– Stock Market Companion – Current Holdings –

(Please scroll down to the end of the report to see your favorite benchmarks – Dollar, Oil, Gold … closing prices and daily direction.)

– Market Trends –

*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 continued to get punched in the chin this morning as the U.S. DOW Jones index of 30 industrials dropped approx. 170 points and threatened recent – tentative support for the markets established last Friday.  Here’s why –

• Dell, Inc. (DELL $12.49) reported DISAPPOINTING earnings last night.  Now “disappointing” in this case does NOT mean “disastrous”.  Dell reported + 43 cents/share for the quarter – which is nowhere near a loss – BUT also reported a drop of overall revenue of 4%.  That was enough to make already jittery investors nervous.  The share price dropped over 14% today alone and is back down at below $12.50/share.  Friends, Dell shares were selling above $18/share just in February.  If you approx. Dell’s forward earnings of let’s say 43 cents x 4 quarters = $1.72/share.  Take today’s share price of $12.49/$1.72 and you arrive at a price earnings ratio of 7.26.  That’s a very inexpensive price for Michael Dell’s company.  Of course, if the world economy crawls into recession, even $12.49 will possibly look expensive for a while.
• More fears about GREECE and whether the U.S. and Europe are prepared for an exit or not.
• Major U.S. headlines about the U.S. government “Falling-off a Fiscal Cliff” in 2013.

The above 3 points were enough to push the markets further lower, as U.S. investors saw overseas markets in Asia and Europe  sinking overnight.

However, the markets RECOVERED most of their losses by the end of the day in a rather dramatic turn-around – beginning at approx. 2 pm this afternoon.

At Stock Market Companion, we believe that value investors are stepping up to make some purchases … as well as those who have been shorting the markets step up and COVER their positions for a profit (short sellers borrow shares high and sell them, hoping to buy them back at lower prices in the future for a profit).

– 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?)

Participants in the Facebook (FB $32) Initial Public Offering (IPO) last week on Friday are all wondering what happened.   In our humble estimation, what happened was the shares were oversubscribed (demand was very high) and that as the investing public (retail investors and private money investors) that couldn’t get in on the IPO shares prior to the listing ran after the stock after it opened, institutional investors sold their shares at a profit to the over-anxious public and private money that is operating under the premise that you should own the stock since you enjoy or use the product.

At Stock Market Companion, we operate under the premise that with IPO’s, you must wait for some form of price “discovery” so that you can gauge your risk.

Today after the close, Hewlett Packard (HPQ $21.08) reported earnings.  During market hours today, there was pretty strong fear that HPQ would have the same performance as DELL = lower than expected earnings and diminishing revenue (gross sales).  INSTEAD, HPQ announced BETTER THAN EXPECTED earnings (by 7 cents a share), revenues DID FALL 3%, BUT the company is projecting UPSIDE EARNINGS for this year of $4.05 – $4.10 /share.  After hours, the shares shot higher to approx. $22.50.  Now, if we do the same P/E calculation as we did above with Dell, we arrive at:  $22.50/$4.05 = 5.55 for a Price / Earnings ration.  Friends, this is very CHEAP for HPQ.  HPQ announced also a major restructuring to achieve higher productivity.  The bad news is that the company will let go of another 27,000 employees.  Please click here for a link to the article. (Reuters)

Under new leadership and with an aggressive restructuring plan announced, this could be the time to load up on HPQ shares for those investors with an intermediate time-frame in mind, particularly with jittery markets at hand.  We reported last week that the world’s biggest hedge fund was buying HPQ shares last quarter.  Those were higher prices than we have today in the shares.

– Benchmarks “At a Glance” –

–Data Source : Financial Visualizations Inc.