-Executive Summary-

• DOWN!  The equities markets worldwide have all taken hard hits today based on the escalating unrest in Egypt.  See more below.
• Ford’s earnings report was a major disappointment and the stock closed down -$2.52/share at $16.27/share.  At the Stock Market Companion, we sold our shares 9 days ago at $18.18, capturing another +4.1% on the stock and forced ourselves to stay disciplined and out of the stock going into earnings … more below.
• At the Stock Market Companion we closed out our holdings in Intel and YRC Worldwide and raised 100% cash today.  Movements in individual stocks are magnified 2x-4x by moves in the broader markets.  If the markets pull-back hard here, 9 out of 10 individual stocks will pull back significantly.  One of our greatest assets as individual investors is to be able to choose when to be in or out of the markets.
• Check out our new video that we produced yesterday teaching about buying or selling a stock that has reported strong earnings.  It’s about 5 minutes in length.  A special thanks to our friends at Off The Menu Productions for their great video work.

This Stock Market Companion 15MinuteStocks Market Update is a powerful tool designed to help you make money in the stock market.  It’s web-based, therefore available wherever and whenever you are.  It is your essential link to the markets, delivers a broad to narrow summary of important market and company specific conditions and events, 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 –

Prior to the market open today, the futures were pointing higher.  There had been little negative response in our markets relative to Standard and Poor’s downgrading of Japan’s debt to AA- from AA – yesterday.

OK.

There was also favorable news relative to our US gross domestic product with the US annual GDP rate coming in at +3.2%.  That’s good.  Click here for a link describing the GDP numbers in more detail. From our perspective at the Stock Market Companion, we like –

1.  Exports are UP.

2.  3.2% is a good annualized rate.  Sure beats the results that came in from Great Britain this week – a negative GDP reading for the last quarter.

THEN CAME THE HAMMER.  Information started to filter in about increasing unrest in Egypt focused on President Mubarak’s government.  Egypt controls the Suez Canal which is a key transport piece related to crude oil coming out of the Middle East.  Egypt also has the largest Arab population.  Any significant change in government –  for instance (in worst case) if the Muslim Brotherhood came into power – would be disastrous for stability in the Middle East.

The market began to drop hard as investors began receiving news about the escalation of this unrest in Egypt.   The fact is that no one knows what the ultimate outcome will be in Egypt and with the weekend ahead – offering plenty of time for things to get out of hand –  and after such a strong run in the market, there was immediate profit taking taking place.

– Story-Stock Investing –

Yesterday we wrote, “Ford Motor Co. (F) reports earnings tomorrow before the open.  We don’t own the stock, but expect the earnings to be good.” Well, well.  On the one hand, we are glad that we weren’t holding the stock heading into earnings.  On the other hand, our expectations for favorable earnings was a little too optimistic.  Here are the 1st 3 items from Ford’s earnings report released today –

Fourth quarter pre-tax operating profit was $1.3 billion, or 30 cents per share, a decrease of $322 million from a year ago. Ford now has posted a pre-tax operating profit for six consecutive quarters.  SMC say’s, “30 Cents /share was significantly less than what the market was expecting.”

Ford’s stock was hammered today, down -13.4%.

Let’s talk a little about our strategy and thoughts about Ford –

1. At the SMC, we sold our shares of Ford 9 days ago on January 19th at $18.19/share.  The stock was behaving poorly at the time, in step with the broader market looking like it wanted to finally pull-back.  Our decision was immediately validated as Ford continued to punch south into the low $17’s/share.  BUT the stock came roaring right back after a brief consolidation and yesterday we were a little disappointed that we didn’t have the stock to sell at $18.60/share.
2. We stayed disciplined to our broader policy of not holding a stock on the day of earnings that has had a long run behind it.  Today we were rewarded for our discipline.  For all of you this is an important tip – If a stock has already doubled since your original entry and has had a steep recent climb, it’s wise to take your profits BEFORE the day they release earnings.
   Yesterday our discipline was really TESTED.  We read reports that Call option buyers well outweighed Put option buyers on Ford – representing investors expecting a pop in the stock into the $19/share area and beyond – AND – there was this bold stock price of $18.60, looking like it was going to punch through the ceiling.  GM also announced yesterday that they had pulled their application for more government funding because BUSINESS is so GOOD.  In our minds, what’s good for GM is even BETTER for FORD.  We however forced ourself to simply sit on our hands and DID NOT buy the stock – and we are of course glad we held off.
3. Ford is most likely going to continue to sell-off.  We will look for another opportunity to buy the stock on extreme weakness – because we like the long term story.
4. When you have time, please consider reading and printing out the full Ford earnings report.  It’s an excellent read and teaching tool for those of you using our work to teach your kids and grandchildren about stock investing and global economics.

Today we announced that we were selling all of our holdings in Intel and YRC Worldwide.  If the market starts to really crater on what’s happening in the Middle East, we don’t want to be holding stocks at this time.  At the SMC, we made a little money on Intel and took a hit on YRC Worldwide.  At this time, no one knows what the market is going to do next.  We have now entered into a period of real unpredictability – which could improve as quickly as it came.  It’s wise for us to watch from the sidelines.  Our policy is that its better to miss an opportunity than to lose real money.

Here’s a quick moving video that we produced yesterday teaching about buying or selling a stock that has reported strong earnings. It’s about 5 minutes in length.  A special thanks to our friends at Off The Menu Productions for their great video work.

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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 counsel 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 may hold positions in the above mentioned securities.  Based on market related or personal events these positions may change without notice.

– Stock Market Companion – Current Holdings –

– Stock Market Companion – Performance –

Please click on this chart to see the Stock Market Companion 15MinuteStocks stock performance versus the SP-500.  It will open in a separate browser window.
* Gains (losses) do not include brokerage fees.   Our returns are very strong … BUT …  WE have to remind everyone just like all other financial sites in America – Past Performance is No Guarantee of Future Returns.  Unlike others however, our objective is to teach you to be able to make these types of strong returns On Your Own.

All of the investments – stocks, entries, and exits are listed on our Stock Market Companion Watchlist at the bottom of the spreadsheet, in the section labelled Former Holdings.

– Benchmarks “At a Glance” –

Data Source : Financial Visualizations Inc.

Signing-Off for Today,

Your -Stock Market Companion

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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.

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