-Executive Summary-

• Falling precipitously!  The markets are falling as liquid assets (stocks) are being sold to cover Yen debt obligations that are increasing rapidly in price.  Please see our explanation below for a clearer understanding of what this all means.
• Here is the latest reliable news on the situation in Japan.
• We sold our Ford Motor Co. (Ticker: F) holdings at $14.17/share.
• Big News on individual stocks … Apple Inc. (Ticker: AAPL) downgraded to hold. Apple Inc. stock fell $15/share today.  We sold our Apple Inc. holdings at approx $338/share on January 19th for a +3.4% gain.  Today the stock closed at $330/share.
• When you can, check out this new Stock Market Companion Video Update – Make Money and Reduce Risk (3 Steps for investing successfully in a turnaround) which we posted on YouTube.  These three steps have made us a lot of money in stock investing over the years.
  

– Stock Market Companion – Current Holdings –

Nr.	Co.	Ticker	Action	Entry Date	Current Gain (Loss)
1	Ford Motor Co.	F	Sold Today	3/8/2011	+/- 0% (Final)

If the above “Current Holdings” table is empty it means that we are not holding ANY stocks at this time and that we are therefore 100% in cash.

– 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	1,256.88	Index	Down = -24.99 points
DOW-30	11,613.30	Index	Down = -242.12 points
NASDAQ	2,667.33	Index	Down = -50.51 points
NASDAQ 100	2,202.97	Index	Down = -56.65 points

– Market Trends –

Trend	SP-500	DJ-30	NASDAQ	NASDAQ 100
Short Term	*Down*	*Down*	*Down*	*Down*
Intermediate	UP	UP	UP	UP
Long Term	Lateral	Lateral	Lateral	Lateral

*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 –

The markets are responding to these developments –

1. Nuclear meltdown RISK at commercial power facilities in Japan in the wake of last weeks earthquake.  This is an extremely negative situation for liquid investments like stocks – short term.

2. Increased violence in Bahrain – Pro-democracy Shiite protesters up against the minority Sunni Monarchy.   Continued violence in Libya is also contributing to unpredictable energy costs.  This situation results in higher or unpredictable energy costs and therefore is a net negative for stocks.  Off-setting these variables is the reality of the world’s 3rd largest economy – Japan – requiring less oil as the economy there is completely in turmoil.

3. US housing starts reported for February today were terrible.  This was the worst month to month drop in housing starts in 25 years.  This is perhaps not as negative for the stock market as the headline would lead you to think.  Less housing starts means that housing inventory may be decreasing as distressed homes and foreclosures are sold.  Diminished inventory will lead to a foundation for building new homes in the future.

– Story-Stock Investing –

As news headlines developed this morning and into the afternoon, our intuition was telling us that it was now prudent to step to the sidelines and raise 100% cash.  We had held out with our Ford Motor Co. (F) investment through two severe pull-backs resulting from extremely unexpected developments in the market.

The market is behaving differently today than any other days in the last year (except for during the flash crash – which we thankfully avoided = our ideas had run as far as practically possible at the time and we were on the sidelines with cash).

Over the last decade, many institutions have borrowed the Japanese Yen at low rates in order to invest in higher yielding but riskier assets.  The Yen today reached 15 year highs as investors were being forced to sell their higher yielding assets (stocks for instance) to buy back Yen, before the Yen surges higher.  This type of broad-based selling can cause rapid declines in the markets.  It’s not that these institutional investors don’t want to hold stocks, its that they don’t want to have to pay back their Yen based liabilities “tomorrow” when the Yen is higher.

The sub-prime problem and Collateralized Debt Obligations (CDO) caused the same problem in the 2008/2009 meltdown in the markets (which we warned people of, also thankfully avoided, and profited from at the bottom).   As the CDO’s became valueless or impossible to value due to their sub-prime exposure, that NEGATIVE side of the balance sheet had to get balanced out with cash.  Cash was raised by selling liquid assets (stocks).  Selling increased exponentially as institutions ran for the exits on liquid assets (stocks) to raise as much cash as possible to cover almost indeterminable liabilities.

Today we are experiencing the same type of selling pressure as large investors head to the exits on liquid assets in order to pay back their Yen obligations.  We don’t expect a huge drop in the market, but it is becoming very unpredictable.  The market can improve quickly if things stabilize in Japan.

If the markets improve and we feel a bottom forming that we can predict, we will be looking to purchase shares in –

Ford Motor Co. (F) ; Nvidia (NVDA); Silicon Image (SIMG) and others….

We sent out this SMC Intra-Day Alert –

Dear Subscriber-Friend –

Prudence is telling us that we have given this market all the tolerance we can.   The broader markets are saying that it may be that the Japanese are not able to keep the Fukushima nuclear plant from a melt-down.   We have held on through several “panics” and the Ford stock has recovered each time.  The market is steadily eroding now as firm handed investors head to cash.  We sold our Ford Motor Stock (F) at $14.17/share and are now completely in cash.

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

– 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” –

US Dollar	1.3893 USD = 1 Euro	USD / EUR	Dollar = UP a bit
Gold	$1,396.80	Ounce	Gold = Flat
Oil	$98.13	Barrel (West Texas Crude)	Oil = UP a bit
30 Yr. Fixed Mortgage	4.87%	Percent	Flat
10 Yr. Bond Yield	3.21	Percent	DOWN
1 Yr. CD	1.16	Percent	Flat

Data Source : Financial Visualizations Inc.

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.

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