– Stock Market Companion – Current Holdings –

Nr.	Co.	Ticker	Action	Entry Date	Current Gain (Loss)
1	Gentiva Health	GTIV	Holding	11/15/2011	+15%
2	Boeing, Co.	BA	Holding	12/22/2011	-1%
3	DEX-One Corp.	DEXO	Holding	12/29/2011	+15%
4	Alcoa, Inc.	AA	Holding	1/3/2012	+2%

– 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	1,277.30	Index	Flat = +.24 points
DOW-30	12,418.42	Index	UP = +21.04 points
NASDAQ	2,648.36	Index	Flat = -0.36 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 see a bigger, easy to read chart on a separate browser tab window).

 

 

– Today’s Highlights –

These three points are significant today –

 

1. Europe is quite possibly moving forward with a ban on importing Iranian oil.  This may cause Iran to finally take action – either towards the negotiating table or something more drastic.  Oil prices moved sharply higher today.  Here is a good Businessweek article from today describing what is taking place. 

2. Factory order data for November was released today, helping us see IMPROVEMENTS in the manufacturing economy.  Durable goods orders increased +3.7% – led primarily by non-defense aircraft orders (read: Boeing).  Excluding aircraft, non-defense capital goods orders FELL -1.2%. (Information courtesy of Briefing.com) 

3. Automotive sales for December showed nice increases and CONFIRMED the best year of sales for US domestic automotive manufacturers since 2008.  Shares of GM and Ford moved higher today on release of their respective automotive sales numbers.  Here are some of our conclusions-

• • • Yes, US automotive sales were excellent in 2011, but investing in US automotive manufacturers in 2011 was a difficult proposition.  Shares in Ford Motor Co. (F) peaked on January 27th at $18.79 and finally hit bottom at the beginning of October (where we repurchased our shares in the low $10’s) at $9.37.  That’s a -50% drop in value for the shares.  Although we were able to recover some of our losses in Ford by picking up the shares at the market bottom in October,  overall at SMC we lost approx. -1.9% on our investment in Ford last year.
    • Ford has done and continues to do a great job.  They have a clear plan going forward and their forecasts for this 2012 year for the US automotive industry is a robust +11.5%.  Over the last several months, the Ford share price has firmed up and at $11.30/share, this may be an excellent time to purchase Ford shares.  The technical nature of the Ford chart looks good here.
    • It appears to us the Ford has probably no longer much of an edge with the broad consumer market in the US due to its “no government help” successes.  In 2009 through April 2010 our SMC investment in Ford paid off a whopping +90% as we combined our understanding of Fords improved earnings, recovery in the automotive sector, and the story behind Ford not taking bail-out money from the government.  If we hadn’t taken our profits along the way in 2010, our overall returns would not have been over +90%, they would have been +41% based on today’s closing price.Today we note that Ford’s sales are good, but the improvements unfortunately came in the SUV and pick-up segments.  There car business was lightly down in sales.  Sure, Ford makes a lot of money on SUV’s and trucks, but it would be excellent if Ford also increased sales in the sedan market.Here’s a good summary article on U.S. automotive sales, from Businessweek today.  

    •  

 

– Story-Stock Investing –

 

SMC holding Dex-One Corporation (DEXO  $1.92) surged higher again today, putting a nice distance behind our buy-point of $1.667.  Friends, this is a very speculative stock – which is why it sells now for a little less than $2/share.  Our overall returns on this investment at the moment is  +15%.  We purchased our shares and immediately sent an SMC Intra-Day Alert on the morning of December 29th.  We have been teaching about this stock since early December – talking about the turn of events that we saw in the company’s earnings and 2012 forecasts reported on November 3rd, and pointing to the recent significantly  improved technical nature of the share price (although from a bird’s eye view the share price destruction still looks like a terrible train wreck).

Dex-One Corporation makes its money from selling print ads in their yellow-page books and from their online ad revenue from their “Dex Knows” products.  Everyone knows that print-ad revenue is diminishing with more and more businesses directing money toward much more targeted internet advertising.  However – DEXO has an online presence and has made strong efforts to clean up their balance sheet this last year AND print-ad revenue may be shrinking, but it is still sizable.  If DEXO is able to successfully carve out a market niche in the local marketing environment – achieving revenue from both print and internet advertising – AND IF they have “right-sized” their operations to match their revenue forecasts and growth opportunities, the share price has a real chance of chugging higher from here.

It’s not unusual for the stock market to gravely punish the stock of a company that is perceived as a “has-been”, only to find out that the company has re-created itself in the mean time and has turned a losing business into a profitable one with a future.  Ford Motor Co. was in this position in 2009, Crocs Shoes (CROX) was in this position in 2010 – bottoming out at a $1/share in 2009 and then inching higher, climbing back and forth up to $31 in August of 2011.  McDonald’s too was selling for a little over $12/share in March of 2003 and just poked above $100/share as it has re-created itself.  Starbucks was at $8 something a share back in 2008 and now is back above $46.

Let’s consider Croc’s Shoes because it is a much smaller company and – in terms of niche marketing – is more similar to DEXO.   With Croc’s,  I personally enjoyed segments in the run for the shares from $16 – $70 in 2006 to 2007, but did not return to that story in the 2010 time frame – I was focused more on Ford, Simple-Tec, Arena Pharmaceuticals, YRC Worldwide, and others that brought SMC subscribers excellent stories and understandings about how the markets work and big returns.  With Crocs, it was astonishing to watch the stock drop from approx. $72/share all the way down to $1/share in a little more than a year’s time.  I knew that Crocs had a new CEO and that they were able to re-negotiate their line of credits (even when the credit market was tight), but I stayed away nonetheless.

Other stocks like Eastman Kodak (EK) have now entered the sub $1 range and may never recover this side of a bankruptcy filing.  Notice that with DEXO, we were uninterested in the investment until AFTER the company announced a strong forecast for free cash flow next year AND we saw accumulation taking place in the shares.  The DEXO shares are still not out of the woods yet either.  It will be clearer on this one IF the stock clears $2.55 / share on volume.

Material processing and supply stocks like U.S. Steel (Ticker: X $28.44) and SMC Holding Alcoa (AA $9.45) performed well today.  Improvements in manufacturing numbers and reasonably strong forecasts for the automotive industry like Ford stated today may mean brighter skies ahead for such companies.  We bought shares in Alcoa (AA) yesterday at approx. $9.24/share and sent out an SMC Intra-Day Alert.  Today, shares in AA opened lower than our buy-point at $9.13 and picked up steam throughout the day.

Apple, Inc. also has our attention today as the shares push above our $408-$412 area of resistance on news that the Apple 4S i-phone will soon launch in China and is already available in approx. 90 other countries.  We may get back on board this one tomorrow.

Today, we are trying a new technology for us at SMC and hope that you like it.   We want to give you a more in-depth understanding of our investment in Alcoa and have made this video. If you click on the “Play” icon and then immediately right click on the chart and select “Show All”, you should see a nice, clear  screen image of our chart* and be able to listen to our short SMC info-presentation.  Be sure to turn on your computer speakers and adjust the volume to make it comfortable.  You can use your right-click commands to replay or end the playing and move on.

*Chart courtesy of Worden Brothers.  Screen capture software courtesy of TechSmith.

– Benchmarks “At a Glance” –

 

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