-Executive Summary-

• Higher.  Volume however, is low.  Resistance for the broader market (S&P 500)  lies near at approx. 1344 – 1345.   We are entering a season of relative quiet, but where opportunities do emerge.  We had two strong runs last July through August that were very unusual.  YRC Worldwide (YRCW) +104% and Arena Pharmaceuticals (ARNA) +90%.  We SOLD our shares on strength in early August 2010 and the shares sank hard after other investors took their profits later and conditions changed at each of the companies which proved destructive for each of the companies.  We are alert to other opportunities.  See below.
• We didn’t take any actions here at Stock Market Companion today.
• Fuwei Films Holdings Inc. (FFHL $4.21) surged +28.75% today on news that the company landed a contract for its environmentally friendly shrink-wrap label at Coca Cola, China – with introduction of the product slated for the second half of this year.  This sounded very good.  Further digging into this stock however reveals murky conditions and possible danger.  See below.
• OCZ Technology (OCZ $8.34) reported positive earnings today after the close and STRONG revenue growth.  The stock is up in thin, after hours trading.  The company manufactures solid-state hard drives (SSD’s) that are particularly important in servers.  This may be an interesting “cloud-computing” opportunity.  We are going to listen to the company’s earnings conference call before making further decisions.
• With the U.S. congress and President Obama unable to reach important decisions to deal with our debt crisis and Portugal’s sovereign debt being downgraded to junk status … we are cautious.  On the other hand, certain growth stocks are moving strongly higher.  Our Apple, Inc. holdings is one of them.  Others are listed below.  We cannot run after stocks that have launched vertically over the last week.  We must wait for prudent entries.
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– Stock Market Companion – Current Holdings –

– 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 Trends –

*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 view it in a larger size.

– Today’s Highlights –

Even in this age of globalization and continuous movement of money and activity in finance, there is a seasonality to the markets.  Mid-summer is a time of low volume on the stock exchanges as market participants take vacation.  Opportunities however still present themselves – so we are alert.  Last July we had two big runners with YRC Worldwide (Ticker: YRCW) offering a +104% return and Arena Pharmaceutical (ARNA) offering +90% over a 3 and 4 week period.

Yesterday in the late afternoon, Moody’s rating service downgraded Portugal’s sovereign debt rating to junk status.  This has put pressure on the euro relative to the U.S. dollar and has allowed the greenback to advance further today.  Typically when the U.S. dollar advances, gold, other precious metals, commodity based materials, and OIL DECLINE.  Not so today.  The U.S. dollar advanced a bit, yet gold advanced.  Why?  Perhaps there is increasing uncertainty about the U.S. government’s ability to reach agreement.  We’ll see.

A red flag for this market is the inability for the financials to get-up and participate.  Most of this is due to the sorting through of the mortgage mess and “robo-signing” (signing of documents without ANY oversight) and pending large settlements with state attorney generals – attorney generals from each of the 50 states involved.

Tomorrow is Thursday and brings with it last week’s data for initial claims for unemployment.  On Friday we will get a clearer view of the overall employment situation for June, with the Non-Farm Payrolls report – which will include the unemployment rate.   We do NOT expect much improvement in the employment picture.

– Story-Stock Investing –

• 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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