– The Stock Market Companion –

15Minute Market Update

June 20, 2011

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

Published all Market Days
Monthly Subscription $29.95

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-Executive Summary-

  • In-Step and UP!  Today the markets found support together – after gapping down at the open on further negative financial news centering on Greece.
  • At Stock Market Companion we put a “toe” in with a purchase of Apple, Inc. shares at $316/share and placed our stop at $311.75.  Remember – “IF” AAPL can hold approx. $20/share in earnings, combined with their $30+ billion in cash, the shares are possibly selling at a P/E of 13.9.  Apple is growing at a rate at least twice this P/E level.  Apple grew last year at a +70% clip.  Here’s a general rule of thumb – As long as a company is growing at a rate equal or greater than its P/E, its share price can be justified.  When markets are falling due to investor fear or simply lack of demand for stocks, such “rules of thumb” can be thrown out the window!
  • We outline below how we handle new stock ideas and “stock tips”, using Oncothyreon, Inc. (Ticker: ONTY) and Jammin Java Corp. (Ticker: JAMN) as examples.  Special thanks to Subscriber-Friend “Jim” for his good email question concerning “ONTY”.
  • Thanks for the encouragement from Subscriber-Friend “Bill” –
    “Hi Eric –  Thanks for being there for us.

    I am reminded of the old Roadrunner v. Bugs Bunny cartoon. He came to a desert highway and looked off to infinity in both directions. Nothing. But as soon as he stepped off to cross, a Greyhound bus flattened him. I guess we need to look both ways twice – maybe three times… Bill”

  • Please click here to send us your feedback.  Let us know how we are doing – We are here to serve you.  Support@Stockmarketcompanion.com

– Stock Market Companion – Current Holdings –

Nr. Co. Ticker Action Entry Date Current Gain (Loss)
1 Apple, Inc. AAPL Purchased small quantity today. 6/20/2011 -0.2%
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

1,278.36

Index

UP = +6.86 points

DOW-30

12,080.38

Index

UP= +76.02 points

NASDAQ

2,616.48

Index

UP = +13.18 points

NASDAQ 100

2,256.65

Index

UP = +3.76 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 chart in a separate browser window).

– Today’s Highlights –

When the markets enter phases of turbulence as they have recently, my mind often returns to my years at Michigan Technological University and travelling from the Detroit area to the northern tip of the Michigan’s Upper Peninsula for school.  The drive was long and often eventful – not only because my old, little Plymouth Arrow which I cared for needed some coaxing along the way, but because I had to cross the Mackinac Bridge which spans the entire distance from the lower to the upper peninsula, in often difficult weather.   Bridge traffic travels slowly, 199 feet above the waters where the mighty great lakes – Lake Michigan and Lake Huron meet.  I can remember as if it was this very morning, my hands holding tightly to the steering wheel ready to compensate for the next gusty surge of wind, taking quick opportunities to look down to see the churning waters and choppy waves far below.   There is a strong resemblance between the markets today and these churning waters.

The main news channels – hungry for information about the markets and eager to pass on whatever scrap of news they can find, regardless of its relevance – have remained focused on the current unfolding saga in Greece.  Everyone knows that the future of the euro could be at stake.  Other European Monetary Union (EMU) nations on the fringe of Europe with high sovereign indebtedness and high interest payments required to service the debt may be next in the limelight.

The “financial waters” are also churning with uncertainty surrounding –

  1. What the markets will be like when the U.S. Federal Reserve discontinues its significant bond purchases at the end of this month.
  2. Concerns of global slowing in leading industrial economies.
  3. Questions regarding the political outcome of the U.S. debt ceiling talks.

We will see what tomorrow brings.

Many individual stocks are down -10% to -60% from recent February 17th and May 2nd high’s in the broader market.


– Story-Stock Investing –

We entered a very modest investment in Apple, Inc. as it broke its 200 day moving average today and found momentary support with the overall market.  Here is our SMC Intra-Day Alert that we transmitted –

Dear Subscriber-Friend –

This is a note for those investors “itching for a move”.  We like Apple, Inc. here for a bounce.  We just put a “toe”-in at $316/share, with a stop just below $312 at $311.75.

We would not add-to our position any higher than $318/share.

The broader market may find support here.

For those willing to wait, there may be better buying opportunities ahead.

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

Responding to an excellent question from Subscriber-Friend “Jim” concerning the strong move of Oncothyreon, Inc. (Ticker: ONTY), we have outlined below how we handle a “stock tip” or new idea at Stock Market Companion –

Hi Jim – Thanks for asking about ONTY.   After 2+ decades of investing, here is what we do with a new idea (or “how we handle a stock tip”) we –

1. Look at the story,  fundamentals and technical’s (chart)

2. If we REALLY like what we see, we put it on our SMC Watchlist.  If not, we keep it on the “visor” of 1000’s of other stocks that we scan.

3. We monitor the stock and begin to learn how the stock “behaves” – does it get quiet when the market sells off?  Does it fluctuate widely?

Does it behave predictably?  Is volume increasing or decreasing …

4. Once we have an understanding of the story, fundamentals, technical’s, AND behavior of the stock, we then consider our entry.  Is the background market suitable for this type of investment, at this time?  Is there a close in area of support that we can use to place our stop?  Has volume appeared in recent moves, confirming institutional interest?

5. We don’t “run-after” a stock – in our humble opinion that is one of the top 5 reasons people get burned or –  in worse case – wiped out investing in stocks (and other investments too).  Instead, we study it and gauge our entry carefully.  Our entry has to be in a place where there has been a lateral consolidation – during which “early adopters” take their cash – and new buyers emerge.  We then buy a break-out higher when the background market is suitable.  We may also buy into weakness if we have learned enough about the stock’s behavior and really like the story.

In the case of ONTY, the background market has NOT been suitable and the stock has been going UP strongly.   The stock has essentially doubled in 2 months.  If we had moved quickly on the stock idea, it would have been very good.  Quite frankly, the chart would have allowed a purchase with a close in stop possible – BUT THE background market didn’t.   There is NO ENTRY at the present time for a prudent investor.

Click on chart to open in a separate browser window.

This situation with ONTY reminds us of a recent story – A little over a month ago a friend brought forth the idea of JAMN  =  Jammin Java Corp. (From Finance.Yahoo Profile  = JAMN is a development stage company, focuses on providing premium roasted coffee on a wholesale level to the service, hospitality, office coffee service, and big box store market in the United States. It intends to produce coffee on the leased farmland in the Blue Mountain region of Jamaica. The company was formerly known as Marley Coffee Inc. and changed its name to Jammin Java Corp. in July 2009. Jammin Java Corp. was founded in 2004 and is based in Beverly Hills, California.)

JAMN is a pink sheet traded company.  Our friend has a personal friend who worked successfully building up TAZO Tea, who has recently started working at JAMN.   Of course we are interested in such developments.  Early awareness of important changes in leadership in a company can lead to significant gains.

Click on chart to open in a separate browser window.

The date our friend notified us about JAMN was 5/11/2011.  The shares opened at approx. $3.43 and closed at $4.02.   The stock was $1 a share in March.   We thanked our friend for the stock idea and told her to be CAREFUL and that we would NOT buy the stock at this point.   We watched.  On 5/12 the stock spiked to $6.35/share and closed at $5.42.  On Friday, 5/13 the stock managed to hold the region between $5 and $6 /share.  On Monday, 5/15  the stock
spiked lower.  By 5/18 the shares fell all the way down to $1/share.   It is now sitting at approx. $1.67/share.

On the same Friday (5/13) that the stock spiked to $6.35/share, as a family we were invited to dinner at a friend’s home who we had not seen in a long time.  Others were there who we didn’t know.  During the introductions, my friend introduced me and my work.  Immediately out of the group an excited individual began asking me about … You guessed it … JAMN!  I smiled and listened.   It’s often this way – of the 1000’s of stocks that we could talk about the person brings up THE VERY ONE STOCK that has gone nuts over the past few weeks.   The person was explaining how he had just added to his position.  I found something encouraging to say to the investor, saying “good work” on their initial entry.  I also said that for us, the horses had already left the barn long ago and that there was no safe entry.

The stock disintegrated the next week.

We hunt new stock ideas every day and are very thankful for frequent suggestions.  Over the years, some suggestions have led to very big gains for us.   As a rule, we let the stocks prove themselves before getting on board.

E.

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

1.4318 USD = 1 Euro

USD / EUR

Dollar = Flat

Gold

$1,541.20

Ounce

Gold = FLAT

Oil

$93.86

Barrel (West Texas Crude)

Oil = Flat

30 Yr. Fixed Mortgage

4.69%

Percent

Flat

10 Yr. Bond Yield

2.97

Percent

Flat

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.

  • The markets were AGAIN divergent today, just as yesterday revealing further weakness in the technology sector while the broader market (S&P 500) and the DOW (DJ-30) held POSITIVE.
  • Research in Motion (Ticker: RIMM $27.75) reported earnings last night that were a major disappointment.  We go through the details below.  The company received 2 broker upgrades going into earnings.  The stock then lost -21.45% from yesterday’s close into today.  We go through our steps in handling our brief investment in the stock this last week – AND WHY, below.
  • Crude oil continued to descend today, reflecting a drop in value of the U.S. dollar – BUT also  concern of future demand as the global economy slows down.
  • The S&P 500 is finding support at its 200 day exponential moving average.  If the broader market doesn’t find strength here and begins to sink further, the next near point of support is the low it plumbed during the recent nuclear crisis in Japan.  If it fails that point, then the intermediate term trend will be DOWN.
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