• No agreement was reached over the weekend by the government on the debt-ceiling, budget debate.  The market flinched and closed lower, but SMC holding Apple, Inc. shares reached higher.  Bank of America and Ford Motor Co. shares diminished a bit.  See Below.
• Research in Motion (RIMM $26.67) announced stronger job cuts than anticipated, which raised more fear in what may be happening next for the company.  At some point the market will over-react to what are real troubles at the company, and forget that the company still makes a lot of money selling Blackberry phones.  That will be our entry.   There was no purchase opportunity for us today.  See Below.
• Bank of Ireland (IRE $1.54) surprised everyone at the end of last week and was able to raise money selling common shares to new investors.  They have also hit secondary bond-holders with -90% reductions in value.  These efforts have kept it out of complete government ownership.  See Below.
• Please click here to send us your feedback.  Let us know how we are doing – We are here to serve you. Support@Stockmarketcompanion.com

• 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 –

Just like many of you, we meet people almost daily who tell us that things cannot continue in the U.S. as they are.  It’s evident to everyone it seems, except for those in Washington.  There the influence of power and of special interest groups provide distractions to common sense and distort reality.  Signs came early that we were going to have an impasse or a cliff hanger on our hands, and that we were facing change-

• Remember 18 months or so ago – Treasury Secretary Geithner was in China, making a presentation at a university there.  At one point he said that the value of Chinese U.S. Treasury holdings was secure.  The audience, even though they are highly trained to respect authority, laughed.
• Over a  year ago, when a bi-partisan group of high ranking congressional members participated in a workshop at the White House to identify areas where the budget could be cut, the only discussion item that emerged in the news was the cost of the next presidential helicopter.
• The “Tea-Party” emerged with real influence last November.
• Over the last year, each time a leading authority has held a microphone, the importance of raising the debt ceiling has been explicitly mentioned.

We think that more than a few people (including ourselves) are disgusted with how the government responded to the financial crisis in 2008 and 2009, and how our representatives were lead to believe that the absolute “end” would come if we didn’t bail out the existing financial structure that had gotten us in the problem in the first place.  This has proven to be a gigantic mistake.  Hopefully we do not fall for this one again.

The highlight for today (but no surprise) is the fact that there was NO agreement reached this weekend concerning the debt ceiling debate.

We do NOT dispute the idea that there will be possibly strong short term volatility in the markets if an agreement is not reached prior to the U.S. Treasury’s deadline established as Aug. 2nd.  But quite possibly this is the one chance we have at arresting run-away government spending.

We are considering if we may trim our holdings in the market.  We currently have strong gains in Apple, Inc. (AAPL $398.50) and “toe-in” entries on Bank of America (BAC $10.01) and Ford Motor Co. (F $13.17) that are roughly at break-even.

– Story-Stock Investing –

On Friday, we presented the idea that Research in Motion (Ticker: RIMM $26.62) may be setting up for a bounce and a possible opportunity to make some money.  We said in our Executive Summary that we would wait and see.  Today, the company announced the magnitude of their 1st job cuts since 2002.  The stock did NOT respond well to the news.  Developments in the stock price today are telling us that fear still remains that RIMM’s business is diminishing fast and that the increase in employment cuts is a signal by the company that “right-sizing” their enterprise to the new realities for RIMM in the market place – up against Apple’s i-Phone as well as  Android based phones – is going to require more than is currently clear.  Ultimately, the question that investors face is this – “What are future earnings going to look like?”.  We know that RIMM is still selling a lot of Blackberry’s and that their Tablet PC is in a growth market – if if they didn’t hit it dead-on with a brilliant product.

We are going to continue to monitor RIMM for an entry.  Right now – at least for today and probably this week (with the uncertainties from Washington mixed in) – we are going to keep our “powder dry”.   At some point, we believe that the market will have over-reacted to RIMM’s real troubles and forgotten to factor in that the company still makes a lot of money.  It doesn’t do us any good however to get in too early and get run-over by investors who are still heading to the exits.  Technical analysis helps us see when the stampede may end and define a good entry.  Right now we are going to keenly observe how the shares handle the 6/20 52 week low of $25.82.  The stock stopped falling on 6/20 at $25.82 and has been trying to find its way since. We want to see if this “line in the sand” is going to hold.

We are also watchful of Bank of Ireland shares (IRE $1.54).  To many investor’s surprise the bank again avoided a complete government takeover by attracting outside investors at the end of this last week.  If the stock can quiet down and build a base here, we may get on board.  Click here for a good article covering developments at the Bank of Ireland.

Here is a chart of Bank of Ireland (IRE), reflecting today’s action.

• 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.
  
• Please click here to send us your feedback.  Let us know how we

Categories: Archives, Daily Updates
Tags:

Comments are closed.