– Stock Market Companion – Current Holdings –

Nr.	Co.	Ticker	Action	Entry Date	Current Gain (Loss)
1	Boeing, Co.	BA	Holding	12/22/2011	+/-0%
2	DEX-One Corp.	DEXO	Holding	12/29/2011	+35%
3	Alcoa, Inc.	AA	Holding	1/3/2012	+/- 0%
4	Dendreon, Inc.	DNDN	Holding	1/11/2012	-3%
5	Mitek, Inc.	MITK	Holding	1/12/2012	+8%

– 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	1,289.09	Index	Down = -6.41 points
DOW-30	12,422.06	Index	Down = -48.96 points
NASDAQ	2,710.76	Index	Down = -14.03 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 –

Two major events are shaping the markets today –

Major Event #1 =

Standard and Poor’s downgraded Frances credit rating by One Notch to AA.  That’s it.  C’est tout!

We think that the best article representing the different implications of this MAJOR event are covered here, by the AP.  Click here for the article.

From an investors standpoint, our first question has to be – “Is the market already factoring this news into its current price?”  Our SMC answer is – to a far reaching degree, “YES.”  This is why the markets did NOT fall off a cliff today on this news.  We think that bond rating adjustments on the 1st world welfare states like France, help give politicians ammunition to make important policy changes.  They have an excuse to tell their electorate why certain social programs are being adjusted.  Bond ratings changes help them find a balance that has been sorely lacking over the past decade.

Remember however that the markets often need a few days to finally decide which direction they are going to go, in response to such foundational issues.

Major Event #2 =

JP Morgan-Chase (JPM $35.90) Q4 earnings report – which includes an excellent summary of results from 2011 and a look ahead.

Friends, as investors in America we have an incredible benefit to be able to look in at the inner-workings of a world class bank.  We learn so much from seeing what they are seeing.  Sure, they don’t report everything, but they report enough that we can all learn tremendously.  If you or your children or your grand children have an interest in investing, finance, or economics it doesn’t get much better than to review the 4th quarter earnings report from arguably America’s strongest, publicly traded bank.

And it doesn’t take long to absorb the highlights and to be informed.

Here is your link to this excellent report, directly from the JP Morgan-Chase Investor Relations Department. Give it a glance when / if you can this weekend.  Here are the highlights from the report and Jamie Dimon’s (JPM – CEO) comments from their earnings conference call today –

JPMORGAN CHASE REPORTS FOURTH-QUARTER 2011 NET INCOME OF $3.7 BILLION, OR $0.90 PER SHARE, ON REVENUE1 OF $22.2 BILLION

FULL-YEAR 2011 RECORD NET INCOME OF $19.0 BILLION, OR $4.48 PER SHARE, ON REVENUE1 OF $99.8 BILLION

 

JPMORGAN CHASE SUPPORTED CONSUMERS, BUSINESSES AND COMMUNITIES –

 Provided $252 billion of credit to consumers in 2011

 Provided new credit cards to 8.5 million people in 2011

 Originated over 765,000 mortgages in 2011

 Offered over 1.2 million mortgage modifications and completed 452,000 since 2009

 Supported businesses

 Provided $545 billion of credit to businesses in 2011, up 28%, including

– $257 billion for Investment Bank clients, up 29%

– $106 billion for Commercial Banking clients, up 18%

– $65 billion for Treasury & Securities Services clients, up 14%

– $100 billion for Asset Management clients, up 48%

– $17 billion to U.S. small businesses, up 52%

 Raised $1.0 trillion of capital for clients in 2011, up 23%

 Supported our communities

 $68 billion of capital raised for and credit provided to over 1,200 nonprofit and

government entities, including states, municipalities, hospitals and universities in 2011

 Donated $275 million to nonprofits in our communities worldwide in 2011

 Hired 3,000 U.S. military veterans in 2011

INVESTED IN THE FIRM’S FUTURE

 Consumer & Business Banking opened 260 new branches, added 3,800 salespeople in 2011

 Global Corporate Bank expanded to 250 bankers, covering 3,500 corporate clients around

the world

 Opened more than 20 new offices outside the U.S. over the last two years

 Asset Management added 160 private bank client advisors in 2011

 Added more than 17,000 jobs in the U.S. in 2011

Now the press in the USA has its own agenda.  Some may not like it, but this data clearly shows that banking and lending in America is STRONG.   The bold type highlights in the above notes are ours.

 

 

– Story-Stock Investing –

Earlier this week we sent out two video’s describing the unfolding situation at Eastman Kodak, Co. (EK $0.53).  At the time, EK shares were pressing UP to approx. $0.85/share.  We thought that if the shares pressed ABOVE $0.85/share, that it may be reasonable for risk tolerant investors to take a look at a possible investment.  The shares NEVER BROKE $0.85/share to the upside this week, and the shares have since folded back down to $0.53/share.  That’s a -37% loss for anyone poking around at the shares in the low $0.80’s and holding them into today’s close.

SMC members avoided that heartache, while having a reference for what was taking place.  We don’t want to miss opportunities.  Right now however, the excitement around EK’s shares has diminished considerably.  There are currently NO CLUES as to what will happen next for the shares.  For us, that spells NO OPPORTUNITY for the moment.  That is NOT to say that something dramatic can’t be announced by EK, resulting in the shares lifting to $2 or more, but that kind of speculative investing is not our cup of tea.  We need a good reason to put money to work in the markets.

Our investments this week in Mitek Corp. (MITK), Alcoa (AA), and Dendreon (DNDN) hopefully are well timed and positioned.  We’ll see.  Alcoa and Dendreon are both still approx. where we purchased them.  Mitek continued higher on the day we made our purchase and is now +8.4% higher into today’s close.  The chart pattern looks good.

Retail stocks have for the most part been very weak following a rather unexciting – and to some retailers a disappointing –  Christmas retail season.  One of the stocks that have been clobbered recently is Sears Holding Co. (Ticker: SHLD  $30.99).  SHLD shares closed at $82.47 on October 27th and today closed at $30.99.  That’s an approx. -63% haircut in a 2.5 months.  The last three days has seen Mr. Eddie Lambert – the KEY SHLD director – purchasing $136.5 million and then another $5.5 million worth of stock on the open market.  This has our attention.  Sears Holding Co. operates Kmart stores as well as Sears. Nothing particularly good going on there, however this type of open market purchasing gets our attention (and others too).

– Benchmarks “At a Glance” –

 

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