• Markets UP today, but not exhibiting the type of performance that we would like to see for the financial sector.
• There were big events today.  Fed Chairman Bernanke, Bank of America, UofM Consumer Sentiment.  See below for our review.
• At SMC we sold BAC, CLWR, and GLL for good profits.  We needed to sell GLL quicker, on strength two days ago.  We are disappointed about that – but we are NOT intending to be such active investors here.  We want to identify changes in trend that lead to excellent returns.   We sent out an SMC Intra-Day Alert.
• Something is NOT quite right at Bank of America.  This could be resolved easily with clear conviction from institutional investors to step up and purchase shares in the bank, following Mr. Buffett’s lead.  But this hasn’t happened – yet.  Additionally, when BAC announced further capital raising by selling a big chunk of their Construction Development Bank of China holdings, the stock still couldn’t hold above $8/share.  We are cautious.  If the shares can move and hold above $8/share, we are interested.
• CEO’s and other senior managers of U.S. corporations are buying shares of their companies on the open market.  Today we learned of the Royal Caribbean Lines (the cruise ship company) CEO purchasing approx. $1.2 million worth of RCL shares at approx. $23/share.  (Courtesy of Briefing.com)
• We purchased shares in Apple, Inc. (AAPL $382) on its move above $380/share and sent out an SMC Intra-Day Alert.  With the overhang on the stock related to Steve Jobs future role at the company out of the way, it MAY BE that investors really push this one higher to reflect its growth rate, cash holdings, market share gains, and ability to eliminate the competition (Hewlett Packard).
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– 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 –

There are 3 defining events / data points that occurred for the markets today –

1. Federal Reserve Chairman Ben Bernanke made his speech today from Jackson Hole, WY where the Federal Reserve Bank of Kansas holds its annual meeting.   There was a lot of focus worldwide on Mr. Bernanke – because there is still an expectation that the Federal Reserve and U.S. monetary policy can impact U.S. economic growth.  In reality, the Federal Reserve has done just about all they can to stimulate the economy through monetary policy.  Nonetheless the market waited, listened, reacted at first negatively, but then market participants caught their breath and began investing in equities (stocks) that have been sold off hard over the past weeks.Importantly, Mr. Bernanke declared the U.S. economy capable of growth and wealth creation AND DID NOT declare any new policy to stimulate the economy from the side of the Federal Reserve.  Our SMC proposition that a “non-event” related to “QE III” (QE III would be the 3rd phase of quantitative easing.  Quantitative easing is a fancy way of defining “extra-ordinary” measures taken by the Federal Reserve to impact the long end of the bond yield curve) would encourage gold speculators to sell has – so far proven inaccurate.  Why?  Because there is still an expectation that QE III will be discussed in September.Click here for a recap of Mr. Bernanke’s speech today.

    

2. The August result of the University of Michigan consumer sentiment survey was released today.  Looking at the consumer expectations part of the results for 6 months ahead, the results were the weakest measured since May 1980.  The current results of 55.7 was the lowest reading since November 2008.Let’s talk a little about these sentiment numbers.  These numbers Do have a near term impact on the market.  However, at their extremes they tend to simply validate either the current gloom or exuberance, whichever is the case.  Often when consumer sentiment is at its worst, equities markets turn higher.  The opposite is also true … Often, when consumer sentiment is at its best, the market peaks.Click here for an overview of today’s UofM consumer sentiment results.

    

    

3. Bank of America (BAC $7.83) announced that they are seeking to sell a significant portion of their stake in the China Construction Bank, in order to raise capital.  The proceeds of such an action may raise $8.5 – $9.0 billion for the bank.  Combine this possible cash infusion and Mr. Warren Buffet’s $5 billion investment this week, and we see that “where there is smoke, there is fire” – meaning that Bank of America is doing what it can to raise capital to meet Basel III lending requirements.  Notice, the bank is trying to do this without selling more common stock – which would dilute common stock values.  We are optimistic that this is a good move and hopeful that institutional investors begin to see the same.  So far they aren’t showing up.
   
   

– Story-Stock Investing –

• 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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