• The markets were NOT able to capitalize much on excellent earnings reported yesterday after the close by Apple, Inc., or on the excellent earnings from U.S. Bancorp today or Wells Fargo Company from yesterday.  Excellent earnings today after the close from Intel, Inc. brought the stock DOWN in after hours trading this evening on Wall Street.   This too will pass.  See below.
• We saw high VOLUME activity in Bank of America (BAC $9.85) this morning – AFTER – US Bancorp (USB $26.14) reported excellent earnings.  Last week, JP Morgan-Chase and yesterday Wells Fargo and Co. both reported excellent numbers.  In our 15Minute Market Update yesterday, we mentioned that perhaps Bank of America had a “kitchen-sink” quarter – when all the bad news is opened for public view and the path ahead hopefully leads to higher ground.  The volume this morning in BAC shares gave us some confidence to proceed with a purchase.
• At Stock Market Companion, we purchased shares in Bank of America (BAC $9.84) at $9.935/share and placed our stop at $8.98.  We wouldn’t be willing to add shares much beyond $10.05 at this point in time.  See Below.
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– Stock Market Companion – Current Holdings –

Nr.	Co.	Ticker	Action	Entry Date	Current Gain (Loss)
1	Apple, Inc.	AAPL	Holding	6/20/2011	+22.4%
2	ProShares Ultra-Short Silver	ZSL	Holding	7/19/2011	-3.4%
3	Bank of America	BAC	Purchased Today	7/20/2011	-0.9%

– 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	1,325.84	Index	FLAT = -0.89 points
DOW-30	12,571.91	Index	Down= -15.51 points
NASDAQ	2,814.23	Index	Down = -12.29 points

– Market Trends –

Trend	SP-500	DJ-30	NASDAQ	NASDAQ 100
Short Term	Flat/Down	Flat/Down	Flat/Down	Flat/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) –

SMC SP-500 ETF Daily Chart

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

– Today’s Highlights –

Apple, Inc.’s STELLAR earnings results after the close yesterday WAS NOT enough to convince others to buy stocks today.  In fact, Apple, Inc. shares sold-off most of the day after gapping UP nicely following yesterday’s earnings announcement.  Corporate earnings are excellent, but the UNCERTAINTY surrounding the August 2nd deadline for U.S. government decisions about the debt ceiling and future spending is simply stronger.

Today after the close, Intel Corp. (INTC $22.99) reported also very strong earnings.  In a stock market in another galaxy far, far away (like in the 1990’s or from 2004-2007) the stock would be good for an investment and a run of perhaps 20 – 40%.  Not now.  The shares sank in after hours trading.

Times will change.

Existing home sales data for the nation was released today.  The news was mostly grim.  Here’s a summary directly from the National Association of Realtors –

Existing-home sales eased in June as contract cancellations spiked unexpectedly, although prices were up slightly, according to the National Association of Realtors®.

Sales gains in the Midwest and South were offset by declines in the Northeast and West. Single-family home sales were stable while the condo sector weakened.

Total existing-home sales¹, which are completed transactions that include single-family, townhomes, condominiums and co-ops, declined 0.8 percent to a seasonally adjusted annual rate of 4.77 million in June from 4.81 million in May, and remain 8.8 percent below the 5.23 million unit level in June 2010, which was the scheduled closing deadline for the home buyer tax credit.

Click here for the entire report.

This was the third consecutive month of existing home sales declines.

Overseas, European Union leaders are trying to find a way through their own sovereign debt crisis.  We are all on the same clock and it is reading – 5 minutes to midnight.

We filter through A LOT of information each day about the markets, stocks, political and international events …etc … Yesterday we saw that Yahoo!, Inc. (YHOO $13.48) was experiencing HEAVY call option volume in the late morning, ahead of their earnings report after the close yesterday.  When we say heavy, we mean it.  Call options were selling 12 times the volume of put options.  “Call” options entitle the owner of the option, the right but not the obligation to BUY a particular asset at a certain price.  The heavy call volume was a bullish sign for the Yahoo! stock.  We looked at it however and decided not to buy the stock.  The risks were simply too high.  Sure enough, YHOO! reported earnings last night that were a major disappointment.  The stock closed yesterday at $14.59/day, today the stock opened DOWN and closed at $13.48/share = -7.6%.  As a rule of thumb, near month at the money options will often gain 100% in value on a 10% move in the underlying stock.  A drop of -7.6% in the underlying stock for Yhoo! resulted in a drop in the value of the August 14.00 Calls of -67%.

We don’t simply lurch after each “insider-buying” or other news tid-bit that emerges in the sea of stock investing consciousness.

That said, we DID move into a short in silver yesterday afternoon when it appeared that there may after all be a break-through in the U.S. debt-ceiling / budget deficit talks in Washington.  Things were looking pretty good into the close and then this morning with our position UP +7.1%.  Then however, silver started picking UP steam again as uncertainty concerning an agreement in Washington again rose through the course of today.  We have our stop in place just below $13/share and we are going to keep it there.

We saw high VOLUME activity in Bank of America (BAC $9.85) this morning – AFTER – US Bancorp (USB $26.14) reported excellent earnings.  Last week, JP Morgan-Chase and yesterday Wells Fargo and Co. both reported excellent numbers.  In our 15Minute Market Update yesterday, we mentioned that perhaps Bank of America had a “kitchen-sink” quarter – when all the bad news is opened for public view and the path ahead hopefully leads to higher ground.  The volume this morning in BAC shares gave us some confidence to proceed with a purchase.  We sent out this SMC Intra-Day Alert –

Dear Subscriber-Friend –

At SMC we are buying Bank of America (BAC) down here at $9.935.   We are putting 10% of our portfolio to work here.

Stop at $8.99.

Your – Stock Market Companion

 

• 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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