– The Stock Market Companion –

15Minute Market Update

November 21, 2011

—— Stock Market Investing since the 1980’s ——

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-Executive Summary-

  • DOWN.  Fear increased significantly today.
  • DOW (-2.11%); S&P500 (-1.86%); NASDAQ (-1.92%)
  • Market Overview = Today marked another distribution day.  This is the 7th one for the SPY (S&P 500 ETF) since the beginning of this rally.  The market is in a confirmed uptrend since the October 4th pivot point that we identified at its inception and profited from.   Normally, four such distribution days within a defined uptrend, within 3 or 4 weeks would normally mark the end to the rally, BUT the rally was so strong that the market can pull-back like this and maintain a positive posture.  Strong corporate earnings help.  A -50% retracement of the move from October 4th through October 27th, is still lower than today’s close.  Buyers may step in at that point.  The market is now firmly within the zone of the lateral consolidation established from August – October.   Click here for today’s SMC S&P 500 (ETF) chart.
  • Catalyst behind today’s move … See below.
  • Don’t miss our table of our stock investing ideas, below.  Some may lead to transformational returns, when the time is right.
  • We shared a lot about Stop Orders in our Successful Investing Quiz #7.  Please click here for this fun and informative 5 question (multiple choice answer) quiz designed to teach about limiting our risk when investing by understanding and setting stops.  (Scroll-down to the bottom of the page for Quiz #7)
  • S&P 500 down approx. -5% for the year.  The S&P 500 ETF “SPY” closed December 31st 2010 at $125.75 and today closed at $119.66.  This represents a -4.8% result for the year so far.
  • 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 Gentiva Health GTIV Holding 11/15/2011 +1%

GTIV, below $6.20 and above $5.10 we believe is in a buying range.  If the market falls off the planet some time soon due to a credit freeze-up in Europe, GTIV will sink too.  On this as well as all our other ideas, please see our disclaimer below.

– 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 1,192.98 Index DOWN = -22.67 points
DOW-30 11,547.31 Index DOWN = -248.85 points
NASDAQ 2,523.14 Index DOWN = -49.36 points

– Market Trends –

Trend

SP-500

DJ-30

NASDAQ
Short Term Down Down 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 –

Today, selling in equities picked-up in earnest.  At one point, the Dow Jones Industrial Average (DOW) was DOWN approx. 305 points.  Beginning at 2 PM, the market did find a few buyers, but really only enough to bring it up off the lows of the day.

At Stock Market Companion, when we are reviewing the markets or an individual stock we want to quickly “drill-down” to the key catalysts that are driving a directional move.  Today’s catalyst is easy to find – its label is “debt” and heavily indebted, first world, welfare states.

What we have been considering here at Stock Market Companion is this –

In Europe, after Greece’s public referendum snafu and subsequent reshuffling in top political leadership in Greece and later – Italy, there simply appears to be a complete lack of credibility that debt issues will be resolved.  There doesn’t appear to be any political leader available with the clout to quiet the markets and bring hope.  Without credible political leadership and a plan that investors can count on, things are probably going get worse.

We exited the markets on November 9th.  (We have re-established a focused position in Gentiva Health – Ticker: GTIV)  We exited the markets for three reasons –

  1. Greece’s abrupt reversal, when they had a plan in hand.  This signaled perhaps the beginning phases of the reconfiguration of the European Mo
  2. Italy’s bond yields began to exceed 7%, which was the same triggering level for catastrophe in Ireland and Portugal.
  3. General Motors surprise us with a near term outlook during their quarterly earnings report that identified DETERIORATING MARKET CONDITIONS.

Our exit on November 9th has thankfully proven to be prudent.  We locked in our approx. +10.1% gain on Ford, +4.8% gain on US Steel, and our modest lost of -1% on Alcoa.  On October 25th, we exited Freeport McMoran (the world’s largest copper miner) with at +21.8% gain.  These investments were all made in the context of a confirmed rally that we identified on October 4th.

In the USA, as of today we now have what would appear to be a continuation of the political drama that began in June concerning the debt ceiling negotiations.  We sure know that the markets had a rough time this past summer during the drama.  The super-committee that was designed to come up with a 1+ trillion deficit reduction plan over 10 years has so far failed to perform.

Today we read in this news post (Fox News) this astonishing idea –

In the USA, over the next ten years the budget predicts expenditures of approximately $44 trillion.  Over the same period of time, what our U.S. Congress is having difficulty doing is finding a way to cut $1.2 trillion.  Friends, it is unimaginable why savings of a significant magnitude cannot be found in such a huge budget.  It is unimaginable, until we remind ourselves that we are talking about politicians who are afraid of not being re-elected if they step on someone’s toes.

At Stock Market Companion, we believe that the budget deficit has become an issue of highest national security.  If we cannot show leadership and determination to curb our expenditures and our debt levels, then we can absolutely count on China, North Korea, Iran, or some other country to test our resolve on other issues of strategic, far reaching importance.

Market participants are responding to this uncertainty about debt reduction in the US and in Europe with predictable behavior.  They are moving liquid assets (cash) into U.S. Treasuries.  Briefing.com reported today that the demand for the U.S. dollar was the strongest that it has been in 20 months.  The price of gold fell hard.  Why?  Global investors want liquid investments that they can move in and out of at a moments notice.  Paradoxically, the U.S. dollar continues to serve this purpose.

 

 

– Story-Stock Investing –

 

Here are a few of the important investment stories that we are considering at Stock Market Companion.   This is the type of thinking and ideas and investments that we like to make which has made us a lot of money over the years in stocks.   We want to teach others to consider thinking similarly and SEE opportunities in the markets as they emerge.

We will expand on this list over the next weeks and be including it on our new MEMBERS ONLY resource area on our redesigned website to come – hopefully SOON.  We have many more ideas to include in this list, but we ran out of time today…  Please notice that we are not RUNNING after these stocks in this current dismal market environment.  We are however very attentive AND prepared to move in particular instances like GTIV, even when the background market is momentarily gloomy.

Number
(Not Prioritized)		 Idea / Concept Company Involved / Investment Opportunity
1 Domination by Apple of the iPad, iPhone and very strong earnings that have
not yet perhaps been fully realized in the share price.		 Apple, Inc. (AAPL).  Strategy – buy on strength above $408/$410 or on extreme weakness.
2 Continuous market share expansion of the iMac due to the cross-selling opportunities and excitement generated across product lines Apple, Inc. (AAPL).  Strategy – buy on strength above $408/$410 or on extreme weakness.
3 Cloud computing adoption and the importance of solid-state hard disk drives OCZ Technology Group (OCZ).  Strategy – buy on strength above $8.70 or on extreme weakness.
4 Oversold condition of U.S. Steel Corp.  Earnings misunderstood. US Steel (X).  Perhaps buy on weakness or strength above $27.
5 Deeply oversold condition of Gentiva Health; Management of all kinds have been strong buyers of shares at $3.90 – $4.60 (approx.) on the open market. Gentiva Health (GTIV).  Entry last week at $5.85.
6 Emergence of Nokia as a player in the smart phone market or as an established, profitable niche player in other phone markets – DUE to the determination of Mr. Elop (new CEO) to restructure the company.  Leadership driver = CEO Mr. Elop. Nokia (NOK).  Perhaps purchase on a move above $6.70 or on extreme weakness.
7 Ability of Home Depot to expand margins in a difficult operating environment.  Leadership driver = CEO Mr. Fred Blake. Home Depot (HD).  Perhaps purchase on a move above $38.50 or on extreme weakness.
8 Adoption of Paypal on the smart phone platform as a real alternative to traditional credit card processes and costs.  eBay owns Paypal. eBay.  Perhaps purchase on a move above $34.80 or on extreme weakness.
9 Baby boomer demand for a more predictable and better outcome than Lasik surgery.  Idea  = There is room for a competing, superior technology / surgical procedure. Staar Surgical (STAA).  Perhaps purchase above $9.56 or on extreme weakness.
10 Eventual, cyclical turn-around in the U.S. automotive industry.  Ford has restructured itself and has a CEO who is a winner (Mr. Mulally) Ford (F).  Perhaps buy on a move above $11 or on extreme weakness.
11 For the first time in over a generation, U.S. airlines are developing pricing power and may be entering a period of profitability. United Airlines (UAL); Hawaiian Airlines (HA)
12 Boeing received its LARGEST ORDER EVER last week for commercial aircraft.  The company is EXPANDING production. Boeing (BA).  Perhaps buy on a move above $68.50 or on extreme weakness.
13 Emergence of a travelling middle class in India.  India has “Priceline.com” equivalent. Make My Trip (MMYT).  Perhaps buy on a move above $33.50 or somewhere lower where it has found a base to push higher from.
14 Significant North American oil production and drilling expansion in shale areas. Various US drillers.
15 Non-invasive melanoma detection device in its infancy. Mela Sciences (MELA).  Perhaps on a purchase above $5.30 or at a predictable entry on weakness.

 

– Benchmarks “At a Glance” –

 

US Dollar

1.3495 USD = 1 Euro

USD / EUR

Dollar = UP

Gold

$1,675.90

Ounce

Gold = Down

Oil

$96.90

Barrel (West Texas Crude)

Oil = Down

30 Yr. Fixed Mortgage

4.04%

Percent

Flat

10 Yr. Bond Yield

1.97%

Percent

Flat

1 Yr. CD

1.16

Percent

Flat

–Data Source : Financial Visualizations Inc.

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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.  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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