-Executive Summary-

• Down firmly.  The broader market (SP 500), the DOW (DJ-30), and the NASDAQ were all down today.
• Selling in commodities (metals, oil, grains…) are shaking up the markets.  See more below.
• U.S. Treasuries are catching a bid (are being purchased), driving down the yields of these investments.  See more below.
• The Institute for Supply Management issued their April Non-Manufacturing report (Services).  Although the economy is continuing to expand, the report today was a disappointment.
• At the Stock Market Companion (SMC), we closed out our final silver commodity SHORT today, by selling our final shares of the Proshares Ultra-Short Silver Fund (Ticker: ZSL).  Our returns on the final “runner” of the investment was +26%.
• At the SMC we attempted an intra-day bounce trade in silver, trying to capitalize on an oversold condition.  Not wanting to hold the position overnight, we exited the trade as a scratch.  We issued 2 SMC Intra-Day Alerts concerning this activity.  We were looking for an intra-day bounce of approx. +5%.
• Tomorrow morning General Motors reports earnings before the market opens.  Today GM was again strong and Ford weak.  We don’t like it, but we are still holding our Ford shares.  The ISM report mentioned about surveys firms about shortages related to Japan.  They report no shortages.  Our short term timing on this Ford investment has been poor.
• Here is a video interview of a father and son using the Stock Market Companion successfully together – as a teaching and investing tool.
  

– Stock Market Companion – Current Holdings –

Nr.	Co.	Ticker	Action	Entry Date	Current Gain (Loss)
1	Nexxus Lighting	NEXS	Miniscule Holding	3/18/2011	-22%
2	Dell Inc.	DELL	Holding	3/21/2011	+6%
3	Ford Motor Co.	F	Holding	4/1/2011	-4%
4	Cisco Systems, Inc.	CSCO	Holding	4/25/2011	+3%
5	Proshares Ultra-Short Silver ETF	ZSL	Sold Final Holding Today	5/2/2011	+17.6% (Lion’s Share) +26% (“Runner”)

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	1,347.32	Index	Down = -9.30 points
DOW-30	12,723.58	Index	Down = -83.93 points
NASDAQ	2,828.23	Index	Down =-13.39 points
NASDAQ 100	2,387.51	Index	Down = -5.29 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 were weak again today.  Aggressive trading in the commodities space (read: oil, precious metals – gold, silver, +) is shaking up the markets.  Some are talking about the last few days of market activity as representing “de-leveraging”, which is simply a fancy way of saying that investors are raising cash or heading to near cash investments like U.S. Treasuries.  We agree with this assessment and mentioned yesterday that treasury yields are low as U.S. Treasuries have found recent favor.  The correlation that we would like to teach here is that the rate on the 30 year fixed mortgage is tied to the yield of the 10 year U.S. treasury bond.  When this yield decreases (because the PRICE of the U.S. Treasury bond goes HIGHER), the 30 year fixed mortgage rate goes LOWER.  Yesterday we noted that the 30 year fixed mortgage is approx. 4.69%.

Action in the silver commodity was center stage today as the metal took another punch to the south (read: DOWN).  From last Thursday’s close, the metal has given up -19% of its value.  Here are the reasons for this aggressive selling –

1. Futures exchanges suddenly demanded / required higher margin for individual traders in the commodity.  This forced traders to either raise cash to meet these higher obligations or sell their positions.

2. Silver was at 30+ year highs and UP +194% from its August 2010 price level.  Profit taking was due to emerge at some point sooner than later.  The difficulty in timing a short of the metal is that you do not know if the price may yet move higher in a parabolic fashion first.

Here’s an example of one of the worst things that can happen when you are shorting – On October 28, 2008 during the financial crisis, the Porsche car company in Germany was quietly purchasing shares in Volkswagen, raising its ownership stake to 75%.   While the stocks of other automotive manufacturers were sliding down hard, the Volkswagen stock vaulted +55% to a share price of approx. $1,261/share.  There were plenty of hedge funds shorting Volkswagen stock at the time, establishing their short positions PRIOR to the price spike.  They were hurt badly.  Some went out of business.

3. The U.S. dollar may be reaching at least a temporary bottom.  An upturn in the U.S. dollar would drive the prices of U.S. dollar denominated commodities DOWN.

Today the Institute for Supply Management – Services Index came out lower than expected.  Here are some points from the ISM Report –

• “Business conditions [remain] unchanged. No supply impact from the Japan earthquake/tsunami, but continue to track with the supply base.” (Management of Companies & Support Services)
• “Revenues are picking up slowly, but the growth is positive as compared to last month and the same month last year.” (Real Estate, Rental & Leasing)
• “Looking forward with reserved caution. Cost of goods by this fall are a big worry.” (Accommodation & Food Services)
• “Continuing economic uncertainty will curtail or delay project spending for the immediate future.” (Educational Services)
• “Fuel prices continue to be challenging and in addition to shipping, are influencing the cost of materials.” (Public Administration)
• “We are seeing price increases in many areas, and the lead times are stretching out. Our business activities are improving at a moderate rate.” (Wholesale Trade)

– Story-Stock Investing –

Today we exited our final holding on the Proshares Ultra-Short Silver fund, ticker: ZSL.  Our return on the final holding was +26%.

As the price of silver began to spike DOWN further, we made a purchase of the silver exchange traded fund (ETF) with the ticker: SVL – with the intention of holding the shares for a bounce during the day.  We exited the position prior to the close and sent out two SMC Intra-Day Alerts concerning this activity.  Silver hardly bounced, although it is down -21% on an intra-day basis from last weeks intra-day highs.

Downward spikes of over -20% in a major metal in a short period of time are OFTEN not sustainable.  Of course, the opposite of what we wrote above concerning a parabolic price swing higher can also occur.  Prices can spike DOWN very hard and stay down.

The Stock Market Companion is NOT a day-trading service.  When opportunities do come along that appear advantageous, we take them and inform our subscribers – even if it is for a very short term trade (these are rare).  We were looking for an intra-day +4-+5% spike in the metal – from the lows – which did not materialize.  It did bounce +2.5% from the lows.

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 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 : 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.

– 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	1.4828 USD = 1 Euro	USD / EUR	Dollar = bouncing around lows – But may now reverse higher.
Gold	$1,515.30	Ounce	Gold = Down
Oil	$108.94	Barrel (West Texas Crude)	Oil = Down
30 Yr. Fixed Mortgage	4.69%	Percent	Flat
10 Yr. Bond Yield	3.22	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.

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.