– The Stock Market Companion –

15Minute Market Update

April 2, 2012

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

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-Executive Summary-

  • Today the markets were STRONG. S&P 500 (+.75%), DOW (+.40%), NASDAQ (+.91%) 

  • 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.
     

     

  • Stock Market Companion micro-cap holding Mitek Systems, Inc. (MITK $9.37) took a BIG HIT (DOWN) on news of USAA Bank’s filing for litigation against the company for allegedly fraudulent action AND false patent claims.  USAA is a significant and excellent US financial institution that serves active and inactive military personnel and their families.  This is a very disturbing development. 

  • With 3 minutes left in the market today, we sold our MITK holdings at $9.29.  We did not have time for an Intra-Day Alert.  We do NOT know where this will end up.  “When in doubt, get out” is our philosophy.  We list the issues in detail below. Those investors who did NOT add to with our add-to last week, are still ahead on this investment.   Ours turned-out negative.  Although this stock could bounce, this  one could go down very hard if the company fails to clear the air.  The number of shares issued to the public = the float, is so small the stock moves in big steps with investor sentiment.  This stock has entered the realm now of complete unpredictability.  In which case our only safe place is CASH. 

  • Here is a link to our Stock Market Companion S.I.M.P.L.E. Company Analyzer™ with our analysis of Mitek from earlier this year.  It shows you in detail the reason for our investment and is a company analysis format that we will be introducing to members in the months and years ahead. Please click here for this useful PDF file. This does not mitigate today’s painful reversal in fortune for the company.

    •  

  • 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.

– Stock Market Companion – Current Holdings –

Nr. Co. Ticker Action Entry Date Current Gain (Loss)
1 Mitek, Inc. MITK Sold Today 1/12/2012 -12%
2 ZAGG, Inc. ZAGG Holding 2/28/2012 +0%
3 Eight by Eight EGHT “Toe-In” Holding
 3/9/2012 -12%
4 EBAY EBAY HOLDING 3/14/2012 -2%

5

 Ford Motor Co. F Holding 3/15/2012

-3%
6 Linked-In LNKD Holding 3/26/2012 +0%
7 Molycorp MCP Holding 3/29/2012 +3.3%


We cannot and DO NOT provide investment advice to individuals. Please see our disclaimer below.

 

 

– 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.
3 3/30/2012 -3% Research in Motion RIMM Entry below $15.10 $12.85 +10% – +25% 2:1 We’re giving this one a wide stop, which cuts-into our Reward / Risk ratio.  Entry at 14.79

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 1,419.04 Index UP
DOW-30 13,264.49 Index UP
NASDAQ 3,119.70 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 –

The markets are still finding reasons to march comfortably higher.

This is a robust uptrend.

 

– 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 = Institutional 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?)


Our micro-cap, growth stock investment – Mitek Systems, Inc. (MITK $9.26)  took a major hit hit today as news reports picked up on a patent litigation lawsuit initiated on March 29th, by USAA – a very significant U.S. financial institution supporting active and inactive American armed forces and their families.   Courtesy of Scribd.com and Briefing.com this is the USAA claim against Mitek filed in Texas on 3/29/2012.  USAA is requesting a jury trial regarding this dispute –

Please click here for this important link.

From this document, we learn that the USAA relationship with Mitek goes back many years – to approx. May 12, 2006 – when Mitek signed a Confidentiality Agreement with USAA.  USAA is asserting that it has patent protection on its technology involving remote deposits and that Mitek is infringing its patents and that Mitek has been fraudulent in its dealings with USAA.  It’s this fraudulent piece that has caused us to sell our shares of Mitek today with just 3 minutes left in the trading day at $9.29.  There was no time to issue an Intra-Day Alert.

Here’s what we know –

  • Mitek’s float = The number of shares available to the public is very small = 19.8 million.
  • Because of its small float, the stock can really move UP or DOWN with investor sentiment.
  • The company has positioned itself as the early leader in transformational technology that allows customers to use their smart phones to deposit checks directly into their bank accounts, without needing to go to the bank.
  • It appears from the above documentation link = litigation papers filed by USAA, that Mitek may have  brought this lawsuit upon itself for being fraudulent in its activities.  It appears to us that Mitek has at least been pushing its weight around when the company should have been seeking careful reconciliation and partnership, where necessary.
  • It’s one thing to claim patents, it is quite another to reach the market place with an idea.  The reason for our investment was that Mitek has successfully been adding customers at a rapid rate AND getting customers to launch this software application takes a lot of hard work.  In other words, there are certain barriers to entry that make it not so easy to enter the business.
  • Mitek has often  stated  it its paperwork filed with the SEC, that they are always at risk of a major financial institution deciding to launch their own application.  Did Mitek bring this one on itself, however?
  • We cannot negate the fact that Mitek has successfully built a business around its technology and that many financial institutions are signed-up.   From point #78 in the attached document, it appears that USAA seeks payment from  Mitek, and we believe the Mitek may still be able to grow beyond this problem.

Because of the small float, upcoming volatility, and now the unpredictable nature of the outcome of this litigation – we have withdrawn our investment.  We just do not know where this is going to end up.  We are going to fall back on this idea = “When in doubt, get out”.

We have based our investment in Mitek on these analysis results that we completed earlier this year.  Please see this debut of the Stock Market Companion S.I.M.P.L.E. Company Analyzer™ for clarity concerning this investment.

 

 

– Benchmarks “At a Glance” –

US Dollar

1.3349 USD = 1 Euro

USD / EUR

Dollar = Flat

Gold

$1,679.80

Ounce

Gold = Flat

Oil

$104.95

Barrel (West Texas Crude)

Oil = Up from last Update.

30 Yr. Fixed Mortgage

4.03%

Percent

Increasing a bit as 10 yr. yields improve.

10 Yr. Bond Yield

2.19%

Percent

Flat but continuing to improve.

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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