– The Stock Market Companion –
15Minute Market Update
August 24, 2011
—— Stock Market Investing since the 1980’s ——
Published all Market Days
Monthly Subscription $29.95
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-Executive Summary-
- UP! The momentary condition in the market has shifted from fear to a willingness to purchase shares in beaten down companies. See below.
- Gold = Down. On the night before last, gold reached an all-time high of approx. $1,919.00/ounce. Yesterday at SMC, we shorted the metal using the ProShares Ultra-Short Gold ETF (GLL) – sending out an SMC Intra-Day Alert. Gold has since experienced two strong days of selling. After the close today, the CME announced increases in margin requirements for gold futures! This should make for a very interesting few days to come. See below. In after-hours trading the GLL is priced at $17.29/share. That’s a +10.9% advance on our investment in a short period of time.
- At SMC, we sent out SMC Alerts for our gold short, MEMC (WFR), and Bank of America (BAC $6.99) purchases – yesterday and today. See Below.
- Steve Jobs, CEO of Apple, Inc. (AAPL $376.18) resigned as CEO after the close today. We wish him well and thank him for his brilliant efforts at Apple, Inc. which re-defined excellence in product development and implementation and brought us and many others very significant earnings – beginning with the iMac in the 1990’s. Click here for his brief resignation note to the Apple Board of Directors and Apple Community.
- Don’t forget – we are testing our Monday / Wednesday / Friday schedule for the 15Minute Market Update through the end of August. So far the feedback we have received = “Great – We like the idea of webinars +”.
- Please click here to send us your feedback. Let us know how we are doing – We are here to serve you. Support@Stockmarketcompanion.com
– Stock Market Companion – Current Holdings –
| Nr. | Co. | Ticker | Action | Entry Date | Current Gain (Loss) |
| 1 | Clearwire, Corp. | CLWR | Holding | 8/17/2011 | +47.7% |
| 2 | ProShares Ultra-Short Gold | GLL | Purchased Yesterday | 8/23/2011 | +8.8% |
| 3 | Bank of America | BAC | Purchased Today | 8/24/2011 | +1.9% |
| 4 | MEMC | WFR | Purchased Yesterday | 8/23/2011 | -1.2% |
If the above “Current Holdings” table is empty it means that we are not holding ANY stocks at this time and that we are therefore 100% in cash.
– 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 | 1,177.60 | Index | UP = +15.25 points |
| DOW-30 | 11,320.71 | Index | UP = +143.95 points |
| NASDAQ | 2,467.69 | Index | UP = +21.63 points |
– Market Trends –
Trend |
SP-500 |
DJ-30 |
NASDAQ |
| Short Term | *UP* | *UP* | *UP* |
| Intermediate | Down/Bounce | Down/Bounce | Down/Bounce |
| 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) –
Please click on the chart to view it in a larger size.
– Today’s Highlights –
O.K. As successful individual stock investors, we uncover and follow clues that give us ideas about what may happen next to the economy at large and at specific companies of interest. Here are a few items recently that caused our hand to reach for the throttle on shorting gold (with the leveraged 2x Ultra-Short “GLL”), and buying Bank of America shares this morning on a move above $8.86/share –
- Yesterday, the Federal Deposit Insurance Corporation (FDIC) reported in a press release format that FDIC insured institutions (read “banks”) were experiencing improvement in ‘aggregate’ profit and – importantly, that the number of banks on their “problem list”declined for the first time since 2006.Here’s a link to yesterday’s FDIC Press Release – It’s excellent reading material for those who would like to learn more about the metrics of banking.SMC subscriber friends who have been with us over a year remember that it was the FDIC quarterly report presented last year at the end of August, that on page 5 announced that banks were needing to withhold LESS for loan losses, which gave us a good signal to re-engage the markets.Banks are entering an era of high regulation AND retail banking, in the absence of strong fee revenue generated by each physical bank location, is going to be completely different in the years ahead. So future earnings potential of banks will be significantly different than in the recent past. Nonetheless, we see a compelling reason to BUY Bank of America shares here with a “$6” in the number.
- On August 10th, banking analyst Meredith Whitney (now famous for calling Citibank a $4/share stock when it was trading in the mid $20’s back in 2008) said that the current selling in Bank of America was beginning to feel like that of the irrational selling in 2009 and that banks should be selling at tangible book value – “Not at -50% of book value (courtesy of Briefing.com). The subsequent bounce however didn’t “feel” quite right – as the background market also was very stressed, so we stayed clear. Fast forward 14 days and today is a new day, with Meredith Whitney again re-assuring investors that Bank of America is probably NOT going to have to aggressively raise capital. Yesterday’s FDIC report, today’s favorable nod from Whitney, AND very high volume in the shares traded this morning gave us the signal to buy Bank of America shares.
- As gold has moved higher, it has moved into the realm of high degree of parabolic distance to it’s “mean” – which in this case is well represented simply by the 50 day moving average of price. A “reset” to the mean is not out of the question. A trip back to its mean would represent a -10% pull-back in the price. Fine. But when should such an investment be made? Remember – an old market adage is the that the market can stay irrational longer than an investor can remain solvent!What had kept us “out” of the investment until yesterday, was the shear unpredictability of how far the price of gold would EXTEND outside of its mean. This extension is a function of fear in the marketplace. The higher the level of fear, the greater is the desire for people to protect a portion of their assets with gold – no matter what the price.The defining moment for us came from the FDIC press release yesterday AND the personal realization that the much talked about “QE III” may NOT be a foregone conclusion. Recall, the recent Federal Reserve Bank decision to make a statement that rates (federal funds rate) will stay at these unusually low levels was NOT a unanimous decision by the Federal Reserve BOARD. There may have been up to 3 dissenters. When we began to combine in our minds the results of the FDIC quarterly report (and subsequent quieting of fear levels) and the modest reduction in the number of banks on their “troubled list”, the fact that the market DID NOT crater on rather terrible new home sale information for July, the unsustainable vertical move higher in the price of gold and the fact that everyone has been talking about gold as of late – provided us with the reason to take a position.At this point, we would also like to THANK our “banker” subscriber-friend who prompted us regarding the idea in our email box. We are glad also to have been able to discuss the possibilities at length some time ago and identify our investment vehicle of choice = the “GLL”.Like a bad comedy, the Chicago Mercantile Exchange JUST NOW in the after hours has INCREASED its margin requirements for gold futures contracts by approx. +50%. This is exactly the scenario that silver investors experienced at the beginning of May, which worked so well in our favor. The new rates for gold will be effective on the close of business tomorrow. More selling of gold may be at hand.
SMC Intra-Day Alert Announcments for GLL, BAC, and WFR –
Dear Subscriber-Friend –
At Stock Market Companion, we are targeting a purchase of Bank of America, Corp. (BAC $6.78) shares on a move above $6.86/share.
At 2009 finance-crisis price levels, BAC shares have attracted strong buying volume this morning AND –
1. The FDIC reported yesterday that banking conditions are improving – modestly. We would have been buyers of BAC yesterday on this news, but the financial sector did not respond with much enthusiasm to the FDIC news – at the time.
2. June FHFZ Housing Price Index firmed UP a bit (data released this morning)
3. July new home sales information from yesterday was atrocious, BUT inventories are being well managed and the equities market refused to sell lower on the dismal news. When equities fail to sell lower on bad news, it is a clue that higher equity prices may be ahead.
4. Over the last weeks, BAC has been under intense scrutiny and management may come out the better for it – they have nowhere to hide.
5. The BAC shares are selling at a possible very strong discount to book value – as long as the bank does NOT need to raise additional capital to meet Basel III lending requirements.
6. Durable goods order (think cars, airplanes, and home appliances…) data released today for July was not a complete disaster. The headline number of +4% is great, but doesn’t tell the whole story. There is a 100 airplane order by American Airlines for Boeing aircraft that distorts the data significantly. (At Stock Market Companion, we like it that a U.S. airline company chose American products. Friends, we need jobs in this country.)
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
Dear Subscriber-Friend –
We have re-established our 15% holding in MEMC Materials (WFR $6.81) this afternoon EST at $6.88 with a stop at $5.50.
More tomorrow.
Dear Subscriber-Friend –
Over the last 8 weeks or so we mentioned the possibilities of shorting gold when the time is right. Each time, we have identified our investment vehicle of choice = ProShares Ultra-Short Gold ETF (Ticker: “GLL” $15.78), and have mentioned the dangers involved. Many investors have stepped in front of gold, anticipating a strong pull-back and have been “run-over” by the “gold” bus.
Today may mark a significant change in the dynamics in the overall market and in gold as the FDIC reported that the number of threatened banks in the U.S. has diminished modestly – for the first time since 2006 – and that the loan business is improving…
At SMC, we are willing to purchase a 10% holding in GLL this afternoon (EST) at $15.58/share and place our stop down at around $14.50.
On this upcoming Friday (August 26th) Federal Reserve Board Chairman, Ben Bernanke is going to speak at an Federal Reserve Bank of Kansas Annual Forum in Jackson Hole, WY. Many around the world are very interested in this upcoming speech relative to a possibility of “QE III” being mentioned. This will impact the price of gold. No mention of QE III may result in a pull-back in gold prices.
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
– Benchmarks “At a Glance” –
US Dollar |
1.4415 USD = 1 Euro |
USD / EUR |
Dollar = Flat |
Gold |
$1,757.30 |
Ounce |
Gold = Down |
Oil |
$85.25 |
Barrel (West Texas Crude) |
Oil = Bouncing a bit higher |
30 Yr. Fixed Mortgage |
4.33% |
Percent |
Down |
10 Yr. Bond Yield |
2.3 |
Percent |
Up some.
|
1 Yr. CD |
1.16 |
Percent |
Flat |
Data Source : Financial Visualizations Inc.
Please help us by sending your valuable feedback to – Support@stockmarketcompanion.com
Signing-Off for Today,
Your -Stock Market Companion
** Stock Market Companion Disclaimer **
The Stock Market Companion (SMC) Market Update and Watchlist are published documents to subscribers that show how we (SMC) are viewing the markets and what we are watching, investing in or selling today. This information is for a wide readership and is not intended for any particular individual, and under no circumstances should this Market Update or Watchlist be considered an investment recommendation or plan for any specific individual. By accessing this material, you agree that the Stock Market Companion will not be held liable for any actions taken by a subscriber or other parties. You understand that the Stock Market Companion holds positions in the above mentioned securities. Based on market related or personal events these positions may change without notice.
Furthermore, the Stock Market Companion, Inc. is a content provider and publisher and not a registered broker-dealer or licensed investment professional. Our intent is to publish very accurate market information for an audience of subscribers (1000+ subscribers). By accessing the Stock Market Companion website and/or using the Stock Market Companion products and services such as this Market Update and accompanying Watchlist, you understand and agree that the material provided in the Stock Market Companion products and services is for informational and educational purposes only, and that no mention of a particular security in a Stock Market Companion product or service constitutes a recommendation to buy, sell, or hold that or any other security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. To the extent any of the information contained in any Stock Market Companion product or service may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Before selling or buying any stock or other investment you should consult with a qualified broker or other financial professional to verify pricing information and to solicit advice as to the appropriateness of a given transaction or investment.
- 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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