– The Stock Market Companion –

15Minute Market Update

April 20, 2012

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

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-Executive Summary-

  • Markets again show divergence with the DOW UP on good earnings from General Electric (GE $19.36) and the NASDAQ modestly negative.  The broader market is navigating its 50 day moving average in price and consolidating early year gains.  S&P 500 (+.12%), DOW (+.5%), NASDAQ (-.24%)

    •  

  • 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. The U.S. broader equity market (S&P 500) is bouncing around near its 50 day moving average in price.  As we have written over the past week, the S&P 500 ETF chart that we show below shows strong support for the markets at 135.  The markets may test that level before market participants decide what to do next. 

  • General Electric (GE $19.36) posted excellent earnings and a strong outlook for 2012.  Please see our Today’s Highlights section for more.
     

     

     

  • SMC holding Ebay (EBAY $40.29) shot HIGHER on excellent earnings yesterday, validating our S.I.M.P.L.E. Stock Investing summary and our investment from early February.  From our initial entry at $32.38, eBay has advanced over 25%.   Please see our S.I.M.P.L.E. Stock Investing Method section, below.

– Stock Market Companion – Current Holdings –

Nr. Co. Ticker Action Entry Date Current Gain (Loss)
1 ZAGG, Inc. ZAGG Holding 2/28/2012 +0%
2 Eight by Eight EGHT “Toe-In” Holding
 3/9/2012 -12%
3 EBAY EBAY Holding 3/14/2012 +8%

4

 Ford Motor Co. F Holding 3/15/2012

-12%
5 Linked-In LNKD Holding 3/26/2012 +3%
6 Molycorp MCP Holding 3/29/2012 -10%
7 Alcoa AA Holding 4/11/2012 -2%


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 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 1,378.53 Index FLAT
DOW-30 13,029.26 Index UP
NASDAQ 3,000.45 Index Flat / Down

 

– Market Trends –

 

Trend

SP-500

DJ-30

NASDAQ
Short Term DOWN/FLAT DOWN/FLAT DOWN/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 pressing higher this morning after General Electric posted excellent earnings and revealed ROBUST GROWTH in all of their business units.  This is good news for market participants who have become increasingly uncertain of near term trends in the global economy.  Institutional market participants are the ones who move the markets and they have been concerned about these points –

  1. Weakness in the European economy negatively influencing China AND then weakening the fragile – but improving – U.S. economic climate.
  2. Slower growth in China
  3. Resurgence in concerns of sovereign debt issues in European rim nations – Italy, Spain, Greece, Ireland, and Portugal.

General Electric’s quarterly earnings results AND forecast for the remainder of the year is very good news for investors.  We will have to see if they can trump the 1, 2, and 3 concerns that we listed above.

Today we are seeing strength in the markets.  The broader U.S. market – which we measure using the S&P 500 ETF (SPY) – is holding above its 50 day moving average for the moment.  We have said that we would not be surprised if the broader market dipped down to touch the recent significant support zone of 135 on the SPY.

 


 – 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?)

Yesterday, SMC holding eBay (EBAY $40.62) posted EXCELLENT earnings and validated our S.I.M.P.L.E. Stock Investing Method summary analysis of eBay that we presented to members at the end of January with this final comment –

EBay announced earnings on January 18th that were the strongest quarterly earnings in 8 quarters AND showed revenues growing approx. +35.5% year over year.  We are particularly interested in the company because they own PAYPAL.

We announced our first investment in eBay on February 1, 2012 at $32.38 and today the shares have RISEN to approx. $40.60 – offering Stock Market Companion members involved with this investment a possible +25% return over this period of time.

EBay appears to again to be in a very transformational development involving retailing AND its Paypal payment system which is disruptive to the traditional retail payment systems of Visa and MasterCard.  EBay guided their 2012 earnings HIGHER to approx $2.35.  If we take today’s share price of approx. $40.6 and divide it by $2.35, we arrive at a price earnings ratio (based on estimated earnings for 2012) of approx. 17.28.  This is slightly higher than the market average of 16, but still quite low considering EBay’s overall revenue and earnings growth rate.

– Benchmarks “At a Glance” –

US Dollar

1.32 USD = 1 Euro

USD / EUR

Dollar = Down

Gold

$1,642.80

Ounce

Gold = Flat

Oil

$103.61

Barrel (West Texas Crude)

Oil = Flat

30 Yr. Fixed Mortgage

4.03%

Percent

Flat

10 Yr. Bond Yield

1.98%

Percent

Down more as risk appetite for equities diminishes.

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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