– The Stock Market Companion –

15Minute Market Update

June 18, 2012

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

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-Executive Summary-

 

  • Divergence… Strength evident today in large cap tech stocks, but the DOW was unable to cross into positive territory.    S&P 500 (+.14%); DOW (-.2%); NASDAQ (+.78%)
  • Market Overview = The drama in Europe continues … Greece had its elections this weekend, which was really a referendum on whether the country would choose to remain in the European Monetary Union (EMU).  The results released show that Greece will stay in the EMU and that a weak coalition government will be formed with the thankless job of having to tell retirees in their 50’s, who are getting up to 80% of their pay, that those days are over.  They also will have to find ways to encourage investment and growth, while cutting other government expenditures.  We’ll see if they can do it.  Meanwhile, concerns are on the increase related to Spain…   So the U.S. dollar remains in demand relative to the euro, putting pressure on U.S. dollar based commodity stocks.
    Growth in China and India is slowing, but still China’s growth is currently forecast at approx. +7%.  Growth in the U.S.A. is pegged at approx. +2% of GDP (Gross Domestic Product), and there is hope for more stimulus from the Fed… (which we at SMC think is misplaced).  All things considered, the market has at least momentarily stabilized.  Certain growth stocks are finding their way higher … like eBay (EBAY $42.49), Apple (AAPL $585.78), Home Depot (HD $52.32), Coinstar (CSTR $64.76) and SMC Holding – Arena Pharma (ARNA $9.38).    Click here for today’s SMC S&P 500 (ETF SPY) chart

  • We are preparing ourselves for some investment in material processing stocks like Alcoa (AA $8.69), or AK Steel (AKS $5.17)…  And are watchful for a few more clues.

  •  Former SMC holding eBay (EBAY $42.49) is looking like a “must-own” as it begins to possibly move higher out of its 2 month lateral consolidation.  The key business unit at eBay driving growth is PayPal.

  • SMC holding Arena Pharma (ARNA $8.40) has pressed +32% higher in one week.

– Stock Market Companion – Current Holdings –

Nr. Co. Ticker Action Entry Date Current Gain (Loss)
1 Arena Pharma. ARNA Holding 6/11/2012 +32%
2 Dendreon, Inc. DNDN Holding 6/13/2012 +6.2%
Caution … Arena Pharma is way beyond any reasonable, low risk entry.  The opportunity for those not on board has – for the moment – passed.  The shares must again build some form of lateral consolidation – from which risk can be measured – before any entry can be considered.
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 1,344.78 Index Flat
DOW-30 12,741.82 Index Down
NASDAQ 2,895.33 Index UP

 

– Market Trends –

 

Trend

SP-500

DJ-30

NASDAQ
Short Term FLAT FLAT FLAT
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 –

The U.S. dollar moved to 3 week lows as talk increased about the possibilities of the U.S. Federal Reserve taking action to stimulate the economy, following the release today of the Manufacturing Survey from the Empire State.  In other words, the manufacturing data released out of New York state was terrible – pointing to a real slowdown.  The thinking is – “any more of this kind of weak data, and the Federal Reserve is surely going to do something.”.    At Stock Market Companion, we are not so certain what action the Federal Reserve would take in this situation.  In the markets, we are always cautious of what appears to be the “obvious” conclusion.

 

 

– 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?)

 

The tech sector – in terms of PC manufacturers – like Hewlett Packard (HPQ $21.64) – was weak today, while material processing companies like Alcoa (AA $8.82) perked UP significantly.  We are very interested here in Alcoa.  We have the unusual opportunity on this one, NOT to have to have money engaged over the weekend as the election in Greece unfolds, and NOT be concerned that we are going to miss an opportunity.  Under normal circumstances, we have plenty of time to see what things will bring on Monday…

 

– Benchmarks “At a Glance” –

US Dollar

1.2636 USD = 1 Euro

USD / EUR

Dollar = At three week lows against the euro.

Gold

$1,628.20

Ounce

Gold = back and forth as the dollar moves against the euro.

Oil

$84.18

Barrel (West Texas Crude)

Oil = Flat

30 Yr. Fixed Mortgage

3.76%

Percent

Down below 4%.

10 Yr. Bond Yield

1.57%

Percent

Flat-lined. Down now 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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