– Stock Market Companion – Current Holdings –

Nr.	Co.	Ticker	Action	Entry Date	Current Gain (Loss)
1	Gentiva Health	GTIV	Holding	11/15/2011	+/- 0%

 

– 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	1,246.96	Index	UP = +51.77 points
DOW-30	12,045.68	Index	UP = +490.05 points
NASDAQ	2,620.34	Index	UP = +104.83 points

 

 

– Market Trends –

 

Trend	SP-500	DJ-30	NASDAQ
Short Term	*Flat/UP*	*Flat/UP*	*Flat/UP*
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’s move in the market was absolutely significant.  Unquestionably, today’s move forced out a lot of short sellers (short sellers are those who have borrowed money to sell shares in the hope of buying them back at a lower price for a profit) this resulted in the large gap-up in prices.

This is the markets third UP day – and today had the feel of a “blow-off” top – but it isn’t one (because the S&P 500 is simply moving up strongly out of the lower half of a consolidation in a confirmed up-trend).  We don’t expect this market to move much further without some sellers emerging challenge further moves.  The emotion that we felt in the market today can be largely attributed to short-sellers scrambling out of the way.  OK.

What we want to determine is if this is the right time to re-engage the markets by buying the shares of companies that have a good story behind them.

So let’s think about that.  Today’s intervention by the US Federal Reserve, the Bank of Canada, Bank of England, Bank of Japan, Swiss National Bank, and the European Central Bank IS DIFFERENT than the stimulus that we had back at the end of August in 2010, with the advent of Quantitative Easing II.  Today’s intervention does not really stimulate, it provides liquidity to thirsty victim who is drowning in debt.  If this sounds like a paradox, that’s good.  It’s meant to.

So the significance of today’s move comes from the idea that the intervention may keep Europe from heading into a recession and dragging the rest of the world with it.  The EXPECTATION that today’s intervention may do that job (keep Europe from heading into a recession) may be important enough to put a firm bottom under this market, at least through Christmas – which will result in the Christmas rally that some have been hoping for.  No one can make any further predictions than that.  The underlying problems are still there in Europe, and here in the U.S. we have also to deal with our runaway deficit spending that runs hot and cold in the press spotlight.

Helping the markets today also was the convergence of this GOOD NEWS about the US economy –

• Chicago area Purchasing Managers Index increased unexpectedly for November (stopping the slide toward a contraction).  New orders were their strongest since April.  Stocks that we like related to this news includes Alcoa, Inc. (AA $10.02) and Ford Motor Co. (F $10.56).
• US pending home sales for October shot HIGHER by +10.4%
• ADP Employment Report – showed that private payrolls increased 205,000.

– Story-Stock Investing –

 

Today’s strength in the market revealed some very strong moves by companies who have posted excellent earnings or news recently, but whose share prices have been volatile lately (but within a reasonable range) with the market.  Let’s talk about these –

Remember – Boeing (BA $68.69) received its largest order EVER over the last 3 weeks.  The shares have shot higher today to the highs of its recent range.  It wouldn’t be unreasonable for an investor to take a position here, but be willing to give the stock a full -10% scope to eventually find its way higher.  We know that the company is expanding capacity to meet very strong demand for its commercial aircraft.  One opposing argument is that we don’t know how possible future US defense spending cuts may eventually impact earnings negatively.

How about Deere and Co.’s (DE $79.25) impressive earnings from a week ago?  The company’s stock looks good here.

We’ve repeatedly talked about how much we like Home Depot’s Mr. Frank Blake as CEO (HD $39.22) – the stock hit a 52 week high this morning and then pulled back throughout the day, much like impressive earnings announcer Nike (NKE $96.18) did.  For Home Depot, this is impressive stock performance considering how miserable the US housing market is.  A clear break higher may get us interested.

We have mentioned on previous occasions how Home Depot has been able to expand margins and improve their net profit, while their retail sales have been relatively stagnant.  Hat’s off to Mr. Blake.

SMC small-cap holding Gentiva Health (small-cap = market capitalization between 300 million and 2 billion; where market capitalization is easily calculated by multiplying today’s share price by the number of shares outstanding in the company) moved higher today, but then quieted down – WITHOUT breaking out and staying above the important $6.20 level.  The chart still looks nicely constructive.

We cannot finish today’s report without talking a little bit about US Banks – specifically – the big ones like Bank of America (BAC), Wells Fargo (WFC), JP Morgan Chase (JPM)… et al.  Up until today, they looked terrible.  Today the world changed.  Bank of New York (BK $19.46) looks particularly constructive.  It wasn’t so long ago – maybe 4 – 6 weeks ago that a well known banking analyst gave BK a thumbs-up, calling it an “easy doubler” from where it was at the time (which was approximately $1/share higher than today’s close).  We know that the banks are deep in a higher regulatory environment and profits have been getting squeezed, but the shares may all be oversold.

Here are two sub-$10 stocks that have our attention due to their powerful moves today –

• Leap Wireless (think: Cricket prepay phone plans) = LEAP $9.07 .  We’re adding this one to our SMC Watchlist.
• Zoltek (Manufactures carbon-fiber composites used in products like Wind Turbines) = ZOLT $8.21.  Zoltec received an upgrade today after reporting yesterday significant improvements in sales revenue for last quarter.  The company has lost money for two years running, but may be now on the mend.  At its peak in 2007, the shares were selling above $45/share.  Here’s a useful link to yesterday’s earnings summary.  It’s a quick 1 page read.  This one has our attention and will be added to our SMC Watchlist.

 

 

– Benchmarks “At a Glance” –

 

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