• The markets were able to shake-off some weakness today and put in a positive performance.  See below for the highlights.
• DOW (+.70%); S&P500 (+.63%); NASDAQ (+.34%)
• Market Overview = The market is in a confirmed uptrend since the October 4th pivot point that we identified and rests momentarily ABOVE the broad lateral consolidation that defined the markets for several months.  This upper lateral line represents strong support. (Assessment unchanged from Friday).  See today’s SMC S&P 500 (ETF) chart, below.
• Greece and Italy are both in the cross-hairs of the global press.  Justifiably so.
• Europeans want “cross-party” commitment in Greece.  Europeans have good reason to be concerned.
• Italy’s bond yields are ramping higher as its bonds become harder to sell on the markets. Not too good.
• An exit strategy for a Greek Prime Minister.  See below.
• We summarize our recent and current ideas and provide a status below.
• We have received a few questions recently about “stops”.  We will address these this week.
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• Here is a video interview of a father and son using the Stock Market Companion successfully together – as a teaching and investing tool.
  

– 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 –

The market responded very favorably off the October 4th bottom because of real data that showed that the U.S. – for the moment – is NOT in a recession and not for certain heading into one immediately.  That was it and it was explosive.  Why?  Because many individual stocks had been shredded in value over 7.5 months.  Many stocks were down -60% to -80% of their values in that period of time.

Additionally, whenever there has been a plausible reason to think that European leaders would solve the immediate sovereign debt crisis, the US equities (stock) markets have responded like a spring that has been finally given permission to unwind a bit.

OK.

Corporate earnings have supported the thesis that the U.S. markets are still strong enough for efficient and well-run corporations to make good money in this low growth environment.  They have validated that we are in a very low growth period in history.  Low growth is still NOT recessionary and there is room for hope.

Then came the moment of moments.  European leaders were finally pressured by weak markets and shrinking credit liquidity to overcome their weak knees and finally meet the problem of Greek debt levels head-on.  Countries from around the world were pressuring Europeans to address this crisis.  They met in Brussels and finally got some work done.  The markets exploded higher again with renewed hope that European banks would not topple like dominoes due to over-exposure to Greek bonds that have become toxic.

Fine.  A deal was laid out for the markets to ponder on October 26th and 27th.  At SMC we reported that we had come away with the understanding that a lot of detail would need to be filled-in, but that it was a meaningful “first-step”.   That was the last Thursday in the month of October.   By that following Monday, the market was again in a state of panic as the Prime Minister of Greece decided that he needed a popular vote – through a referendum – to decide whether to press ahead with the agreement hammered out in Brussels.  This pre-condition had not been revealed in the press, other European and world-wide leaders were completely surprised, and the markets tanked.

Now, a week later the situation in Greece is again – “clear as mud”.  Today we read that the Greek Prime Minister survived a no-confidence vote, so that he can resign, and a new unity government can be formed that is willing to accept the proposal negotiated in Brussels.  It all sounds ridiculous.

If you were Prime Minister of a nation like Greece, and –

• from a family line of political leadership
• you were accustomed to broad appeal by your countrymen
• you found yourself in over your head on an issue that may have very long lasting, negative consequences for your country
• you didn’t really like the agreement arrived upon in Brussels
• you didn’t want to be the remembered as the person “at the switch” when a decision would be reached for your country that may have far reaching negative consequences, or at least represents near term financial pain for your fellow citizens

Then maybe you would be trying to find a way out, just like Mr. George Papandreou appears to be doing.  In this light, the events in Greece have certain rhyme to them – although they are nonetheless chaotic.

The global equities markets don’t like it.

Here’s the latest, decent article on what is happening today in Greece.

• 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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