– The Stock Market Companion –
15Minute Market Update
March 28, 2012
—— Stock Market Investing since the 1980’s ——
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-Executive Summary-
- Today the markets PULLED BACK. S&P 500 (-.49%), DOW (-.54%), NASDAQ (-.49%)
- 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.
- Market participants were taking their cues today from the DOWNWARD revision to Gross Domestic Product results in the United Kingdom for the fourth quarter, increases in oil inventories here in U.S. (at +$4/gal. of gasoline, people are scaling back driving a bit), and concern about China’s economy.
- J.P. Morgan – Chase CEO, Mr. Dimon mentioned that he believes that China will be able to navigate a “soft landing” for their economy. We believe that these comments helped the markets improve today into the close.
- Shares of Amylin Pharmaceuticals, Inc. (AMLN $23.77) soared +54% today on LEAKED news that the company REJECTED an unsolicited bid to purchase the company for $22/share last month. Yesterday the shares of the company closed at approx. $16/share. The company markets a drug treatment for type 2 diabetes, and the company has recently received approval for a longer-acting formulation. When a company rejects an unsolicited offer, there can be several reasons. The market decided to opt for the reason that the company board believes that the company is worth more. An investor analyst today gave the company a target price of $31/share. We are watchful. Here is more information from Marketwatch.com
- Shares of Vermillion (VRML $2.16) shot over 22% higher today after its 3+ week pullback on a surge that has placed it on our table of Advanced Investor Opportunities. We are watchful for a move ABOVE $2.75 / $3.0 before we get interested.
- Today’s strong move validates our broader perspective … (We repeat from the last 10 days or so) … “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.”
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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 | +47% |
| 2 | ZAGG, Inc. | ZAGG | Holding | 2/28/2012 | -4% |
| 3 | Eight by Eight | EGHT | “Toe-In” Holding |
3/9/2012 | -14% |
| 4 | EBAY | EBAY | HOLDING | 3/14/2012 | +0% |
|
5 |
Ford Motor Co. | F | Holding | 3/15/2012 |
-5% |
| 6 | Linked-In | LNKD | Holding | 3/26/2012 | +0% |
– 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 | 1,416.51 | Index | UP |
| DOW-30 | 13,241.63 | Index | UP a bit (consolidation) |
| NASDAQ | 3,122.57 | Index | UP |
– Market Trends –
Trend |
SP-500 |
DJ-30 |
NASDAQ |
| Short Term | UP/FLAT | UP/FLAT | UP/FLAT |
| 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’s markets are a bit fixated on the United Kingdom’s (UK) revised data on its Gross Domestic Product (GDP) results for the fourth quarter. The U.K. announced that their GDP contracted -0.3% for the fourth quarter.
One common measure of a recessionary period is two consecutive quarters of negative GDP growth. As investors, we are all watchful of what is taking place in Europe and we know that the European economies are forecasting near term weakness, due to lack of business and consumer confidence driven by the uncertainty surrounding Greece and its default on its bond payments last month. Spending and business investment in Europe dropped last year as emotions rose related to Greece and the uncertainty of the broad impact of its sovereign default on its bond obligations, relative to the entire European Monetary Union system.
The United Kingdom has some other important dynamics unfolding. British Prime Minister David Cameron course for reducing government expenditures by -40% is a fiscal policy that is the exact opposite direction of the U.S. Obama Administration. It is entirely predictable that GDP in the UK would contract. It will take time for private enterprise to take up the slack and appropriately re-balance the economy where fiscal policy has been withdrawn. Also – there is a lot of business that takes place between the UK and mainland Europe. As mainland Europe slows down, so too will the UK be impacted.
For us in the U.S., it is good to see how robust the UK economic environment is holding in the face of dramatic cuts in government spending there. As Americans, Mr. Cameron’s fiscal policy bravery is a message of hope that someday our own government will have the courage to live within its means. Unfortunately, since 2003 we have increased expenditures while cutting taxes. At Stock Market Companion, we like the tax cutting of course – but without corresponding cuts in government expenditures – this combination leads to a road of ruin.
– 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?)
We do not have much to report today on the individual stock investing hunt. Micro-cap Vermillion, Inc. (VRML $2.16) which we reported about on March 7th and have in our Advanced Investor Opportunities table jumped +22% today to $2.16. A break above $2.75 may get us interested.
– Benchmarks “At a Glance” –
US Dollar |
1.3316 USD = 1 Euro |
USD / EUR |
Dollar = UP a bit
|
Gold |
$1,660.50 |
Ounce |
Gold = Flat
|
Oil |
$105.56 |
Barrel (West Texas Crude) |
Oil = Down
|
30 Yr. Fixed Mortgage |
4.03% |
Percent |
Increasing a bit as 10 yr. yields improve. |
10 Yr. Bond Yield |
2.20% |
Percent |
Flat but 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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