– The Stock Market Companion –

15Minute Market Update

July 1, 2011

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

Published all Market Days
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-Executive Summary-

  • “Reach for the Sky!”  … The markets roared again today – fueled to a significant degree by those who shorted the market in June and who didn’t take their profits by June 20th.  See below.  The market’s rally higher is unsustainable and is entering an area of very strong overhead resistance at 1344-1345.20 on the S&P 500.
  • 4 Points of interest behind this week’s rally – Read below.
  • SMC answers subscriber-friend “Joe” on “adding-to” on Apple, Inc. shares, below.
  • SMC looks at other stocks for next week… Ford (Ticker: F), JP Morgan Chase (JPM) … See below.
  • We wish you all a safe and joyous “Independence Day” weekend!  Pack your hat and sunscreen.  Speaking of which, we may even need sunscreen here west of the Cascades in the Pacific Northwest.  At least we can put away our rain coats… for a while.
  • 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 +8.6%
2 Research in Motion, Inc. RIMM Holding 6/23/2011 +.6%
3 Nokia, Corp NOK Holding 6/29/2011 +1.1%
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

1,339.67

Index

UP = +19.03 points

DOW-30

12,582.77

Index

UP= +168.43 points

NASDAQ

2,816.03

Index

UP = +42.51 points

NASDAQ 100

2,361.39

Index

UP = +36.32 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

Please click on the chart to make it BIGGER!

– Today’s Highlights –

Early in the movie “Toy Story”, Woody’s (the cowboy’s) voice string is pulled and he say’s – “Reach for the Sky!”  That’s what today’s market did and didn’t look back.  We like it.
For the S&P 500, this has been the strongest week of performance since last July.  Here’s why –
  1. The broader market (s&P 500) had pulled back -7.1% from its April 29th high to its June 15th lows.  Individual stocks move anywhere from 2 to 4 times that same amount, so stocks were down anywhere from -14% to at least -28% during that same period of time and READY FOR A BOUNCE – IF – the global gloom lifted a bit (Greece, economic slowdown…). 

  2. The Greek government survived a no-confidence vote that allowed it to continue pressing through stark budget cuts and state asset sales – which in turn took the immediate specter of a sovereign default of a European Monetary Union member, off the table.  This took pressure off the euro, and brought back investor appetite for higher yielding investments – like equities (stocks).
  3. Following today’s release of the Institute for Supply Management’s (ISM)  – June 2011 Manufacturing ISM Report on Business – which came in at +55.1, we have two back – to – back respected reports (yesterday we had the Chicago Purchasing Manager’s Index) of hard data showing that the U.S. economy is still in expansion mode – albeit modest.  Today’s ISM report is a nation-wide measure of economic activity.  Click here for the details. Investor’s liked this news – a lot.  Here’s the sentence that sums things up from the report – Economic activity in the manufacturing sector expanded in June for the 23rd consecutive month, and the overall economy grew for the 25th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business®.
  4. “Short-Covering” by those investors who initiated a short position after June 1 and held too long.  See below.

– Story-Stock Investing –

The S&P 500 is now UP 5 days in a row – and very strongly so.  This rate of improvement is not sustainable.  We will wait for some kind of pull-back before going after most stocks.  This kind of powerful up-move in the market is to a large degree driven by “short-covering”.  Short investors are those who have borrowed shares and sold them high, with the objective of purchasing them back at significantly lower prices.  Those who shorted this market any time in the last 30 days are quickly covering their positions and wishing that they hadn’t shorted the market.  If they hadn’t taken their profits by June 20th, they are staring at losses.   This “quick covering” of positions is a strong force behind this week’s rally.  The market is now higher than it was at the end of May.
Here’s what we like –
Financials are picking up a little bit of interest –
  • JP Morgan-Chase (JPM) – Is the “Gold-Standard” here.
  • Bank of America (BAC) = severely out of favor – but may bounce strongly.
  • American International Group (AIG) = same as BAC.

Apple, Inc. = Looking Good.  Here’s what we wrote subscriber-friend “Joe” today about “adding-to” our Apple position –

“Eric, I missed the entry for AAPL in the ~318 range. Looking at the chart it appears that the stock is forming a bit of a pennant between the 50 and 200 day SMA. Do see an opportunity to add to your position and or a new entry if the stock can move above and hold the 50 day SMA?

If you are not comfortable answering a direct question like this I understand

Thank you for what you are doing for us

Joe”

SMC Response – Hi Joe – Thanks for your note.  We would definitely consider “adding-to” our own position here between $35 and $42, with a stop at around $325.  We would put a buy order in maybe at $339 to see if we get filled on a pullback.

Yours – Eric

If Research in Motion (RIMM) pushes over $30/share we may add-to.  It has gone nowhere during the entire week of rally – which could be a concern.  We have seen too many instances though where stocks like RIMM that have been so severely punished, gradually pick up strong steam after the other growth stories make a run (and are already “not buyable”).

Soda Stream International (SODA) – We should have put a toe in on this one at $52.  Coca-Cola made a negative comment that took the stock down hard several days in a row.  Today SODA was a rocket.  We will see if there is an opportunity.  Very choppy chart.

Ford Motor Co. (F) – Made a good move and announced June sales at +14%.  Nice.  Some time in the future, it may appear that we were wise to purchase the stock here with a $13 or low to mid- $14 in the number.

8×8, Inc.  (EGHT) and “ONTY” quieted down now.  ZAGG too has pulled back.  Nokia (NOK) = very quiet.  RIMM too – very quiet (above).  We are watchful.

More next week.

Precious metals all took sharp cuts today.

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 –

EHere 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

1.4520 USD = 1 Euro

USD / EUR

Dollar = Flat

Gold

$1,482.60

Ounce

Gold = DOWN

Oil

$94.75

Barrel (West Texas Crude)

Oil = Down

30 Yr. Fixed Mortgage

4.69%

Percent

Flat

10 Yr. Bond Yield

3.18

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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