-Executive Summary-

• Higher!  The markets have recovered quickly from the unrest in Egypt.  See more below.
• The Institute for Supply Management announced January manufacturing data that showed manufacturing expanding at its highest rate since 2004!  See below.
• Stocks like Caterpillar (Ticker: CAT) and Alcoa (AA) look very good and are in alignment with the ISM data released today.  Ebay (EBAY) and Level3 Communications (LVLT) also look good. We still want to give this Middle East situation a bit more time before we climb back on board this market.  For ourselves at the SMC, we would consider small, starter positions in LVLT, INTC, … EBAY.  Nvidia (NVDA) looks like it wants to rip higher…

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– 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 this chart of the broader market (Successful stock investors develop and start with a minds-eye view of the broader market and keep it clear) –

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

– Today’s Highlights –

Stocks were strong today, on the back of excellent earnings at Archer Daniels Midland (Ticker: ADM), United Parcel Service (UPS), and Pfizer – AND – manufacturing data from the Institute for Supply Management (ISM) which indicated that manufacturing expanded at its strongest rate in over seven years!  That’s great news.

Here is an excerpt from today’s ISM report –

The report was issued today by Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. “The manufacturing sector grew at a faster rate in January as the PMI registered 60.8 percent, which is its highest level since May 2004 when the index registered 61.4 percent. The continuing strong performance is highlighted as January is also the sixth consecutive month of month-over-month growth in the sector. New orders and production continue to be strong, and employment rose above 60 percent for the first time since May 2004. Global demand is driving commodity prices higher, particularly for energy, metals and chemicals.”

Here is the full report…

– Story-Stock Investing –

When geo-political events of magnitude emerge, we immediately exit the markets and raise cash, and sometimes short the market.  It’s a good practice.  At the outset of the event, we never know the depth of the problem or length of time that the markets will remain focused on the situation.  We never know how much selling will take place that can plunge market indices solidly south – and drag individual stocks down -30% or more in a very short period of time.

At the moment, it appears that government and military restraint in Egypt towards protestors are calming the markets.  Oil spiked yesterday above $91/share but have settled down approx. $1 today into the $90/barrel range.

Today we read that massive protests are still taking place in Egypt.  We’ll simply have to see how these events influence the markets.  So far the market response to the Egypt trouble has been muted.  Good.

The DOW (DJ-30) closed decisively above 12,000 as material stocks (Read: ALCOA) and heavy equipment manufacturers like Caterpillar (CAT) closed higher.

At this time we like the looks of these stocks –

Caterpillar (CAT); Alcoa (AA); Ebay (EBAY); Level3 Communications (LVLT), and Intel Corp. (INTC).

We don’t however want to get hurt by an escalation in Egypt.  International stock markets like Frankfurt and Tokyo don’t look good.  We are watchful.  Nvidia (NVDA) looks very strong here.  Any shorts that got on board based on Egypt troubles on Friday may get squeezed here.

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– 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.
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– Benchmarks “At a Glance” –

Data Source : Financial Visualizations Inc.

Signing-Off for Today,

Your -Stock Market Companion

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