-Executive Summary-

• The markets slid HARD at the open and closed strongly lower today from Friday’s close.  Markets were able to lift off today’s late morning lows into the afternoon to minimize the sting of more significant losses achieved this morning.  Concerns overseas and here domestically about government spending and sovereign debt is causing investors to raise cash.
• Shares in Bank of America (BAC $9.71) moved firmly DOWN this morning.  We sent out an SMC Intra-Day Alert about this – evaluating whether this is an opportunity or not.  Bank of America announces quarterly earnings tomorrow ahead of the open.  See more below.
• Even though the market pushed south, Apple, Inc. (AAPL $373.80) shares moved strongly higher today.  Special “Thank-You” to SMC subscriber-friend John for reminding us that Apple announces earnings tomorrow after the close.  We did mention this last week, but would have overlooked this important fact today.  Because of our favorable entry and other reasons, we are planning on holding our shares of Apple at Stock Market Companion – and not selling them tomorrow before earnings are released.
• Housing starts for June will be reported tomorrow morning at 8:30 AM.  We’ve included a multi-year chart below that reveals a clear picture of residential home-building – and why residential construction employment is so weak.
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• Here is a video interview of a father and son using the Stock Market Companion successfully together – as a teaching and investing tool.
  

– 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) –

SMC SP-500 ETF Daily Chart

Please click on the chart to view it in a larger size.

– Today’s Highlights –

Globally, equities markets are experiencing disfavor among investors.  The combination of weak leadership in Europe with regards to sovereign debt issues in the “fringe” nations of Greece, Ireland, Italy, Spain, and Portugal  – AND – the lack of progress in the U.S. regarding negotiations to STOP runaway fiscal government spending in the context of the August 2, 2011 deadline, is providing more than adequate supply of the uncertainty that investors dislike.  This August 2, 2011 deadline has been established by the U.S. Treasury as the day on which the debt ceiling must be raised before it would become necessary for the U.S. to push-back debt repayments.

Notable today is the continued advance of gold and silver, even while the U.S. dollar remained flat.  Other metals like aluminum and copper are not a advancing as significantly.

Notable also is the extreme weakness of U.S. financial stocks today.  Tomorrow, Bank of America (BAC $9.74) will announce their quarterly earnings before the market opens.  Investors sold the shares down hard at the open, but some bargain hunters and gamblers were enticed into making purchases at today’s lows of approx. $9.56 for the stock.  See our comments below.

Tomorrow before the market opens also brings reports on our U.S. national residential housing starts and building permits.  Here is a chart from the New York Federal Reserve Bank and the U.S. Census Bureau showing a CLEAR picture of what has been happening in the housing market over the last decade and why current residential construction employment is so weak (Please click on the chart to enlarge it in a separate browser window) –

From an intermediate term perspective, the overall market is in a broad, lateral consolidation ranging back to the end of January of this year.  The S&P 500 reached 1,307 on February 1st and today – July 18th – closed at 1,305.

From a long term perspective, on March 1, 1999 the S&P 500 rose above 1,305 for the first time, and now – 12 YEARS later – the market is at the same level.  We all know that there have been 2 drastic reductions in the market over these same last 12 years, and 2 very good rallies in between.  Stock Market Companion was born from my personal experiences of helping people for free during this last decade and seeing wealthy and less wealthy alike take the hard hits in the market and then – because of the fear of losses from the dramatic reductions in the market – not be able to really capture strong gains when the going was good.

From a short term perspective, the market is again in a down / lateral trend since peaking near the May 2nd highs on July  7th.  Most investors who tried to short the market and hold for a strong retracement in the overall market (10% or more), beginning on May 2nd have been frustrated.  Those satisfied with 5-7% returns on the retracement – and who took their profits – have been able to benefit from short term weakness in the market.

At Stock Market Companion we did so with our short in silver on May 2nd, which due to the leveraged nature of the tool we used generated between 17.6% and 26% returns on our published entries and exits.  Our recent, modest purchase of Apple, Inc. down at its 200 day moving average at $316/share has been good and we are holding the shares.  Our “toe-in” on other stocks have not been so good – like Research in Motion and Nokia and others – and we are glad that our small holdings and tight stops have kept us from too much trouble.

Today we were presented with an opportunity to purchase Bank of America (BAC $9.72) at $9.56/share.  We sent out this SMC Intra-Day Alert concerning this development in BAC shares…

• 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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