– Stock Market Companion – Current Holdings –

Nr.	Co.	Ticker	Action	Entry Date	Current Gain (Loss)
1	Gentiva Health	GTIV	Holding	11/15/2011	+12%

 

– 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.)

(AS of 15:00 EST on Wednesday, December 7, 2011)

Market	Price (Today’s Close)	Unit of Measure	Today’s Direction
SP-500	1,243.72	Index	FLAT = +2.42 points
DOW-30	12,107.74	Index	FLAT = +4.16 points
NASDAQ	2,577.97	Index	Down = -25.76 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 –

There are three significant events that we would like to bring to your attention today –

 

• Oracle, Inc. (ORCL $25.36) put a large dent into the tech stock marketplace today with very disappointing quarterly earnings offered up yesterday after the close.  Until last nights earnings release, Oracle has had not only an aura of strong business performance – but REAL results.  This is what makes last nights revelation about current and upcoming earnings expectations for the company hard to swallow for tech investors.  For the last seven quarters, Oracle has put in double digit revenue growth (year over year comparisons by quarter).  That all apparently came to a screeching halt this last quarter with a comparatively paltry +1.9% growth over the revenue from Q2 in 2010.  As we write this, Oracle’s share price is sitting at approx. $25.72.  At the end of October the shares were sitting boldly at $33.66.  That’s a -23.4% change in shareholder value in a short period of time! So what happened over at Oracle?  Have they been too busy celebrating the demise of their arch-nemesis of recent years Hewlett-Packard, Co. and taking their eye off the ball?  Oracle’s explanation can be summed up as “Lengthening sales-cycles and deal approval processes” (according to BMO Capital Mkts.).  Here’s are a few of our thoughts at SMC -Because the earnings miss is across all product lines, we are seeing this as an advanced signal that the first quarter of 2012 is not going to be particularly good for tech stocks (broadly speaking)Oracle is not a good buy here.  Lower share prices are perhaps around the corner as they work hard to address what really happened.Oracle is an excellent company, but their management is going to have to work hard to turn things around. 

• European banks are reported to be gobbling up the European Central Bank cheap loans in order to raise cash for next year’s bond payment obligations.  If the U.S. Federal Reserve hadn’t coordinated this plan several weeks ago, there may have really been BIG trouble in Europe by now.  This does not give us a warm and fuzzy feeling about the markets. Here is a good Bloomberg article on this development.
  
• The National Association of Realtor’s released their existing home sales data for November.  The numbers are grim, but do show that sales are still higher than in November 2010.
  

– Story-Stock Investing –

Oracle’s earnings miss casts a long shadow in the tech space – particularly for enterprise software related firms – Hewlett Packard, SAP, VM Ware, …etc…   These stocks are all looking sickly – and not just based on today’s Oracle induced response by selling shareholders.  We’ve talked about this (above) and there simply isn’t much to add to the conversation.  Business in that sector is simply turning out to be much weaker than expected and share prices are adjusting accordingly.

As a side-note, just over a week ago I couldn’t help but notice how negative IBM’s shares were responding to the market after recently hitting new highs.   When stock of companies pullback aggressively from new highs and plunge hard, it’s good to take notice and ask yourself if you have shares of related companies in your portfolio that may need to be trimmed away.  We didn’t have any such investments in place, so for us it was simply an observation.

That being said, there are some company shares that are acting quite strongly “divergent” to today’s negative market.  Ford Motor Co. (F $10.60) and Boeing, Co. (BA $73.48) are looking quite good.  Boeing would be our favorite in terms of technical, chart characteristics in addition to recent news about very robust sales of their commercial aircraft.  We’re going to give this market another bit of time before we engage it however, unless Boeing begins demanding action now – which it may.  We would keep that one on a wide anchor and give it room to find its way higher.  Business is good for Boeing.

Here are the details behind today’s National Board of Realtor’s data on existing home sales for November. Here are some take-aways from this report that are important:

• Appraisals that don’t meet the desired sales price is still a big problem.  33% of realtors reported contract failures due to this and other problems.
• The fixed rate 30 year mortgage hit a record low of 3.99% in November.
• Existing home sales hit a 10 moth high and are 34% above the 2010 low-point, but the median home sales price is -3.5% lower than last November (2010).
• Distressed home sales were +29% of all sales vs. +33% a year ago.
• Median existing home price in the USA = $164,200.
• Median existing home price in the Northeast =$240,200
• Median existing home price in the Midwest = $133,400
• Median existing home price in the South = $143,300
• Median existing home price in the West = $195,300
• Median existing condo price in the USA = $164,400 (a slight increase over a year ago.)
• Current inventory of existing homes represents a 7 month supply at current sales rates.
• There are 2.58 million existing homes for sale now (inventory) vs. 4.04 million homes for sale in 2007.  This is a -36% reduction in inventory.  This is good.  At some point inventory supply will boost demand for new homes and give employment a nudge higher.
• Investors purchased +19% of all existing home sales in November, which is the same number as a year ago.
• All cash sales were +28% of all existing home sales in November, almost the same as the year before.

– Benchmarks “At a Glance” –

 

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