• DOWN! The markets begin to respond negatively to the stand-off in Washington.  See below for perspectives.
• See our answer to subscriber-friend email about possible opportunities next week… below.
• We SOLD our Apple, Inc. shares at $393.75/share and immediately issued an SMC Intra-Day Alert, securing our approx. 24.5% returns.  See below.
• The Federal Reserve issued its Beige Book of economic activity today.  This too contributed to weakness in the market.  Automotive sales were soft – which put pressure on automotive manufacturer shares – like Ford – today.  We take a quick look at Ford … see below.  A more detailed SMC Special Report on Ford Motor Co. is on the drawing board and coming soon.
• SMC Watchlist stocks such as “ONTY”, “EGHT”, and “OCZ” have pulled back sharply in price – demonstrating why we do not “run-after” stocks.  Many stocks – small, medium, and large cap – have begun pulling back, demonstrating a reduced appetite for risk by market participants.
• Don’t forget – we are testing our Monday / Wednesday / Friday schedule for the 15Minute Market Update through the end of August.   Webinars are coming in August. So far the feedback we have received = “Great idea”.
• 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 –

Nr.	Co.	Ticker	Action	Entry Date	Current Gain (Loss)
1	Apple, Inc.	AAPL	Sold Today	6/20/2011	+24.5% (Final)
2	Bank of America	BAC	Holding	7/20/2011	-2.6%
4	Ford Motor Co.	F	Holding	7/21/2011	-7%

– 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	1,304.89	Index	Down = -27.05 points
DOW-30	12,302.55	Index	Down = -198.75 points
NASDAQ	2,764.79	Index	Down = -75.17 points

– Market Trends –

Trend	SP-500	DJ-30	NASDAQ
Short Term	Flat/Down	Flat/Down	Flat/Down
Intermediate	Flat	Flat	Flat
Long Term	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 –

There is a lot going on in the markets right now.  For perspective, the U.S. equity markets turned higher on March 6, 2009 after the worst financial crisis in U.S. history since the great depression took equity values down -54% (S&P 500).  Fast-forward 2 years and 4 months and the S&P 500 has recovered +83.5% of its value value.  The peak in October 2007 for the S&P 500 was approx. 1,514.  Today the S&P 500 rests at 1,305.  For those more familiar with the DOW, the DOW 30 peaked at approx. 14,105 in October 2007 and is now 12,303.  Here’s something interesting – the S&P 500 is still (12 years later) at levels achieved in 1999, BELOW 2000 highs.  The DOW currently rests +800 points ABOVE its 1999 / 2000 highs.

The 2 year 4 month long recovery in market values has not been based simply on a bounce from over-sold conditions.  No, no, no.  With the exception of financial service companies and a few automotive companies (NOT Ford), corporations have seen their share prices reflate because they have focused on improving their businesses and underlying EARNINGS.  Sure the market is influenced by geo-political events (current debt-ceiling debate / possible U.S. default on debt obligations), tragedies (9/11/2001), natural disasters (tsunami / Japan), supply disturbances (1970’s oil disruptions), and U.S. monetary policy – BUT the market is mostly focused on EARNINGS at corporations and return on investment.  As a rule of thumb, equities markets are looking 6 months ahead, with market participants asking themselves questions like these – “Six months from now  …”

• will earnings be improving at U.S. corporations?”
• will the economy be growing or receding?”
• will monetary policy be accommodative (is the Federal Reserve offering funds to financial institutions at a low rate?)?”
• will capital gains taxes be higher?  Will corporate taxes be higher or lower?”
• …etc…

– Story-Stock Investing –

Apple, Inc. (AAPL $392.59) shares were not able to hold their +$400 level achieved yesterday, reversing lower this morning on strong volume.  When the shares were not able to recover this afternoon, we decided to be pro-active and take our approx. +24% profits.  We sent out this SMC Intra-Day Alert –

Dear Subscriber-Friend –

Our recent 1+ month investment in Apple, Inc. (AAPL $394) has yielded strong returns = approx. +24.5%.  We are taking our profits here – in FULL anticipation of buying them back again – and perhaps at a discount to today’s price.  Today’s price action, the given price chart pattern, our desire to be prudent about capturing strong profits, and uncertainty about the debt ceiling debate outcome is motivating us to this action.

We sold our shares here at $393.75.

We will write more today in our 15Minute Market Update.  We will also cover Ford Motor Co. in detail.

For your protection and our own, we would like to remind everyone that this is not an investment recommendation for any particular individual.  We cannot possibly know the risk tolerance and investment suitability of such investments for any particular subscriber. Successful investors know their own objectives, purposes, and risks associated with any investment – whether in stocks, real estate or other investments.  Each investor is on their own.

We are simply reporting the SMC actions in the market place.

Your – Stock Market Companion

For now, our entry in Apple, Inc. shares on 6/20/2011 at $316 and yesterday’s close at $403.41 represents what we at Stock Market Companion call a “pair of bookends”.  For the reasons we identified in our SMC Intra-Day Alert, we believe it is prudent to take our profits after such a strong run in such a short period of time.

Apple shares could pull-back strongly, at least test the recent approx. $360/share break-out and still be in a healthy uptrend.  There is no need to give up such good profits, when the shares have gone up so strongly in such a short period of time and we stand before such an uncertain event.  We still see Apple shares moving higher at some point from here, but some “backing and filling” is only natural – and healthy for the stock.  We can now watch from the sidelines – with our profit secured – how the shares handle this upcoming conclusion to the debt-ceiling debacle.  O.K.

Yesterday, on Monday night Ford posted earnings that were excellent, but the market has responded negatively to the results.  We don’t like it one bit, BUT we are going to stick this one out.  Based on the last 4 quarters of earnings (including Monday’s), Ford is selling at a price earnings ratio (P/E) of 6.0.    That’s CHEAP for such an excellent company.  The company has earned $2.05/share over the last 4 quarters.  We are adjusting our current stop and putting it down at $10.00!  We are simply NOT interested in selling the shares.  The company is doing everything right.  We have a SMC Special Report for Ford on the drawing board that is not yet complete which highlights the reason for our position.  If we had more money at stake on this one we would take some off, but we have simply a “toe-in” on this one.  On extreme weakness we will – in all likelihood add more.  Stay tuned.

It’s helpful to group stocks in our minds.  Here are some categories that we work from here at Stock Market Companion –

Stocks that grow from $1- $5/share. (Current example … “LVLT”)

Stocks that grow from $5 – $15/share. (Current example = “ZAGG”)

Stocks that grow from $15 – 45/share. (Possibly Ford (F)… but … the stock has been underperforming…)

Stocks that grow from $45 … higher. (Current example “NFLX” or “CAT”)

 

Here is an email question that we received today that we would like to answer here …

Hi Eric,

I hope all is well.  I have a question.

In light of the Dept Ceiling debate and the deadline next week. Do you think there might be some opportunities/trades/purchases that you can anticipate next week?

… “Matt”.

 

Hi Matt – Great question…

There may be an opportunity … If this market were to drop a quick thousand or more points – I would like to purchase shares in AAPL, Ford, CAT, AMZN, BAC, WFC, ZAGG … BUT I would WAIT for the market to “catch itself”.

But we don’t know what to expect. These are simply unchartered waters. We have trimmed our holdings to simply two “toe-in” holdings – Ford and BAC.

…

Yours – Eric.

Here 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.

• 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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