– The Stock Market Companion –

15Minute Market Update

March 9, 2012

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

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-Executive Summary-

     

  • Today the markets bounced a bit more, closing HIGHER.  Last Wednesday’s gap-up DOWNSIDE REVERSAL that we identified as such that day, remains the pivot point.  S&P 500 (+.36%), DOW (+0.11%), NASDAQ (+.60%)

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  • Market Overview =  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 the market pulled-back very strongly on Tuesday, it has recovered well.  So far, the uptrend is very much in tact. 

  • We purchased a “toe-in” holding in shares in Eight by Eight (EGHT $4.65) today at $4.67.  On Jan 18th, the company reported +0.04/share in earnings and a +30.9% increase in year over year revenue growth.  This company is another real small one … only $100 million in revenue annually.  Here’s their website link = http://www.8×8.com/ The company offers innovative – cloud based -telephone services to businesses, revamped its sales force, and is offering cloud computing services.  We aren’t too overly excited about this one, but wanted to remain faithful to the fact that the stock has been building a nice lateral consolidation after presenting strong earnings on Jan. 18th.  The push higher above recent highs has us on board with a small holding.

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  • In our Today’s Highlights section, we cover today’s Non-Farm Payroll Report, Unemployment rate, and yesterday’s jobless claims.  Labor conditions are improving in America.  See below.

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  • We posted 3 SMC Successful Investing Videos on Linked-In (LNKD $90.33) this morning in an SMC Intra-Day Alert.  The shares moved very favorably yesterday and are quiet today.  We do NOT have any trouble imagining these shares possibly really moving higher in the weeks AHEAD of the Facebook initial public offering (IPO).  

  • We are adding Linked-In (LNKD) to our SMC Watchlist.  Please notice that LNKD had its IPO last year in May.  We are demonstrating how we have WAITED for price discovery and several quarterly earnings releases before getting overly excited about the stock. 

  • Yahoo! Finance offered a good interview with Energy Investor T. Boone Pickens.  We include the text below.  It is an excellent, brief read.  He reminds us, just as we have repeatedly mentioned here at Stock Market Companion, that 2/3 of our trade deficit is due exclusively to our purchases of OIL.  We have spent $1 trillion over the last 10 years for crude.  That’s enormous – and the countries receiving all that money are … how can we say this politely…?  … Not always are friends. 

  • Is it time for you to build a home-based business? … Stock Market Companion serves a wide spectrum of investor enthusiasts –  CEO’s, former CEO’s, business owners, financial professionals, students, retirees, workers, farmers, teachers, home-makers, lawyers, doctors … and others find real value here at Stock Market Companion!  Homeschool and Charter School families are using our work to learn global and business finance and successful investing.  We are looking for entrepreneurial-minded friends who would like to benefit strongly financially by building their own businesses to promote the Stock Market Companion 15Minute Market Update Program.  Call us at 360 695 6985 for details.
     

  • Stock Market Companion received this excellent review from CathyDuffyReviews.com as a teaching tool. Summary quote = “The Stock Market Companion is a great tool for parents and children to work together to learn about global and business finance, the stock market, and the characteristics of excellent companies and eventually develop their own investment portfolios.”  We would like to extend a very special “Thank You!” to Cathy Duffy at CathyDuffyReviews.  She is a curriculum specialist, and has been providing families in the U.S. and internationally with extensive curriculum reviews and encouragement for decades (since 1984!) through her reviews, articles, books, and speaking engagements.  www.CathyDuffyReviews.com

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  • Special “Thank You!” to SMC Member Chad.  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.

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  • 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!  Please feel free to contact us at 360-695-6985 or email support@stockmarketcompanion.com for a special, significant discount code to give them.

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  • We introduce a NEW Feature to the SMC 15Minute Update Program = Advanced Investor Opportunities … Please see below for details.

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  • Please click here to send us your feedback.  Let us know how we are doing – We are here to serve you. Support@Stockmarketcompanion.com

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– Stock Market Companion – Current Holdings –

Nr. Co. Ticker Action Entry Date Current Gain (Loss)
1 Mitek, Inc. MITK Holding 1/12/2012 +44%
2 ZAGG, Inc. ZAGG Holding 2/28/2012 -10%
3 Eight by Eight EGHT Purchased Today
 3/9/2012 +/-0%

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 –

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 +
1 2/29/2012 -1.3% Proshares Ultrashort
SP 500 or QQQ		 SDS or QID Capture short term retracement in
the market.		 A stop just below today’s low. 5%-15% 6:1 It may take more than one attempt
to see this robust rally finally pullback.
2 3/7/2012 +/- 0% Vermillion VRML WAIT for break above 3/6 highs for entry ($2.95) With 12 Million shares outstanding, this company could possibly really run on news that its OVA1 test becomes a standard.

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 1,370.87 Index UP
DOW-30 12,922.02 Index UP
NASDAQ 2,968.34 Index UP

 

– Market Trends –

 

Trend

SP-500

DJ-30

NASDAQ
Short Term DOWN/Flat DOWN/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 –


On Wednesday, we identified what market participants are wrestling with.  On the one hand are recent negative inputs from China and Europe, on the other are the underlying favorable undercurrents in the U.S. economy.  In summary and as a refresh from Wednesday –  The markets are weighing these two NEGATIVE inputs from Tuesday –

  1. China has reduced its growth forecast for 2012, to +7.5%.  This is its lowest growth target since 2004.
  2. Europe’s Purchasing Manager’s Index came in at 49.3 for February – Revised down from last month’s estimates.

with these underlying FAVORABLE conditions for equity investments (stocks) –

  • Interest rates are extremely low and the Federal Reserve is purposing to keep them low for an extended period of time.
  • Corporate earnings are strong at American corporations
  • Stock prices are relatively low, compared to earnings growth percentages
  • The economy in the U.S. is improving, but could be wounded in the case of a sudden crisis in Europe.

Today – we had further data released in the U.S. that validated the current positive orientation of the markets.  Non-Farm Payrolls as reported by the Department of Labor INCREASED +227,000 jobs for February.  That’s very good news.   The national unemployment rate is calculated to be approx. +8.3% – this remained unchanged compared to January’s figure.

Please click here for the Non-Farm Payroll Report directly from the Department of Labor.

Yesterday’s favorable initial jobless benefits claims report was also a continued step in the right direction.  The equities markets (stocks) perked up and found a solid footing on this news.

The market profited however most from the news that the Greek sovereign bond swap was proceeding as planned.  We wrote this in today’s SMC Intra-Day Alert – “Today, the “re-financing” of Greek debt (largest in history), appears to be moving forward favorably for the euro-zone.  For private bond-holders, the -84% loss in value in their investment is NOT favorable – but better than losing -100% of their money as they have in other sovereign defaults like Brazil, Mexico, and countless others.”


– S.I.M.P.L.E. Stock Investing Method tm –

– (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?)

 

Yesterday the shares of Linked-In, Corp. (LNKD $90.33) began to pick-up interest and triggered our attention.  The company reported favorable earnings on February 9th, but the shares are pretty expensive based on these earnings.  The shares are selling for approx. 187 times earnings, if we take last quarter’s results and annualize them.  On the other hand, it may be that Linked-In shares develop a “must-own” character at mutual funds with Linked-In operating within the epicenter of the social media explosion.  It may be also that Linked-In will move strongly higher in anticipation of the Facebook IPO to come this year.

We prepared three videos for your review, each 5 minutes in length.  We cover the technical, fundamental (in this case, earnings), and S.I.M.P.L.E. investing perspectives –

SMC Video 1

SMC Video 2

SMC Video 3

Remember, Google too started at approx. $100/share and rose above $700.  Their earnings however were stronger than Linked-In’s.  If however, it is PERCEIVED (and later validated or invalidated) that Linked-In is increasing earnings – due to their ability to expand revenue from their platform, then the shares could really move HIGHER.


Here is the text from a good interview with Boone Pickens, concerning oil, oil prices, our trade deficit due to our purchases of oil… (courtesy of Finance.Yahoo)

As one of the best known and longest serving oil and gas industry executives in the country, Boone Pickens has pretty much seen it all in his 60 year career, except for one thing; a national energy policy.

“The U.S. is the only country in the world that doesn’t have an energy plan,” the 83 year old says in the attached video, despite the fact that we use over 20% of the world’s oil.

Of course, public ire over high gasoline prices has galvanized political attention, and Pickens is once again embarking on a public crusade to reduce the country’s dependence on foreign oil, this time by supporting the NAT GAS Act, a bill that is designed to incentivize the use of natural gas in the nation’s truck fleet and that is gaining bipartisan support in Washington.

As much as the country is aware of the problem and wants to fix it, we never seem to do it; and President after President has tried to no avail. But Pickens is relentless and rattles off statistic after statistic to bolster the chance of passage. He points out that 70% of the oil used every day in the U.S. goes to transportation fuel, while 2/3 of our trade deficit is spent purchasing foreign oil.

“We’ve bought over $1 trillion dollars of OPEC oil in the last 10 years,” he says, “At $100 a barrel, it’s going to cost $2.2 trillion for the next 10 years so we’re absolute fools if we don’t get on our own resources.”

As much as our domestic supply of natural gas is “abundant, cheaper and cleaner” than oil, its price is wallowing at a 10 year low and Pickens doesn’t expect that to change anytime soon. And while the increased use of a drilling technique called hydraulic fracturing, or fracking, has raised environmental concerns, Pickens believes the technology is safe, proven, and will be able to overcome current concerns.

“I saw my first frack job in 1953 at Border, Texas. I’ve fracked over 3000 wells personally and have never had a problem with a frack job,” Pickens says, while referencing 800,000 wells that have already been drilled in the Ogallala acqufier – the nation’s largest – without incident.

Interestingly, as much as high gasoline prices support his effort, he’s quick to point out that they’re “not Obama’s fault,” but rather the result of limited global supply and growing global demand; particularly from China, who he predicts will match U.S. consumption in the next decade.

In the meantime, he’s imploring Americans to “get yourself educated” about oil alternatives and to shed the belief that we’ll always have cheap gasoline.

– Benchmarks “At a Glance” –

 

US Dollar

1.3114 USD = 1 Euro

USD / EUR

Dollar = Flat

Gold

$1,711.70

Ounce

Gold = Down some more

Oil

$107.39

Barrel (West Texas Crude)

Oil = Up a little

30 Yr. Fixed Mortgage

3.91%

Percent

Flat

10 Yr. Bond Yield

2.04%

Percent

Flat

1 Yr. CD

1.00

Percent

Flat

–Data Source : Financial Visualizations Inc.

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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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