010
——- Stock Market Investing since the 1980’s ——-
Published all Market Days
Monthly Subscription $29.95
 Today’s SMC Watchlist

– Executive Summary – 

Your name is “Market” and you are at the order counter at Wendy’s Hamburger Restaurant.  You didn’t need to even glance at the menu board.  You know exactly what you came there for -> “Risk”.   It’s your turn now to give your order at the register.  You are resolute in your mind and you say, “I’d like to order Risk.  Can you super-size that?”…

Here is your SMC SP-500 Daily Chart.

Markets were down firmly today.  Last night after the close, Cisco Systems Inc. (Ticker: CSCO) reported earnings and declared the quarter to be the strongest in the company’s history.  They are doing a great job, but unfortunately forward guidance did not meet investor expectations and the stock was down in after-hours and throughout the day today.

The euro too contributed to today’s malaise.  It gaped down and continued to show weakness most of the day.  The euro is sitting just above last Thursday’s low.  It has completely erased its gains from Monday’s bold U.S. Federal Reserve and European Union intervention plans.  Not good.

(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	1,157.44	Index	Down = -14.23 points
DOW-30	10,782.95	Index	Down = -113.95 points
NASDAQ	2,394.36	Index	Down = -30.66 points
NASDAQ 100	1,945.52	Index	Down = -30.06 points

 

– Market Trends –

Trend	SP-500	DJ-30	NASDAQ	NASDAQ 100
Short Term	Down	Down	Down	Down
Intermediate	Down	Down	Down	Down
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.

– Today’s Highlights –

We contend that the markets are at great risk for a major currency disruption involving the euro.  Because of their inherent liquidity, stock markets are at risk of losing capital as investors seek safety for their money.

It’s not that the markets are overpriced.  Look at Cisco System Inc.’s (Ticker: CSCO) results.  They earned 37 cents per share.  Multiply that by 4 = $1.48 / share (annualized).  Divide the share price of $26/share by $1.48 earnings/share.  The result is a price / earnings ratio of approx. 17.5  = the approx. current market average.  Cisco’s revenue grew at a rate of 26.4% vs. the same quarter last year.  26.4% revenue growth is cheap at a P/E of 17.5, but the market would have none of it.  The stock was sold all day.

When fear enters the market, no one cares about price justification.  People just want their money.

The destabilizing factors working on the market are –

1. Euro => Greece, Spain, Portugal, and Ireland deficits are pulling the euro down.

2. U.S. budget deficits.  We reported yesterday that April’s deficit of $80 billion (approx.) was 4x last April’s amount.

3. Investors taking their profits first from the year+ rally and asking questions later.

4. Last week’s 980+ point drop (intra-day) in the DJ-30.

5. Inability to stop the oil leak in the Gulf of Mexico and fear of additional government regulation.

6. Fear of where the economy is going next, absent of real job growth.

7. Absent real job and economic growth, are we at a peak for property foreclosures or are there more to come?

– Stock Investing Specifics and Strategies –

Baidu Inc. (Ticker: BIDU) – Split its stock 10 for 1 two days ago.  The stock ripped north yesterday and early today, and this late morning began to take it all back in the form of a severe price reversal.  This is not the type of behavior that investor’s want to see in a market leading stock.

Apple Inc. (AAPL), Intel Corp. (INTC), and Cisco Systems Inc. (CSCO) all reported stellar earnings and excellent revenue.  None of these stocks have been able to hold onto their post earnings gains.  Cisco didn’t even get to enjoy any post earnings gains.  These are the signs of a market that needs to be handled with extreme caution.  Investors who purchased AAPL or INTC stock post earnings had the surprise of their investing life last week and are currently underwater on their investments.  The same applies to any investors purchasing Dendreon Inc. (DNDN) post FDA approval.

The Stock Market Companion is standing clear of this market until compelling opportunities emerge and risk diminishes.  We want “odds stacked in our favor” investments, not “shoot and hope” trades.

Somaxon Pharmaceuticals Inc. (SOMX) had a good day today.  The price chart looks very constructive now.

US Natural Gas (UNG) also had a good day.

We’re adding Vivus Inc. (VVUS) to our watchlist today.

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 15MinuteStocks 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)

If there was a company with a ticker labeled “100% CASH”, we would have to report our holdings in the above table.

– Stock Market Companion – Previous Holdings –

Nr	Co.	Ticker	Entry Date	Exit Date	Total Gain or (Loss)
1	YRC Worldwide	YRCW	2/26/2010	4/29/2010	+35%
2	US Natural Gas ETF	UNG	4/9/2010	4/29/2010	(-4%)
3	Ford Motor Co.	F	4/14/2010	4/27/2010	+5.4%
4	ProShares Ultra Short SP-500	SDS	4/7/2010	4/9/2010	(-1.8%)
5	US Natural Gas ETF	UNG	4/5/2010	4/8/2010	(-8.2%)
6	Apple Inc.	AAPL	3/23/2010	4/7/2010	+5.7%
7	Ford Motor Co.	F	3/31/2010	4/7/2010	(-2%)
8	Somaxon Pharmaceuticals	SOMX	3/23/2010	4/6/2010	(-15.9%)
9	Dendreon Inc.	DNDN	3/23/2010	3/31/2010	(-1.4%)
10	ProShares Ultra Short SP-500	SDS	3/19/2010 (1/2 Position)	3/23/2010	(-1.5%)
11	Dendreon, Inc.	DNDN	2/11/2010	3/19/2010	+14.5%
12	General Electric Co.	GE	3/16/2010	3/19/2010	+1.4%
13	Apple Inc.	AAPL	3/5/2010	3/19/2010	+1.3%
14	Ford Motor Co.	F	2/25/2010	3/18/2010	24%
15	RINO International	RINO	3/3/2010	3/17/2010	3.1%
16	Nutri-System Inc.	NTRI	10/16/2009	12/28/2009	+79.7%
17	Palm Inc.	PALM	11/11/2009	11/27/2009	-8.6%
18	Research In Motion	RIMM	12/8/2009	1/5/2010	+6.8%
19	Simple Tech, Inc.	STEC	12/15/2009	1/5/2010	+62.2%
20	US Natural Gas ETF	UNG	12/10/2009	1/8/2010	+6%
21	Human Genome Sci.	HGSI	12/22/2009	1/8/2010	(-0.2%)
22	Ford Motor Co.	F	11/9/2009	1/12/2010	+48.6%
23	Western Refining Inc.	WNR	1/5/2010 (1/2 Share Count)	1/12/2010	(-5.5%)
24	RINO International Corp.	RINO	1/8/2010 (1/4 Share Count)	1/12/2010	(-5.1%)
25	Bank of America Inc.	BAC	1/4/2010	1/12/2010	+4.7%
26	YRC Worldwide	YRCW	1/12/2010 (1% only)	2/4/2010	(-17.1%)
27	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	1.2517 USD = 1 Euro	USD / EUR	Dollar = UP
Gold	$1,229.2	Ounce	Gold = Down
Oil	$74.4	Barrel (West Texas Crude)	Oil = Down
30 Yr. Fixed Mortgage	5.01	Percent	Down
30 Yr. Bond Yield	4.46	Percent	Flat
1 Yr. CD	1.38	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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