– The Stock Market Companion –

15Minute Market Update

February 17, 2012

—— Stock Market Investing since the 1980’s ——

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-Executive Summary-

  • The broader market and the DOW moved HIGHER today…  The NASDAQ closed lower.  S&P 500 (+0.24%); DOW (+0.36%); NASDAQ (-0.27%).  This is a divergent condition.  Approx. 12% of the NASDAQ’s move is represented by Apple, Inc. shares alone.
  • Market Overview =  On Wednesday, the market exhibited characteristics of a strong reversal day.  Leading stocks like Apple, Inc. (AAPL), Deere (DE), Visa (V) and others staged reversals and closed DOWN for the day – on Wednesday.  These stocks have not recovered their leadership position, but others like Intel Corp., Microsoft, and financials like J.P. Morgan-Chase have taken up the slack – allowing the broader market to move ABOVE the July 2011 highs.  This has the feel of a healthy rotation to it.  This is something we haven’t had in a long time – due to the underlying fear that has accompanied the markets since 2008.  Another way to say this is this – some leading stocks are taking a much needed break, and institutional investors are stepping in to purchase shares in other excellent companies which haven’t traveled quite as far as the recent leaders.  The market is in a confirmed uptrend since the October 4th pivot point that we identified at its inception and profited from. Click here for today’s SMC S&P 500 (ETF SPY) chart.
  • Although there have been exceptions, broadly speaking it hasn’t been particularly rewarding to buy “break-outs” over the past year, but now these conditions may have changed as institutional investors are showing an increased willingness to drive stocks higher.
  • The equities (stock) markets in the U.S. will be closed on Monday in observance of President’s Day.  Your next SMC 15Minute Market Update will be published for you on Wednesday, February 22nd.
  • SMC Holdings Mitek and Ebay have moved strongly HIGHER this week.
  • Another development stage pharmaceutical company, Cell Therapeutics (CTIC $1.35/share) has our attention today after the company received tentative approval by the European equivalent of the FDA Advisory Board for their late stage Non-Hodgskin’s lymphoma drug.  The shares jumped approx. +25% higher today on 24 million shares.  See our S.I.M.P.L.E. Stock Investing section, below.
  • We’ve created 3 short videos for your review concerning CTIC, below.
  • There has been notable weakness in the shares of raw and processed material leaders like Freeport McMoran, U.S. Steel, and Alcoa.  We’d like to see these stabilize and possibly offer us a re-entry in shares of Alcoa (AA).
  • Special “Thank You!” to SMC Member Chad.  Last week, he reported these great results since becoming an SMC member – “I have been using your 15Minute Market Update Program on our Florida Stock Market Simulator and have moved from last place to first place among our 6 groups. Good information.” – Chad. B. Yulee, Fla.  USA.
  • Did you know that SMC members ALWAYS get 1 free month for each new paying member they recommend who joins our 15Minute Stocks Program?  It’s a great way to help friends and gives everyone something new to talk about!  NOW you can call 360-695-6985 or email support@stockmarketcompanion.com for a special, significant discount code to give them.
  • We introduce a NEW Feature to the SMC 15Minute Update Program = Advanced Investor Opportunities … Please see below for details.
  • Please click here to send us your feedback.  Let us know how we are doing – We are here to serve you. Support@Stockmarketcompanion.com

– Stock Market Companion – Current Holdings –

Nr. Co. Ticker Action Entry Date Current Gain (Loss)
1 Mitek, Inc. MITK Holding 1/12/2012 +33%
2 EBAY, Inc. EBAY Holding 2/1/2012 +8%

Neither Mitek or Ebay offer suitable entries for new investors at this time.   They are too far extended above support areas.  With the broader market at a major resistance point (July 2011 highs) AND having traveled so far since the October 4th lows, we are not particularly in favor of initiating purchases without a pause in the market that may provide more advantageous entry prices on good investments.
We cannot and DO NOT provide investment advice to individuals. Please see our disclaimer below.

 

– Stock Market Companion – ADVANCED INVESTOR OPPORTUNITIES –

We will streamline this section with a link to a table in the days ahead.

Our objectives are to teach principles of successful investing and to offer you as many real and excellent investment ideas and opportunities as possible.  When we launched Stock Market Companion in October 2009, we knew that we would eventually be faced with the situation where we had more ideas and more opportunities presenting themselves than we would be able to invest in ourselves.

We want to make sure that we present you excellent opportunities that are unfolding NOW, even when we do not engage them ourselves.  Many of you are already using our SMC Watchlist and monitoring it to see such opportunities unfolding, on your own.  But we don’t want to be confined with just what is in our SMC holdings and in our SMC Watchlist.

A recent, excellent example of this: On 1/13/2012 we presented the idea that Sears Holdings (SHLD) director Mr. Eddie Lampert  purchased approx. $140 million of SHLD shares on the open market between approx. $27.50 and $30 / share.  The stock jumped higher the next day and for us was “overextended” – but the shares roared on another +60% in a few days!  For some SMC members who are more risk tolerant, SHLD may not have appeared overextended and our thoughts on the investment may have kept them from participating or participating more fully.  We want to give ideas and offer valuable insights, but Get out of the Way!

We are introducing this section so that at SMC, we can “get out of the way” and let you decide for yourselves and not influence members so greatly with our own risk-tolerances and objectives at the time.  We WILL point out key characteristics that we think are important to consider, or logical areas to place stops or offer realistic targets based on our over two decades of investing experience, but we will be less inclined to judge these opportunities beyond that.  What we list in this section will be cover many dimensions:

  • Growth stories following our successful S.I.M.P.L.E. investing method
  • Unusual opportunities arising from oversold or overbought conditions
  • Opportunities presenting themselves due to key technical developments in the shares (key support and resistance line engagement, high volume clues…)
  • Stocks that offer excellent dividend yields and measurable risk
  • Covered Call ideas
  • Higher risk but possibly quite unique investment opportunties
  • Excellent mutual funds and ETF ideas (including off-shore)

At this time, we are including this section in the SMC Basic Membership.  Our advisors may determine that these insights should be offered outside of the basic membership for a modest additional fee. That decision is for sometime later.  Let’s proceed …

Nr. Introduction
Date
% Gain or (Loss)
(Introduction)
Co. Ticker Possible Opportunity NOW STOP Level or Other Considerations Possible TARGET REWARD / Risk
Ratio
S.I.M.P.L.E. Notes +

For S.E.C. compliance, here too we must  identify clearly whether we have a position.  We may introduce lightly traded stocks for ideas for you, but we will not be able participate in them.  We will maintain a wide margin of compliance with the S.E.C.
All investments involve RISK.  Please remember, at SMC there is no way that we can match our ideas with the suitability or risk tolerance of each member – We therefore cannot and DO NOT provide investment advice to individuals. Please see our disclaimer below.

 

– 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 1,361.23 Index UP = +3.19 points
DOW-30 12,780.95 Index UP = +45.79 points
NASDAQ 2,951.78 Index Down =-8.07 points

 

– Market Trends –

 

Trend

SP-500

DJ-30

NASDAQ

Short Term *Flat* *Flat* *Down / Flat*
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 –

Yesterday and today, the markets in the USA showed a healthy behavior that we haven’t seen in quite a while.  Here’s what we mean –  On Wednesday, the markets all exhibited downside reversal days = high volume,  downward thrusting move from a lateral consolidation.  Over the past couple of years, this would have meant that the markets would follow through to the south and begin a retracement.

This didn’t happen.  The next day = Thursday, the markets “righted” themselves and pushed Wednesday’s gloomy behavior aside.  This occurred largely because of the excellent economic news that we received from various sources yesterday –

  1. Initial Jobless Claims for the previous week.  On Thursdays, the jobless claims for the previous week are reported.  The number reported on Thursday was 348,000.  This is the lowest jobless claims number since 2008 (4 years ago) and confirms that jobless claims are in a downtrend.  This is good.  It means that companies are shedding fewer jobs.  This means that U.S. corporations and small businesses are making evaluations that their labor forces are in balance with what they are seeing ahead in the economy.  Our last U.S. Non-Farms Payroll Report showed a strong INCREASE in jobs, and drove the top-line unemployment number firmly below 9%.  That’s good news (although we all know that these statistics have their limitations and biases).
  2. New Housing Starts INCREASED to 699,000 in January vs. expectations of 645,000.  That’s good.
  3. Building Permits INCREASED 676,000 in January vs. expectations of 650,000.  That’s good too!

So what we have is very good corporate earnings combined with increasingly favorable economic indicators.  This is providing a nice foundation to the markets that we haven’t had in a while.  Thus our investments in Mitek Systems and Ebay, and our heads-up on Alcatel-Lucent (ALU) are each pushing Strongly higher this week.


– 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?)

 

Today in our Executive Summary, we mentioned that Seattle-based, Cell Therapeutics (CTIC $1.35)  jumped approx. +25% in value as the European Advisory Council for their FDA-like organization recommended the CTIC drug for patients with late stage Non-Hodgkin’s Lymphoma = a terrible and aggressive cancer.

Let’s quickly apply our S.I.M.P.L.E. investing model to this one –  Please click on these three – SHORT – 5 minute Successful Investing Video segments for this useful analysis and to see what we are looking for next!


– Benchmarks “At a Glance” –

 

US Dollar

1.3144 USD = 1 Euro

USD / EUR

Dollar = Down

Gold

$1,725.90

Ounce

Gold = Flat

Oil

$104.06

Barrel (West Texas Crude)

Oil = UP

30 Yr. Fixed Mortgage

3.91%

Percent

Flat

10 Yr. Bond Yield

2.01%

Percent

Flat

1 Yr. CD

1.00

Percent

Flat

Data Source : Financial Visualizations Inc.

Please help us by sending your valuable feedback to – Support@stockmarketcompanion.com

Signing-Off for Today,

Your -Stock Market Companion

 

 

 

** Stock Market Companion Disclaimer **

The Stock Market Companion (SMC) Market Update and Watchlist are published documents to subscribers that show how we (SMC) are viewing the markets and what we are watching, investing in or selling.  This information is for a wide readership and is not intended for any particular individual,  and under no circumstances should this Market Update or Watchlist be considered an investment recommendation or plan for any specific individual.  By accessing this material, you agree that the Stock Market Companion will not be held liable for any actions taken by a subscriber or other parties.  You understand that the Stock Market Companion holds positions in the above mentioned securities.  Based on market related or personal events these positions may change without notice.

Furthermore, the Stock Market Companion, Inc. is a content provider and publisher and not a registered broker-dealer or licensed investment professional.  Our intent is to publish very accurate market information for an audience of subscribers (1000+ subscribers).  By accessing the Stock Market Companion website and/or using the Stock Market Companion products and services such as this Market Update and accompanying Watchlist, you understand and agree that the material provided in the Stock Market Companion products and services is for informational and educational purposes only, and that no mention of a particular security in a Stock Market Companion product or service constitutes a recommendation to buy, sell, or hold that or any other security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.  To the extent any of the information contained in any Stock Market Companion product or service may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.  Before selling or buying any stock or other investment you should consult with a qualified broker or other financial professional to verify pricing information and to solicit advice as to the appropriateness of a given transaction or investment.

  • The markets were AGAIN divergent today, just as yesterday revealing further weakness in the technology sector while the broader market (S&P 500) and the DOW (DJ-30) held POSITIVE.
  • Research in Motion (Ticker: RIMM $27.75) reported earnings last night that were a major disappointment.  We go through the details below.  The company received 2 broker upgrades going into earnings.  The stock then lost -21.45% from yesterday’s close into today.  We go through our steps in handling our brief investment in the stock this last week – AND WHY, below.
  • Crude oil continued to descend today, reflecting a drop in value of the U.S. dollar – BUT also  concern of future demand as the global economy slows down.
  • The S&P 500 is finding support at its 200 day exponential moving average.  If the broader market doesn’t find strength here and begins to sink further, the next near point of support is the low it plumbed during the recent nuclear crisis in Japan.  If it fails that point, then the intermediate term trend will be DOWN.
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