– The Stock Market Companion –

15Minute Market Update

April 30, 2012

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

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-Executive Summary-

  • Down a bit.  Please see our Today’s Highlights section below. 

  • Market Overview =  The market is in a confirmed uptrend.  Click here for today’s SMC S&P 500 (ETF SPY) chart. Earnings results last week from Apple, Inc. (AAPL $603), Boeing (BA $77.25), and Amazon (AMZN $226.85) helped the broader market recover its composure and remain ABOVE its 50 day moving average in price.  Near support on the SPY of 135 was ALMOST tested … the SPY today however rests nicely above its 50 day moving average. 

  • Market volume was quiet today. 

  • Microsoft (MSFT $32.01) and Barnes and Noble (BKS $20.75) are forming a venture … Currently named “Newco” (in other words, the company does not have a name…  The marketing prowess of Steve Jobs has not infiltrated Microsoft).  We cover the details below.
  • Barnes and Noble shares jumped over 50% in value today on the news of the venture with Microsoft.  We go through some of the math and reasoning below.  With over 60% of Barnes and Nobles shares sold short, the shares may have further UPSIDE.  Our calculations give Barnes and Noble shares a $28/share value, NOT including existing Barnes and Noble business value. 

  • The game changed today for short sellers of Barnes and Nobles stock.  Short sellers may be in for more pain and be forced to cover their positions as the shares possibly move higher.  We need to see how the shares perform next.  A small consolidation would help investors gauge risk. 

  • Stock Market Companion holding ZAGG, Inc. moved again nicely higher today. 

  • Concern about Spain entering recession has the markets on edge.  Our own, U.S. economy slowed a bit more in April. 

  • I am traveling and presenting Stock Market Companion at conferences.  More videos and Intra-Day Alerts will return next week.  Please look forward to more teaching content and helpful materials to come … with our Investor’s Tool Kit and the S.I.M.P.L.E. Stock Investing Method.  Thank you for your patience during this time! 

  • While SMC investments in eBay, ZAGG, and Linked-In have proven favorable, our investment in Molycorp is looking terrible.  This is very disappointing.  Ford also is not looking too good – but we have long term intentions here.  We are putting our stop at $25.80 on MCP.

– Stock Market Companion – Current Holdings –

Nr. Co. Ticker Action Entry Date Current Gain (Loss)
1 ZAGG, Inc. ZAGG Holding 2/28/2012 +17%
2 Eight by Eight EGHT “Toe-In” Holding
 3/9/2012 -12%
3 EBAY EBAY Holding 3/14/2012 +10%

4

 Ford Motor Co. F Holding 3/15/2012

-13%
5 Linked-In LNKD Holding 3/26/2012 +6%
6 Molycorp MCP Holding 3/29/2012 -19%
7 Alcoa AA Holding 4/11/2012 -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 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 1,397.91 Index Flat
DOW-30 13,213.63 Index Down a bit.
NASDAQ 3,046.36 Index Down

 

– Market Trends –

 

Trend

SP-500

DJ-30

NASDAQ
Short Term Flat Flat 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 broader market, which we measure using the S&P 500 Exchange Traded Fund (ETF) – ticker “SPY” = is currently quietly sitting ABOVE its 50 day moving average.

Today’s volume for the broader market was low.  As we have mentioned over the last few weeks, the MOMENTUM from the first quarter has dried up for the markets.

There were some items of interest today, with Microsoft spending approx. $1.7 billion for a 17.6% stake in a company that Microsoft is forming with Barnes and Noble booksellers  (BKS $20.75).  If we use a simple ratio to solve for the remaining 82.4%, the remaining 82.4% owned by BKS is valued at $1.4 billion.

Now, let’s go see at Finance.yahoo how many shares have been issued at BKS and other items of interest…

  • If we take BKS total shares outstanding of approx. 50 million shares and divide that into $1.4 billion, then each BKS share is valued at $28 (not including the existing BKS business)!
  • BKS jumped over 90% in value today and closed at approx. $20.75
  • BKS shares are 67% sold short – which is one reason why the shares jumped so high today.  The short sellers (short sellers borrow shares to sell HIGH, hoping to buy them back at a lower price) had to cover their positions quickly this morning.
  • It may be that BKS still may move to the UPSIDE, due to this “line-in-the-sand” value of $28/share for BKS’s ownership in this “Newco” formed with Microsoft.
  • The $28/share does NOT include yet any value for the existing Barnes and Noble business, which DOES have value, although their balance sheet is loaded with questionable big ticket items like $524 million in goodwill (which may never materialize), $566 million in intangible assets (where and what are these assets?)…
    When you look at the quality of Barnes and Noble’s balance sheet, you can see why 67% of the shares are sold short.   To the short sellers surprise, the game changed however today, and they may have to cover – and push the shares of Barnes and Noble’s HIGHER in the process!

For those interested in more information, please read this article on the Microsoft / Barnes and Noble alliance (Reuters).

 

– 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?)

Stock Market Companion holding ZAGG, Inc. (ZAGG) continued to move higher today.

Please see our comments about the Barnes and Noble / Microsoft alliance and “Newco” formed today for ideas.

– Benchmarks “At a Glance” –

US Dollar

1.3239 USD = 1 Euro

USD / EUR

Dollar = Flat

Gold

$1,666.90

Ounce

Gold = Flat

Oil

$104.78

Barrel (West Texas Crude)

Oil = Flat

30 Yr. Fixed Mortgage

4.03%

Percent

Flat
 

10 Yr. Bond Yield

1.92%

Percent

Flat

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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