– The Stock Market Companion –

15Minute Market Update

May 9, 2012

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

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-Executive Summary-

  • The broader U.S. market, represented by the S&P 500, and the narrower markets – represented by the DOW-30 and the NASDAQ –  all FELL today.  Please see our Today’s Highlights section for more details and insights. 

     

  • Market Overview =  Our short term trend change to *DOWN* last week has been validated.  The markets are still in an intermediate uptrend.  Concerns GLOBALLY about the survival of the euro in its current form and how a euro restructuring could take place without global disturbances, is putting a bid under the U.S. dollar (buyers are pressing the Greenback HIGHER against the euro).   Click here for today’s SMC S&P 500 (ETF SPY) chart. 

  • Yesterday morning we transmitted an email SMC Intra-Day Alert, indicating that we were exiting all stock positions and raising 100% cash.  Uncertainty in Europe and uncharted waters with the euro and signs of slowdown in the U.S. (last Friday’s Department of Labor “Jobs Report”) is causing us to take a “prove-it to me” approach. 

     

  • At Stock Market Companion, we fared well in our recent investments in eBay and Linked-In, but poorly in our investments in Molycorp, Alcoa, and Ford. 

  • We have reported – using our S.I.M.P.L.E. Stock Investing Method – about Alcoa being an interesting investment because there may be an unusual coordinated impact of reduced aluminum smelting capacity pushing the price of aluminum HIGHER – if global demand remains strong for the metal at forecast levels of +7%.  Tonight this SMC idea is being confirmed (to a degree) from this very interesting article.  Please click here for this late-breaking information that Asia SUPPLY of aluminum may be dropping (Bloomberg).

    •  

  • Tonight after the markets closed, Cisco Systems, Inc. (CSCO $18.78) reported disappointing earnings expectations AHEAD.  The shares have sunk -8% in after-hours trading and this weakness will be felt in the overall market tomorrow.  Cisco CEO John Chambers did NOT give overly encouraging news about the economy immediately ahead.  He is a salesman and when even his enthusiasm wanes, his comments demand market participants attention. 

  • The markets may bounce, once the high probability selling related Cisco’s economic outlook subsides a bit.  Our SMC alert from Monday to the  possible BEARISH “Head-and-Shoulders” (Please see our SMC S&P 500 (ETF SPY) chart), alerting to possible further weakness ahead – has been validated. 

  • We created 5 short SMC Successful Investing Videos describing the conditions of the broader market (going quickly back to 1995 for reference), and including short term opportunities that may be present for nimble investors (Video 5).  Please click here for Successful Investing Video #5 and  see our S.I.M.P.L.E. Stock Investing Method section for the remainder of the videos.
     

– Stock Market Companion – Current Holdings –

Nr. Co. Ticker Action Entry Date Current Gain (Loss)

We liquidated all holdings yesterday.  We will report our performance on these investments on Friday on our SMC Watchlist.   Performance in Molycorp, Alcoa, and Ford was miserable.  Performance in eBay and Linked-In = Good. 

 

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 1,354.58 Index Down
DOW-30 12,835.06 Index Down
NASDAQ 2,934.71 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, the U.S. equities markets again opened lower than the previous day’s close and were able to attract some buyers in the early afternoon – allowing the markets to close HIGHER than their opening levels, but still below the close of each previous day.

Technically, the broader market is at very significant support and could well bounce a bit higher off these levels.  We cover this market overview in our 5 short videos for today.  Working against the market however, is the earnings report presented by Cisco Systems, Inc. (CSCO $18.78) after the close today.  The Cisco that we are talking about here is the internet infrastructure tech-giant, NOT the SYSCO that you see on trucks in your area representing the food service company.  Cisco BEAT 3rd quarter earnings estimates – but MORE IMPORTANTLY – guided LOWER for the next quarters ahead.  This news is poison for any stock and subsequently, CSCO shares are off -8% in light, after-hours trading.

Even though the market is at key support, the market WILL BE IMPACTED by Cisco’s public declaration of uncertainty in the upcoming quarters and lower growth.

Please click here for a good review of earnings and the outlook provided by Cisco’s CEO John Chambers (Reuters).

Meanwhile – Globally – all eyes are on Greece and wondering if Greece can pull together a government that supports their previous government’s commitment to budget cutting and – critically – agreements with the International Monetary Fund and others for maintaining their bond payments.  Remember, Greece “folded” on previous bond commitments in the form of a re-finance that left existing bond-holders with approx. -75% in losses.  This bond “re-financing” was completed last fall and was the largest that the world has ever seen – without complete default.

With a public nurtured for over a decade on excessive government expenditures that supported comfortable early retirement packages, budget cutting measures have been political suicide in Greece.  In a world away in England – Prime Minister Cameron has built his government on policies that reduce government expenditures by approx. 40%!

In the U.S., we awoke today to the idea that a prison inmate in West Virginia carried 41% of the democratic primary vote in that state yesterday.  The U.S. presidential election is now in near full-swing.

At Stock Market Companion, we are going to preserve our cash until clear opportunities arise.  We look at some opportunities for risk-tolerant, nimble investors in our 5th video today.

Fiscally – in the U.S. – our hope lies in the emergence of political leaders who have the guts to steer the kind of course that Mr. Cameron in England is steering today.


 

– 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?)

 

Here are 5 short videos that provide you with –

 

– Benchmarks “At a Glance” –

US Dollar

1.2945 USD = 1 Euro

USD / EUR

Dollar = HIGHER against the euro.

Gold

$1,592.60

Ounce

Gold = Lower, as the U.S. dollar moves Higher.

Oil

$96.69

Barrel (West Texas Crude)

Oil = Lower, as concerns about global recession increase.

30 Yr. Fixed Mortgage

4.03%

Percent

Flat
 

10 Yr. Bond Yield

1.86%

Percent

Flat and now firmly below the important 2% line.

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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