– The Stock Market Companion –
15Minute Market Update
March 19, 2012
—— Stock Market Investing since the 1980’s ——
Published 3 Days / Week
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-Executive Summary-
- Today the markets were again positive = S&P 500 (+.40%), DOW (+0.05%), NASDAQ (+.75%)
- 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. So far, the uptrend is very much in tact.
- Larger perspective … We repeat from last week … The DOW has pressed above 13,000. This marks a very significant move in the market. We have adjusted our trend table, below. The market does not yet appear in any way exhausted, although pull-backs are always a possibility. In the November time frame we thought about the 10 year or so bond rally that has taken place as now finished. We are perhaps moving into a period of extended favor for equities (stocks). Interest rates have nowhere to go but UP, which will pressure bond prices lower.
- Today, Apple, Inc. announced their plans for a dividend AND a share repurchase program. We do the math below to show you what this means. In summary, the dividend works out to be a +1.8% annual yield, based on today’s $601/share stock price. The share re-purchase program is less significant. See our Today’s Highlights Section, below.
- We cover briefly the metrics of a share repurchase program that can impact the underlying share price of a company significantly, below.
- Today, UBS gave the shares of U.S. Steel a $47/share target. The shares surged HIGHER. We talked about STEEL Companies on Friday and would like to make sure that you see this information … From Friday …” we have some signs of a possible opportunity unfolding in the steel industry. We made 2 SMC Successful Investing Videos to highlight what we are seeing. The first video provides background information, and the second video provides more detail. Here are the links = Video 1; Video 2″
- 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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– Stock Market Companion – Current Holdings –
| Nr. | Co. | Ticker | Action | Entry Date | Current Gain (Loss) |
| 1 | Mitek, Inc. | MITK | Holding | 1/12/2012 | +39% |
| 2 | ZAGG, Inc. | ZAGG | “Toe-In” Holding | 2/28/2012 | -10% |
| 3 | Eight by Eight | EGHT | “Toe-In” Holding |
3/9/2012 | -17% |
| 4 | EBAY | EBAY | HOLDING | 3/14/2012 | +2% |
|
5 |
Ford Motor Co. | F | Holding | 3/15/2012 |
-3% |
– Stock Market Companion – ADVANCED INVESTOR OPPORTUNITIES –
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 | -6% | 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 | No longer currently an opportunity for entry. There was profit on the second and third day after this announcement of +4% ; that profit would have only be available for nimble investors. |
| 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. |
– 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 | 1,394.28 | Index | Flat |
| DOW-30 | 13,194.1 | Index | Flat |
| NASDAQ | 3,040.73 | Index | Flat / UP |
– Market Trends –
Trend |
SP-500 |
DJ-30 |
NASDAQ |
| Short Term | UP | UP | UP |
| Intermediate | Flat/UP | Flat/UP | Flat/UP |
| 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 –
Today, the broader market is taking its cues from Apple, Inc. (AAPL $601), financial stocks, and the U.S. dollar.
Apple, Inc. shares pressed a bit higher on GOOD news about their planned quarterly dividend to be initiated at the end of this year. Financial stocks pressed a bit higher due to last weeks favorable news regarding the Federal Reserve’s stress test, and the U.S. dollar came down in value as the euro picked-up a bit of steam. The pull-back in the U.S. dollar allowed raw material stocks and processors like U.S. Steel (X $31.64) to move higher. In the case of U.S. Steel, the company received a VERY STRONG upgrade by UBS and a target of $47/share! Last Friday, we talked about steel companies catching investor enthusiasm as investors STEPPED-UP to purchase shares in Steel Dynamics, Inc. (STLD $15.49) – even though the company MISSED on earnings expectations.
When companies announce earnings that are not – at first glance – very favorable, and investors buy the shares … that is often a good sign for possible share price increases ahead, as long as the background market remains favorable.
Let’s talk a bit about Apple, Inc. –
Apple announced that it would begin issuing a QUARTERLY Dividend of $2.65/share, beginning in the fourth quarter of this year. Here’s how to calculate the yield or return on that dividend based on today’s share price –
Multiply the $2.65 x 4 = Annual dividend payout = $10.65/share.
Divide the annual dividend payout by today’s share price x100 = Dividend yield = $10.65 / $601 x100 = 1.8%.
Apple, Inc. also announced a $10 billion stock repurchase plan. Let’s calculate here how significant that announcement is in terms of the number of shares that they will repurchase vs. the number of total shares outstanding for the company.
First, how many shares will Apple be able to repurchase with $10 billion? = $10 billion / $601 (today’s share price) = 16.64 million shares.
Second, how many shares are currently outstanding (# of shares outstanding is the total number of shares of stock that the company has issued) = 932 million shares (approximately).
Third, percentage-wise – how many significant is the share repurchase plan = 16.64/932 *100 = 1.8% of the number of shares outstanding will be repurchased. That’s not a very significant impact on the number of shares outstanding.
In summary – Apple will begin paying a dividend at the end of this year and it will amount to an approx. 1.8% dividend yield. If you are only getting 1% on a CD at the bank, then Apple’s dividend yield is certainly attractive – but you are also always at risk that the stock will go down in value. Apple’s decision to re-purchase $10 billion worth of shares is not particularly significant, due to the current price of the shares.
When would a re-purchase plan be significant? Re-purchase plans that impact over 10% of the total shares outstanding can really have a positive impact on the underlying share price of the company’s shares. A good example of this occurred approx. 2 years ago with Texas Instruments’ repurchase plan that we highlighted at that time. The shares ran from approx. $25/share to $35/share over several months (approx. +50%), AFTER the news was released.
Also – When a company that has a large percentage of shares that are sold short announces a share repurchase program, then too the shares can really shoot higher in value as investors who have been betting against the company begin to cover their positions
– 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?)
Here again are those videos from Friday’s 15Minute Market Update, where we identify possibly opportunities unfolding at steel companies …
We’ve proceeded to make two SMC Successful Investing Videos to cover what may be unfolding in the steel industry, possible opportunities in the steel or other raw material processors, and how to identify such opportunities yourself in the future. Please click on the video links, below.
Successful Investing Video 1 (Background)
Successful Investing Video 2 (Possible Opportunity)
We mentioned that U.S. Steel received a broker upgrade to $47/share. Based on today’s closing price in the shares of U.S. Steel at $31.64, that would represent a +48% increase in the share price … over time. We are going to keep an eye out. Right now, we don’t simply want to run-after the shares. We’ll see what tomorrow brings, first.
– Benchmarks “At a Glance” –
US Dollar |
1.3236 USD = 1 Euro |
USD / EUR |
Dollar = Down
|
Gold |
$1,663.80 |
Ounce |
Gold = Flat
|
Oil |
$107.78 |
Barrel (West Texas Crude) |
Oil = Flat
|
30 Yr. Fixed Mortgage |
4.03% |
Percent |
Increasing a bit as 10 yr. yields improve. |
10 Yr. Bond Yield |
2.38% |
Percent |
Continuing to improve. |
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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