– The Stock Market Companion –

15Minute Market Update

June 8, 2011

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

Published all Market Days
Monthly Subscription $29.95

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-Executive Summary-

  • Lower again!  The equity markets could not attract any real buyer enthusiasm today – even as prices fell further into the red of good and out-of-favor stocks alike.
  • As of yet, there is little FEAR emerging in the marketplace.  The selling is taking place in a steady slide, as of yet NOT punctuated with fear.  While the markets could bounce at anytime, without a fear induced sell-off which attracts momentum and value hunters, the markets are vulnerable to further downside.
  • The Federal Reserve’s “Beige Book” report on economic conditions in the U.S. was released today.  See more below.
  • Special thanks to new subscriber-friend “Tommy” for bringing an excellent story-stock (Ticker: ONTY) to our attention.  Catch some of the details, below.  We are adding ONTY to our SMC Watchlist immediately.  Click here for your SMC Daily Chart of “ONTY”.
  • Scroll down to our Story-Stock section to see our bullet-points describing the characteristics of a key reversal day.  That’s what we are looking for next with this market and individual stocks.

– Stock Market Companion – Current Holdings –

Nr. Co. Ticker Action Entry Date Current Gain (Loss)

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

1,279.56

Index

Down = -5.38 points

DOW-30

12,048.94

Index

Down = -21.87 points

NASDAQ

2,675.38

Index

Down =-26.18 points

NASDAQ 100

2,252.89

Index

Down = -16.07 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 –

Selling begets more selling resulting in stocks continuing to fall today.  The markets were primarily focused on digesting Federal Reserve Chairman Mr. Ben Bernanke’s speech contents from last night.  We covered Mr. Bernanke’s speech in modest detail in yesterday’s edition of our SMC 15Minute Market Update.  For those subscriber-friends who haven’t had a chance to glance at his speech, click here for the link to the speech, courtesy of the Federal Reserve website.  For investors who have the time, this is an excellent read.  For families using our work as a finance curriculum – it is essential reading.

This afternoon the Federal Reserve’s “Beige Book” results on current economic conditions throughout the nation were released for May.  Here’s a summary of what the “Beige Book” is –

Commonly known as the Beige Book, this report is published eight times per year. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes this information by District and sector. An overall summary of the twelve district reports is prepared by a designated Federal Reserve Bank on a rotating basis.

Here is the first paragraph from the Summary pages from the report.  If you find this reading interesting (as we do) – click here for a PDF file of the complete report released today for May 2011.

SUMMARY*
Reports from the twelve Federal Reserve Districts indicated that economic activity
generally continued to expand since the last report, though a few Districts indicated some
deceleration. Some slowing in the pace of growth was noted in the New York, Philadelphia,
Atlanta, and Chicago Districts. In contrast, Dallas characterized that region’s economy as
accelerating. Other Districts indicated that growth continued at a steady pace. Manufacturing
activity continued to expand in most parts of the country, though a number of Districts noted
some slowing in the pace of growth. Activity in the non-financial service sectors expanded
at a steady pace, led by industries related to information technology and business and
professional services.
Consumer spending was mixed, with most Districts indicating steady to modestly
increasing activity.

What’s evident from today’s action in the markets is that – broadly speaking – share prices – even after significant price pullbacks – still aren’t low enough to attract investor interest.  This could change tomorrow, but it is where we stand today.

In our estimation, these are the key catalysts driving the markets south (DOWN) –
  1. Concerns of the U.S. economy and world economy (last week we reported that Australia posted negative quarter on quarter GDP growth) slowing down, in spite of liberal stimulus and money supply.
  2. Uncertainty in the U.S. and globally as to whether the U.S. congress will raise the U.S. debt ceiling or not.
  3. Working out output issues in manufacturing from supply change disruptions related to the tragedy in Japan in March.
  4. Uncertainty about the strength of the investment environment when the U.S. Federal Reserve discontinues its quantitative easing at the end of this month.
  5. Continued weakness in the U.S. real estate markets and recent signs of reductions in consumer spending.

– Story-Stock Investing –

At Stock Market Companion we have built our company around the significance of teaching individuals and families to –

  1. Rigorously time the markets for their investments by understanding the condition and “SEEING” the broader (SP 500) and secondary markets (DOW and NASDAQ) – as clearly as possible.
    We teach that one of the greatest advantages individual investors have is being able to choose WHEN to engage the markets.
  2. Understand the “story” behind stocks of interest, not just price.  In almost all circumstances, there should to be a catalyst in place that is going to propel shares in our desired direction as investors. (Which is most often “UP”, although we do from time to time short certain market conditions – as we did successfully with silver in May).
  3. Catalysts come often in the form of improved earnings, or new company leadership, or a new product, or a new distribution channel, capitulation selling, insider buying or selling, change in government policy, global supply and demand constraints …
  4. Understand how to tie the fundamentals of a company (earnings, cash balances, book value, share supply and demand characteristics…) with share price technicals (primarily price and volume), and catalysts for change (above).
  5. Understand when to buy AND when to take profits or cut losses.
  6. Be ready for a handful or two good ideas per year, knowing that there are some years that there may be fewer good ideas.
  7. Do all of the above using a process that takes 15 minutes or less per day, using internet technology that allows access from virtually anywhere.

That said, when the market drops as it has we begin looking for “bounce” opportunities, where we are purchasing stocks most often on price and volume action / oversold conditions alone – most often predicated by the broader market and individual stocks exhibiting key reversal day characteristics.  A key reversal day often has these features (for indices and stocks alike) –

  1. Multi-week or month downtrend
  2. Gap down at the open.
  3. Capitulation selling – ie – high volume selling.
  4. High volume buying at lows as bargain hunters and value investors step up to buy shares
  5. Stock or index closes lower than, but near the close of the previous day or higher than the previous day.  In both cases, the aggressive negative price action has been reversed.
  6. At least 1.5x average daily volume.

The market did not deliver this performance today, nor do we have any particular stocks to report that performed in such a manner today.  More fear needs to enter the market for such events to appear.

We would like to say a special thanks to new subscriber-friend “Tommy” for bringing this pharmaceutical “Story Stock” idea to our attention –  Oncothyreon, Inc.  (Ticker: ONTY $6.51). We are IMMEDIATELY putting this stock on our SMC Watchlist as the company begins Phase 2 testing of a vaccine “Stimuvax” for non-small cell lung cancer, and is currently in two other Phase 3 tests for other drugs.  The stock is performing strongly in the face of this difficult market.  The company has successfully sold shares at approx.  $4/share recently to raise cash and has raised cash from GE Capital in the form of a loan ($12.5 million).

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

1.4577 USD = 1 Euro

USD / EUR

Dollar = UP

Gold

$1,538.70

Ounce

Gold = Down some.

Oil

$100.78

Barrel (West Texas Crude)

Oil = UP

30 Yr. Fixed Mortgage

4.69%

Percent

Flat

10 Yr. Bond Yield

2.94

Percent

AT recent lows.

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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