– The Stock Market Companion –

15Minute Market Update

May 21, 2012

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

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-Executive Summary-

 

  • A recovery bounce is possibly at hand.  The markets closed FIRMLY HIGHER today.  S&P 500 (+1.6%); DOW (+1.09%); NASDAQ (+2.46%)
  •  Market Overview = After retracing approx. -35% off the April highs, today the markets PIVOTED HIGHER on Friday’s volume and this weekend’s meeting of the G-8 at Camp David.    As mentioned last week …  Any sign of a stabilization in Greece would probably cause the markets to bounce strongly, although the severity of the recession in Europe is casting a stronger shadow globally.   It may be that this weekends emphasis by European leaders to do what they can to keep Greece within the European Monetary Community is a first, small step towards stabilization.  Click here for today’s SMC S&P 500 (ETF SPY) chart.
  • Today, we added more to our toe-in investments in Ford Motor Co. (F $10.20) and Alcoa (AA $8.60) after the shares of both company’s have been sold HARD over the past 1.5 months.  We sent out an SMC Intra-Day Alert announcing this action.

  • Shares in Facebook slid HARD this morning at the open.  Those who felt like they “Had to” own the shares and paid upwards of $45/share on Friday our now firmly approx. -24% on their investment.  Please see our S.I.M.P.L.E. Stock Investing Method section, below for details.
  • Both  Arena Pharmaceuticals (ARNA $5.92) and Groupon (GRPN $12.39) share prices improved significantly today.  Groupon looks particularly interesting to us, due to its surprise strength in published earnings from their second quarter results as a publicly traded company.
  • It may be that between now and the elections in Greece that the markets may quiet down and recover some of the recent losses.  We have adjusted our short term trend to UP, based on Friday’s high volume, today’s move higher, and the G-8 meeting from the weekend.  Strengthening in financial stocks would help the overall market tenor.
  • Apple, Inc. shares catapulted higher today… without SMC on board.  Idea was good, but my stop too tight…
  • We are going to look closer at Triquint Semiconductor (TQNT $5.37) tomorrow.  Shares are gathering strong buying interest at these lows and the chart pattern is good.
  • Please let us know if you would like us to perform a S.I.M.P.L.E. Stock Investing Method analysis on a stock that has your interest.  Support@stockmarketcompanion.com

 

 

– Stock Market Companion – Current Holdings –

Nr. Co. Ticker Action Entry Date Current Gain (Loss)
1 Ford Motor Co. F Holding 5/17/2012 +/- 0%
2 Alcoa, Inc. AA Holding 5/17/2012 +/- 0%

We raised 100% cash on 5/8/2012 and have now begun MODEST dollar cost averaging investments in Ford Motor Co. and Alcoa.  As we have mentioned, we are interested however in purchasing shares of Alcoa on weakness and others.  We purchased the above shares in Alcoa and Ford in order to begin dollar-cost averaging entries at these multi-month lows.   Groupon DOES have our attention now that the company has turned a profit, has blistering growth rates, AND competition does not seem to be as destructive as feared.

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 1,315.99 Index UP
DOW-30 12,504.48 Index UP
NASDAQ 2,847.21 Index UP

 

– Market Trends –

 

Trend

SP-500

DJ-30

NASDAQ
Short Term *UP* *UP* *UP*
Intermediate FLAT FLAT FLAT
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 –

It may be that the markets gave us the volume that we needed for some form of a recovery bounce on Friday – and that today we had the follow-through.  Throughout the course of the today’s market activity, the broader U.S. market – S&P 500 “wiggled” its way higher – looking for direction from leading stocks like –

Apple, Inc. (AAPL $561.28)

Walmart (WMT $63.04) and moving to all-time high’s.

Boeing (BA $71.78) – bouncing strongly after an unpleasant reversal off recent high’s … perhaps in response to last weeks U.S. House of Representatives proposed $642.5 billion defense budget!

Helping the markets along was the G-8 meeting at Camp David this weekend, during which European politicians emphasized solidarity around the idea of keeping Greece within the European Monetary Union.   Unfortunately, there were no specifics about just how to do this – so it may be that this bounce in the markets will be short lived.  Bounces in oversold market conditions do not require specifics – they require buyers willing to step forward in sufficient quantities to put short-sellers to flight.

Helping the markets also was a break in the continuous move HIGHER in the U.S. dollar and a lifting off of extreme lows accomplished by German bond yields.  Yields are at their lowest, because investors have been flocking to perceived safe-havens like American and German bonds.  As bonds increase in price, their yields DECREASE in value.


– 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?)

 

Shares of Facebook (FB $34.03) slid HARD today at the open.  The shares are now over 10% BELOW their $38 Initial Public Offering price.  That’s not the “half of it”, because there are thousands of investors who purchased the shares somewhere between $38 and $45 on Friday in a “must have it” attitude that is misguided.  Those who exercised their privilege to purchase shares at $45 on Friday on the open market are now firmly 24% UPSIDE DOWN on their investment.

We don’t know yet what is going to happen next with Facebook shares.  At Stock Market Companion, we believe that Facebook WILL offer a very interesting investment opportunity somewhere down the road, when –

  • The emotions of the largest IPO in U.S. history have diminished significantly.
  • It becomes clear just how Facebook is going to drive real EARNINGS growth – aside from social networking GAMES (Zynga…).
  • How Facebook is going to drive EARNINGS from over 900 million monthly users (folks, this is truly an enormous number of people associated with Facebook)
  • Facebook has had a least one quarterly earnings report as a publicly traded company and revealed plans for the future that hold up under the scrutiny of serious market analysis.

In the mean time, a roughed-up IPO from November = Groupon (GRPN $12.36) is perhaps putting in a nice bottom here technically.  Certainly their earnings surprise and work at “right-sizing” their business has attracted the eyes of investment managers.

Arena Pharmaceuticals (ARNA $5.92) also improved significantly today in its technical price pattern.

 

– Benchmarks “At a Glance” –

US Dollar

1.2809 USD = 1 Euro

USD / EUR

Dollar = DOWN a bit against the euro.

Gold

$1,593.20

Ounce

Gold = shines, as U.S. dollar takes a pause in its advance against the euro.

Oil

$92.87

Barrel (West Texas Crude)

Oil = Beginning to bounce a bit.

30 Yr. Fixed Mortgage

3.76%

Percent

Down below 4%.

10 Yr. Bond Yield

1.72%

Percent

LOWER 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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