-Executive Summary-

• Investors and traders are enjoying the holidays – away from Wall Street.  In spite of negative consumer confidence numbers posted today the markets trended flat to slightly higher.  Volume is low.  See more below.
• At the SMC, we purchased shares in China Shen Zhou Mining and Resources, Inc. (Ticker: SHZ)  See more below.
• More story stock news … See below.
• We’re going to go ahead and say it … the markets have come a long way without at least a little shake-out.  Our purchases of IRE and CSCO were unique purchases off clear support.  Our purchase today of SHZ is more aggressive and demands a much smaller share count due to it’s high volatility and its already strong advance.

This Stock Market Companion 15MinuteStocks Market Update is a powerful tool designed to help you make money in the stock market.  It requires just a few minutes a day, provides an essential link to the markets, and prepares you to be ready for actionable ideas.  We show you when/where we put our own money to work… and when/where we take our profits/losses.  Please see our short (2 minute) website videos for more information.

– 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 Trends –

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

– Market Perspectives –

For your added perspective, we’ve included these two different views of the broader market –

1. SMC SP-500 ETF Daily Chart (Click to open helpful chart in a separate browser window).

2. SMC SP-500 Weekly Chart (Spanning back through 2007)

– Today’s Highlights –

The markets are quiet as investors and traders enjoy the holidays.  Many do not want to brave the aftermath of the 6th worst storm in New York since 1869.

The Conference Board put up its consumer sentiment numbers for December that didn’t look particularly good.  Still, the DOW (DJ-30) advanced modestly on the news.

Gold soared higher today, back above $1,400/ounce on no real news or consequential U.S. dollar movement.

Here’s an interesting story about where the job growth is globally – And why things appear like they do in the United States.

– Story-Stock Investing –

Stock Market Companion holding Cisco Systems Inc. (CSCO) advanced again today modestly and the Bank of Ireland (IRE) found a few buyers today.  A push back above $2.60-$2.70/share would help the overall condition of this stock materially.

Yesterday we wrote … “Stock Market Companion watchlist stock China Shen Zhou Mining (SHZ) advanced nicely today, making a possible set-up that we at the SMC will consider tomorrow”…  Today we placed a very modest investment in this one and sent out this SMC Intra-Day Alert –

Dear Subscriber-Friend –

On December 16th, we mentioned China Shen Zhou Mining and Resources, Inc. (Ticker: SHZ) for the 1st time in our SMC 15MinuteStocks Market Update and placed it on our SMC Watchlist.  Yesterday – Dec. 27th – we highlighted that SHZ was now looking better.  Click here for the SMC Daily Chart of SHZ. This morning we purchased some shares at $5.17/share.  After we purchased our shares, the stock promptly fell to $5.00/share and didn’t look particularly favorable.  We were purchasing our shares in the face of negative consumer confidence data that was released today at 10:00 am.   At the time, there didn’t seem to be any urgency in alerting everyone to a dud or ill-timed investment.

It’s now two hours later and the stock has SPRINTED higher to $5.80/share and has now PULLED BACK to $5.29/share.

Here’s what we know about the company and its stock –

1. The company is Chinese – primarily a micro-sized fluorite mine with zinc and copper also mined along with the fluorite.  Fluorite is used in steel processing and other industries.
2. The primary mining assets appear to be in inner-Mongolia.
3. The company issued a press release on December 3rd highlighting revenue growth of +164% expected for next year.  They are expecting to  increase production to 60,000 metric tons of fluorite powder and 40,000 tons of fluorite lumps in 2011.  For perspective – In the first nine-months of 2010, the Company sold 8,800 metric tons of fluorite powder and 20,356 metric tons of fluorite lumps.  These expectations for next year’s production and revenue growth is therefore very significant.
4. The Chinese government is also doing its part to make this one interesting.  China is restricting the amount of fluorite that can be mined in China to approx. 10 million metric tons.  Fluorite prices have since doubled on this news.  (Information courtesy of Briefing.com).  For the sake of perspective, if SHZ produces 100,000 metric tons of fluorite, and China establishes a mining quota of 10 million metric tons, then SHZ is expecting to produce approx. 1% of the Chinese output of fluorite in 2011.  SHZ is a very, very small producer.  If the other producers aren’t publicly traded or publicly traded in America, this may be the only means of participating in this type of investment for the global investment community.
5.  This company is tiny.  Its 2010 revenues are expected to be $14.5 million.  Next year this number is expected to be $38 million.  Net income for 2011 is expected to be $11 million.  With approx. 28 million shares outstanding – of which perhaps 89% is held by insiders – > 11 million in net income is approx. $2.50/share.  At a little over $5/share in stock price, this data makes the stock look pretty cheap.
6. From its balance sheet, the company appears to have debt of about $16 million, and stated plant and equipment value of approx. $34 million.  Overall, assets appear to outweigh debt by a factor of more than 2:1.  Who knows however how accurate this information is.

Friends – this company and its stock is NOT a Cisco Systems, Bank of America, Bank of Ireland, Apple Inc. … or anything remotely like it.  It is a very small mining company in China, with stock that trades on the American Stock Exchange.  The stock has already moved from around $1/share in October to over $5/share today.  It’s shares outstanding at approx. 28 million puts it in our experience in a categorical “sweet spot”.  It can really move UP when investors get behind it AND it can sink like the Titanic when investors decide to cash in their profits.

This morning a SMC subscriber friend sent us this helpful Bloomberg article which provides more of an understanding of what the Chinese government is doing relative to export quotas for its rare earth resources.  We don’t know at this time if fluorite falls explicitly in this category of rare-earth materials – but the article describes an overall picture for materials that is very interesting.

As we write this SMC Intra-Day Alert, the SHZ stock has moved from $5.70 to $5.88 to $5.29/share.  It is currently noted at $5.56/share.

At the Stock Market Companion we have purchased shares at $5.17/share and would consider a purchase for ourselves based on today’s behavior in the stock and overall technical (price) characteristics anywhere up to $5.70/share.  Our stop is at around $4.60/share.  If it heads back into the mid to high $4/share area, we don’t want to be in it.  Due to the very speculative nature of this type of stock, we have used only a small share count.

For a good picture of where the stock price is today relative to its recent past and what we like – Here is our SMC Daily Chart of SHZ.

For your protection and our own, we would like to remind everyone that this is not an investment recommendation for any particular individual.  We cannot possibly know the risk tolerance and investment suitability of such investments for any particular subscriber. Successful investors know their own objectives, purposes, and risks associated with any investment – whether in real estate, stocks, or other investments.  Each investor is on their own.

We are simply reporting the SMC actions in the market place.

Your – Stock Market Companion

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