– The Stock Market Companion –

15Minute Market Update

May 24, 2011

—— Stock Market Investing since the 1980’s ——

Published all Market Days
Monthly Subscription $29.95

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-Executive Summary-

  • Down.  Early buyers – moving opportunistically after yesterday’s strong sell-off – were not able to encourage others to join them and met a late afternoon wall of sellers.  See more below.
  • The U.S. dollar and the equities markets moved in tandem today – DOWN, breaking a recent inverse relationship.
  • Thank You and congratulations to SMC Subscriber-Friend “Bill” concerning his note today -, “Eric – All at cash this morning.  My small non-IRA account has grown 44% since 11/26/10.  So I am happy with SMC !  (:-D) Bill
  • New home sales for the U.S. were +30,000 higher than was anticipated.  That is positive news.  Click here for an interesting article. You’ll be surprised at some of the strong prices for homes.  Four bedroom Washington D.C. area town homes still selling for $332,000.  Pheonix area homes selling for $305,000.  If accurate, this is quite surprising.

– Stock Market Companion – Current Holdings –

Nr. Co. Ticker Action Entry Date Current Gain (Loss)
1 Cisco Systems,Inc. CSCO Holding (Reduced size) 5-10-2011 -9%
2 Amarin Corp. PLC AMRN HOLDING 5-19-2011 +7%

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

1,316.28

Index

DOWN = -1.09 points

DOW-30

12,356.21

Index

DOWN = -25.05 points

NASDAQ

2,746.16

Index

DOWN =-12.74 points

NASDAQ 100

2,303.55

Index

DOWN = -13.23 points

– Market Trends –

Trend

SP-500

DJ-30

NASDAQ

NASDAQ 100

Short Term

Down

Down

Down

Down

Intermediate

Flat

Flat

Flat

Flat

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 –

During a bull market or at least a strong market rally, trading days are often a bit weak in the mornings and then strong in the afternoons as investors step-up to purchase equities that were sold-off during the morning session.  On very weak days during a bull market or in a strong market rally, this behavior is very evident and builds confidence in investors.  They see buyers come when prices are weaker and prices gradually move higher in a 2 steps ahead, 1 step back type of fashion.  During periods like this, charts of select stocks reveal strong up trends growing in this fashion.

During bear markets or periods of market contraction, trading days are often stronger in the morning as opportunistic buyers step-in to purchase stocks after strong sell-offs like we experienced yesterday in the market, with the hope of other buyers drawing in and building support for another move higher.  Often, such follow-up buying does not materialize and those early a.m. buyers sell their stocks as they find a wall of sellers emerging to sell at the slightly elevated prices achieved in the a.m.  The sellers are glad to be rid of stocks at slightly improved prices compared to the prices offered the previous day.

Today was a classic “market contraction” trading day.  Prices improved, but then buyers met a wall of sellers in the afternoon.

Both the U.S. dollar AND equities markets sold off again today.

We’re in a bit of a conundrum.  From several different perspectives, the stock market is not currently overpriced –

  1. We’ve all observed how companies with strong balance sheets (ie. CASH) have been paying strong price premiums compared to stock market prices for companies that they wish to acquire.
  2. The stock market has in many cases not priced in any premium for strong growth.  For example, Apple Inc. grew at an approx. +70% rate last year, but still only trades at an average market price of 17x earnings.
  3. The DOW (DJ-30) is still trading for approximately the same price investors were paying in 1999 or 12 years ago.

The conundrum is simply that after a 2 year rally, even though the market is not overpriced, investors want to take their profits.  Uncertainty does lie ahead –

  1. European sovereign debt issues.
  2. American debt issues (At what point will the U.S. congress raise the debt limit?)
  3. Will there be meaningful change in fiscal policy in the USA (unlikely, but there is hope)?
  4. How will the economy respond when the Federal Reserve removes more stimulus or hikes rates just bit?
  5. Will inflation that has shown up in developing nations appear in the main industrial nations?
  6. The global economy does appear to be slowing down a bit, following April’s data.

At the moment, we are keeping the lion’s share of our “powder” dry – to be ready for opportunities ahead.

– Story-Stock Investing –

For those investors who are a bit more risk tolerant, a situation like this today with Hewlett-Packard (Ticker: HPQ) may spell opportunity for a quick 5% – +10% move.  Today the stock was again downgraded, and sold-off to $35.58/share, and then attracted buyers  and close positive for the day.  It looks like the stock could reverse and move higher here.  The stock is -35% off its highs from a little over a year ago and down -26.5% since February this year.  That’s a big drop for a good company.  It does look like bargain hunters did step in today and held on in the face of this late afternoon market sell-off.  This is bottom fishing and as such, investors engaging in this type of investing need to know that bottom could be further down.

Click here for a Stock Market Companion Daily Chart of HPQ.

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 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 : 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 15Minute Market Update 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

1.4095 USD = 1 Euro

USD / EUR

Dollar = Down

Gold

$1,525.20

Ounce

Gold = UP

Oil

$99.26

Barrel (West Texas Crude)

Oil = UP

30 Yr. Fixed Mortgage

4.69%

Percent

Flat

10 Yr. Bond Yield

3.12

Percent

UP just a bit.

1 Yr. CD

1.16

Percent

Flat

Data Source : Financial Visualizations Inc.

Please help us by sending your valuable feedback to – Support@stockmarketcompanion.com

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.

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