– The Stock Market Companion –

15Minute Market Update

June 29, 2011

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

Published all Market Days
Monthly Subscription $29.95

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-Executive Summary-

  • UP again!  The markets closed higher as it appeared that the legislature in Greece passed measures to implement budget cuts and divestiture of assets under state control.
  • The U.S. dollar headed a bit lower as global investors felt momentarily more comfortable with the euro and investing in higher yielding instruments – like stocks.
  • Activity will pick-up again when earnings results are released – starting officially with Alcoa, Inc. (Ticker: AA) on July 11th – after the close.
  • At Stock Market Companion, we invested in Nokia, Inc. (NOK $6.33/share) today.  Our purchase price was $6.35/share and our stop is at approx. $5.49/share.  We examine the company in detail, and tell what we like – below.
  • IF Nokia is able to maintain its dividend, then its current dividend yield is +7.2%.  IF the company can improve its earnings performance, then it may be possible to see further share price appreciation in addition to the +7.2% yield.
  • 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 Holding 6/20/2011 +5.7%
2 Research in Motion, Inc. RIMM Holding 6/23/2011 +.1%
3 Nokia, Corp NOK Purchased Today 6/29/2011 +/- 0
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

1,307.41

Index

UP = +10.74 points

DOW-30

12,261.42

Index

UP= +72.43 points

NASDAQ

2,740.49

Index

UP = +11.18 points

NASDAQ 100

2,294.43

Index

UP = +8.68 points

– Market Trends –

Trend

SP-500

DJ-30

NASDAQ

NASDAQ 100

Short Term

UP

UP

UP

UP

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 –

The Greek legislature PASSED its first bill in authorizing the current governments plans for cutting the budget AND selling state assets.   This occurred in the face of street riots in Athens, which were covered by the international press.  Passing this legislative bill took selling pressure off the euro and onto the U.S. dollar.  The U.S. dollar had been BID HIGHER over the past few weeks as uncertainty has increased concerning the ability for the Greek government to steer towards aggressive budget cutting.  A failure in the government in Greece to pass these measures to cut spending would have resulted in a failure to meet requirements by the International Monetary Fund (IMF) and the European Central Bank (ECB) for further government financing and perhaps signaled that default by the Greek government on its outstanding debt was imminent.  Greece defaulting on its sovereign debt would have put a huge question mark on the current status of the euro and strongly increased the value of the U.S. dollar – as investors would seek the relative safety of the greenback.
Over on this side of the world, the U.S. government attempted to sell 7-Year bonds – and the sales DID NOT go well today.  Demand was low.  This put DOWNWARD pressure on U.S. Treasury prices, which sent the yields on U.S. Treasuries HIGHER.  Yields were also higher as investors bid equities (stocks) higher as the immediate threat of financial failure in Greece appeared to be passing.  Stocks are also higher today because earnings still are strong at U.S. corporations and stocks are relatively cheap, as long as the global balances in the financial world are not tipped into the red by a big problem – like Greece.
Crude oil inventory data for last week in the U.S. was released today, revealing that DEMAND for oil and gasoline is STRONG – even at higher prices.
When the U.S. dollar pulls back – like it did today – precious metals and other commodity based stocks (like steel) advance.  We saw that today in the markets.
There are two remaining trading days left in this 2nd quarter of U.S. business and investment activity.  Mutual funds and other large institutional investors use this period to balance out positions – which also is an influence on the equities markets.

– Story-Stock Investing –

Today at Stock Market Companion we initiated an investment in Nokia Corp. (Ticker: NOK $6.33/share).  The shares of NOK are DOWN -41% for the year AND DOWN -83% from their November 2007 highs of approx. $38/share.  We issued this SMC Intra-Day Alert concerning our actions today –

Dear Subscriber-Friend –
 

At Stock Market Companion, we’ve entered a small investment in Nokia (Ticker: NOK) at $6.35/share.  We would not add-to this position beyond $6.55/share.    Our stop is down at $5.49/share.

We are using the words “small” and “toe-in” and others to clarify that we are not comfortable putting heavy investments on in the market at this time.  Small or toe-in is anywhere from 5% to 10% of our investment capital.

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

———–

Let’s talk a bit more about Nokia.  For background information, please read this excellent article on the company from Bloomberg Businessweek from June 2, 2011.  Please click here for the article. This was the “cover story” from the June 6, 2011 edition of Bloomberg Businessweek.  Be aware that this story is 7 half-pages long, BUT is well written and very insightful.  This type of article is “excellent reading” for those families using our 15Minute Market Update to teach their children about business economics and finance.
Here’s what we have –
  • Nokia is a former market leader and innovator in the mobile phone industry.  The company has been “out-smarted” in the smart-phone innovation and market curve and therefore has been squeezed into the low margin and very competitive basic mobile phone market.  Without a dramatic change in direction, the future looks dim for Nokia.
  • Mr. Stephen Elop is the new CEO at Nokia, on the job since September 2010.  He is motivated to perform and has the guts to at least take on the bureaucracy that has set-in in Nokia and hopefully steer the company out of this crisis.
  • Nokia is now adopting the Microsoft Phone 7 software platform, based on Elop’s tough decision this spring to discontinue Nokia’s own in-house Symbian software system.
  • Nokia is busy “right-sizing” its business to the new market place and scrambling to catch-up in the smart-phone space.
  • IF the company can TURN-Around from here, it may be that the shares are “on sale”.  Here’s a look at some important metrics (courtesy of Briefing.com) –

 

Nr. Quarter Total Revenues
($ Billions)		 Actual Earnings
($/share)
1 2011 03 14.9 .19
2 2010 12 17.1 .30
3 2010 09 10.3 .14
4 2010 06 10 .11
5 2010 03 9.5 .14
6 2009 12 11.9 .25

 

  • As of December 31, 2010 (courtesy of Finance.yahoo) Nokia’s “book-value” per share is approximately $5.46/share.  The company has approx. 16.5 billion in cash and between 6 and 7 billion in debt.
  • If we take Nokia’s Total Current Assets of $36 billion and take away the Total Current Liabilities of $23.5 billion and subtract $5.8 billion in other liabilities, we arrive at a balance of $6.7 billion.  Divide this $6.7 billion by 3.7 billion shares outstanding, we arrive at a cash value per share of approx. $1.8/share.
  • Nokia PAYS A DIVIDEND = $0.46/share.  At $6.33/share (closing share price today) that dividend represents a dividend yield of +7.2%.
  • Looking at the above table of revenues and earnings, you can see that Nokia is still selling a lot of phones and that revenues are still holding up.  It’s trailing twelve month’s earnings are $0.74/share.
  • Today’s closing share price of $6.33/$0.74 = 8.5 Price / Earnings Ratio.  Recently we calculated Apple’s price earnings ratio to be approx. 13, counting in Apple’s large cash balance.  So Nokia is selling at a -35% discount to Apple’s discounted price earning’s ratio.

Here’s what we like about Nokia –

 

  • The shares are selling at a price last seen for the shares in the spring of 1998.  This mean’s that the shares are selling at 13 year lows.
  • The company is still selling a lot of product and is still Profitable.
  • They hired a younger, experienced CEO who has demonstrated an ability to make HARD Decisions and has shown a big commitment to the companies where he has participated based on his biography.  We like what we read about Mr. Elop.
  • The company realized that it needed to make big changes and has gone “outside of the fold” for its CEO and has given him the latitude to make difficult decisions.
  • There is room for another phone operating system besides Apple and Android.
  • If the company continues to pay its dividend, we get the benefit of a strong dividend yield AND POSSIBLE share price appreciation.
  • Today’s push higher in the share price is – from a technical perspective – favorable.

Click on the chart below to get a clear visual on Nokia, Corp.

 

We are keeping our eyes wide open for more investment opportunities.

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 –

Here is a chart of the Stock Market Companion 15Minute Market Update stock performance versus the SP-500.  Click on it to 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

1.4475 USD = 1 Euro

USD / EUR

Dollar = Down

Gold

$1,511.40

Ounce

Gold = UP a bit.

Oil

$95.14

Barrel (West Texas Crude)

Oil = UP

30 Yr. Fixed Mortgage

4.69%

Percent

Flat

10 Yr. Bond Yield

3.11

Percent

UP

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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