– Stock Market Companion – Current Holdings –

Nr.	Co.	Ticker	Action	Entry Date	Current Gain (Loss)
1	Alcoa, Inc.	AA	SOLD	1/3/2012	+5%
2	Dendreon, Inc.	DNDN	SOLD	1/11/2012	-2%
3	Mitek, Inc.	MITK	Holding	1/12/2012	+29%
4	EBAY, Inc.	EBAY	Holding	2/1/2012	+2%
5	Cree, Inc.	CREE	SOLD	1/18/2012	+18%
6	Apple, Inc.	AAPL	SOLD	1/30/2012	+9%

(Please scroll down to the end of the report to see your favorite benchmarks – Dollar, Oil, Gold … closing prices and daily direction.)

– Market Trends –

*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 –

We ended our last 15Minute Market Update with, “The market is likely to pull-back some soon…?”  Well – Today marks the beginning of the pull-back.

The markets generally do NOT go straight UP, yet many individual stocks have that appearance at this time.  We have been announcing here in your 15Minute Market Update that it was mostly unsuitable to be purchasing stocks at this time without buying on a pullback.

Here is what we know –

• The market was due for a pullback.
• The catalyst for this pullback was the trouble in Europe regarding Greece.  We covered this on previous days and in an SMC Intra-Day Alert early this morning.  See below.
• Some market leading stocks like Apple, Inc., have not yet shown much weakness (so the situation doesn’t YET look too grave, although this could change if Greece does default).
• Corporate earnings are good, but stocks have traveled a long way higher in many cases.  Strong profit taking can set-in.
• The U.S. economy is expanding slowly.
• Many stocks are behaving predictably.  There are some disappointments, like Dendreon (DNDN) however.  It’s come right back in from its excellent breakout.
• The employment situation in the U.S. – although bleak – has improved some.
• Opportunities are continuing to unfold – like Alcatel-Lucent this morning and others like Mitek Systems…etc…
• The banking industry and housing industry is in the early innings of “righting-itself”
• We have followed our S.I.M.P.L.E. investing strategy and engaged the market well at key transition points.
• The Federal Reserve is being very accommodative.

Here is what we don’t know now –

• How far this pull-back will go.  The degree of pull-back that is upon us is mostly aligned with the degree to which Greece and the EU are able to contain and make progress on their problems.  The worse-case scenario is this – Greece decides to remove itself from the European Monetary Union and default on the bonds they have issued.  So far this worse case scenario appears only to be a distant possibility.  There is however a legislative vote to take place in Greece on the latest negotiated austerity package.  Outcome of this vote = “No one knows”.

– S.I.M.P.L.E.  Stock Investingtm –

– (Where each investment begins with a Story and ends with Earnings) –

S.I.M.P.L.E. Stock Investing is built upon these core concepts –

S = Story (What is / are the key catalyst(s) behind the company of interest?)

I = Investor Interest (Is the stock chart showing investor interest = buying or share accumulation?)

M = Market (Is the background market favorable for investing at this time?  Don’t Fight the Market! We know the vast majority of stocks move in the direction of the overall market).

P = Person or Product (Is there a particular person or product that makes the story work for this investment?)

L = Leader (Is the company a leader in its industry group or is its product a leader in its market?)

E = Earnings (Are current quarterly earnings and annual earnings growing?)

We are alert to possible opportunities unfolding at ALU and CLWR.  These are both sub-$5/share stocks and are therefore increasingly speculative.

We transmitted these SMC Intra-Day Alerts –

1. Dear Subscriber-Friend,

Due to the size of our holdings, at SMC we have sold all holdings of Alcoa, Apple, Dendreon, and Cree.  We have sizeable profits in each – with the NOTABLE exception of DNDN.

We will re-consider our portfolio balances into next week.

To avoid any misunderstandings, please remember that we do NOT make any investment recommendations for any individual.  We cannot know the investment suitability and risk tolerance of each member.  Each investor is on their own.  Please see our disclaimer below.

Your – Stock Market Companion

2. Dear Subscriber-Friend,

This morning, shares of Alcatel-Lucent (Ticker: ALU $2.23) are moving higher after the company reported its first annual profit in over 6 years!

Here’s our SMC Successful Investing Video that covers this development.

To avoid any misunderstandings, please remember that we do NOT make any investment recommendations for any individual.  We cannot know the investment suitability and risk tolerance of each member.  Each investor is on their own.  Please see our disclaimer below.

Your – Stock Market Companion

3. Dear Subscriber-Friend,

The markets are behaving as we discussed yesterday = Pull-Back!  We summarized things yesterday with this, “It boils down to this – for “short termers” now may be a good time to book some profits.  For those interested in seeing where this market can go longer term with excellent stocks, it’s probably suitable to keep these stocks in a deep drawer and not over-analyze them.”

The markets have come a long way in 4.5 months.  Profit-taking was DUE.  The catalyst behind today’s profit taking is the trouble in the EU.  This is exactly the problem that Mr. Dimon at J.P. Morgan-Chase identified on his conference call last month.  The Europeans are NOT working together to fix the problem.  Negotiators work in good faith, the Greek government agrees to aggressive cuts, and then the 16 EU finance ministers demand more after the agreement has been created and possibly settled.

Here’s a summary from an AP article that covers it well (written by Pan Pylas) –

Investors breathed a sigh of relief that the agreement would allow Greece to get a euro130 billion ($173 billion) bailout package and avoid a bankruptcy next month that could send shockwaves around the financial markets.

But finance ministers from the other 16 eurozone states threw a spanner in the works late Thursday and insisted that Greece had to save an extra euro325 million ($430 million), pass the cuts through a restive parliament and guarantee in writing that they will be implemented even after planned elections in April.

The renewed hurdles in the way to the avoidance of a Greek default, which could send shockwaves around the global economy, dented sentiment in the markets Friday. Stocks were down through the Asian session into Europe’s, with the benchmark index in Athens 1.6 percent lower by midday local time.

In Europe, the FTSE 100 index of leading British shares was down 0.3 percent at 5,876 while Germany’s DAX fell 0.9 percent to 6,728.

A “spanner” is a term used  to describe a wrench.

We teach at Stock Market Companion that market pull-backs during a defined uptrend, are an excellent opportunity to find shares of companies that are simply quieting down and showing good relative strength in comparison to the broader market.  Company stocks that are in strong uptrends that quiet down and build nice, lateral consolidations offer possible good entries for investments.  Other stocks that re-trace along with the markets and find support at key technical support levels like 50 day moving average in price lines also offer often good entries.

To avoid any misunderstandings, please remember that we do NOT make any investment recommendations for any individual.  We cannot know the investment suitability and risk tolerance of each member.  Each investor is on their own.  Please see our disclaimer below.

Your – Stock Market Companion

– Benchmarks “At a Glance” –