– The Stock Market Companion –

15Minute Market Update

May 4, 2012

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

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-Executive Summary-

  • The markets were SLAMMED negatively today on the U.S. Department of Labor’s Non-Farm Payroll Report (Jobs Report) that showed jobs growth, BUT gravely missed expectations AND was the 3rd consecutive month of DECREASING jobs growth.  Remember however, there is STILL job growth – just not anywhere near what our economy needs to make a dent in the unemployment picture and help improve the economy. 

  • Market Overview =  The market is in a confirmed uptrend.  Click here for today’s SMC S&P 500 (ETF SPY) chart. Today’s sharp drop in the U.S. equities (stock) markets have changed our SHORT TERM TREND to NEGATIVE. 

  • On Monday, we may pro-actively let go of our Alcoa investment at a loss and take our strong profits on eBay and Linked-In.  We were stopped out today of Ford at $10.75.  We will enforce our Molycorp stop at $25.80. 

  • Last night after the close, SMC holding Linked-In (LNKD $117.30) posted strong quarterly earnings numbers, in alignment with our S.I.M.P.L.E. Stock Investing Method expectations. Our investment here is UP +14.5% since our entry on February 26th. 

  • Our losses in Molycorp, Ford, and Alcoa take the shine off our strong gains in eBay and Linked-In, and our +8% gains in Zagg.  This is disappointing. 

  • The price of CRUDE OIL sank hard today on news that Iraq oil production may increase.  Concerns of weakness in the U.S. economy and therefore possible diminishing demands in the U.S. for crude oil also added to today’s downward pressure in the commodity. 

– Stock Market Companion – Current Holdings – (from Monday, April 30th)

Nr. Co. Ticker Action Entry Date Current Gain (Loss)
1 ZAGG, Inc. ZAGG Holding 2/28/2012 +7%
2 Eight by Eight EGHT “Toe-In” Holding
 3/9/2012 -12%
3 EBAY EBAY Holding 3/14/2012 +6%

4

 Ford Motor Co. F Stopped Out Today.
 3/15/2012

-17%
5 Linked-In LNKD Holding 3/26/2012 +15%
6 Molycorp MCP Holding 3/29/2012 -20%
7 Alcoa AA Holding 4/11/2012 -6%


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 1,369.10 Index Down
DOW-30 13,038.37 Index Down
NASDAQ 2,956.34 Index Down

 

– Market Trends –

 

Trend

SP-500

DJ-30

NASDAQ
Short Term *DOWN* *DOWN* *DOWN*
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 U.S. Non-Farm Payrolls (Jobs Report) Report drove STRONG  institutional selling across all U.S. equities markets today.   Here’s the link to this important Jobs Report – directly from the U.S. Department of Labor.

Here is what we know now …

  • Whereas the European economic condition is recessionary, we believe that the economy in the U.S. is still expanding (although extremely modestly).
  • The most recent Federal Reserve Beige Book Report demonstrated that the 12 Federal Reserve districts in the U.S. were recently still showing growth.
  • The Jobs Report is an important indicator of economic condition, and although the results showed LESS JOB GROWTH than expected (hoped for), the truth of the matter is that there were still jobs added to the economy.
  • The Federal Reserve appears ready to act with more bond purchasing to drive down the long end of the bond curve and stimulate capital investment.
  • This is an extremely important election year and President Obama is going to fight hard to at least give the impression that he is doing all that he can to stimulate the economy.  Perceptions and reality are of course key ingredients to the upcoming elections this Fall.
  • Our S.I.M.P.L.E. Stock Investing Method works, but our choices in metals (Molycorp, Alcoa) and Ford – have been quite poorly timed.  Our choices for eBay, ZAGG and Linked-In have been good ones.
  • The broader U.S. equities market is showing OMINOUS signs of further weakness ahead.  We are very cautious.

 

– 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?)

 

Metal and materials processing companies like Molycorp and Alcoa have had a very difficult time.  Molycorp more so than Alcoa.  Our choice of Ford Motor Co., has also – in spite of Ford’s decade long record of sales in February – been a headache.

Offsetting this malaise are our strong investments in eBay and Linked-In.

At this point, we are considering damage control.  Our stop in Ford kicked-in at $10.75 after a steep fall-off at the open.  So we are OUT of Ford.

Our stop on Molycorp stands at $25.80.  We may proactively sell our Alcoa shares on Monday, although we are very interested in the medium term perspective this year on the possibilities of an increase in aluminum prices – IF the 7% demand forecasts hold and IF smelting capacity continues to be removed by the major Aluminum producers.

 

– Benchmarks “At a Glance” –

US Dollar

1.3083 USD = 1 Euro

USD / EUR

Dollar = Mostly Flat with the Euro at lows.

Gold

$1,645.20

Ounce

Gold = UP a bit.

Oil

$105.08

Barrel (West Texas Crude)

Oil = Flat to slightly down.

30 Yr. Fixed Mortgage

4.03%

Percent

Flat
 

10 Yr. Bond Yield

1.89%

Percent

Down and now firmly below the important 2% line.

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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