– The Stock Market Companion –

15Minute Market Update

July 2, 2012

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

Published 3 Days / Week
Monday, Wednesday, Friday
Monthly Subscription $49.95

-Executive Summary-

 

  • Markets recover significant portion of early morning sell-off, but not entire amount.  S&P 500 (+.25%); DOW (-.07%); NASDAQ (+.55%)
  • Market Overview = The U.S. markets are in a confirmed up-trend, but caught within the confines of a lateral consolidation.  Today’s disappointing Institute for Supply Management (ISM) report (see Today’s Highlights, below) caused the markets to sell-off sharply at mid-morning.  Buyers however picked-up shares throughout the early afternoon and pushed the markets to an almost flat finish.From Friday … The markets have moved to the UPPER BOUNDARY of the lateral consolidation that we have sketched out and that the markets have been working through for the past two months.  The U.S. markets are in a confirmed “uptrend”.  Today’s move validates our exposure to the markets and early today we “added-to” our positions in Alcoa (AA $8.75) and Nvidia (NVDA $13.82) – and transmitted an SMC Intra-Day Alert to that affect.KB Homes (KBH $9.80) confirmed that they are seeing what may be a significant improvement in the housing market.  Unfortunately, in the world of cars and trucks, Ford Motor Co. does NOT see an improving landscape.    From Wednesday … “While uncertainty in Europe and concerns of global economic slowdown are continuing to impact the equities (stock) markets negatively, steady – modestly – favorable economic news continues to emerge in the USA.  New home sales are IMPROVING, durable goods (think refrigerators and cars) data released today was FAVORABLE, and pending home sales are IMPROVING.  The U.S. equities markets, as represented by the S&P 500 are maintaining a lateral formation.  Europe however is staging another summit – with low expectations for resolution of issues.  Today’s favorable news (better than expected durable goods orders for May and pending home sales) pushed the markets higher.  We are cautious, but do NOT want to miss an opportunity if basic material processing stocks like Alcoa (AA) and AK Steel (AKS) begin moving higher.”    Click here for today’s SMC S&P 500 (ETF SPY) chart.

  • The U.S. equities markets will be open tomorrow, Tuesday, July 3rd for one-half day of trading, and will be CLOSED Wednesday, July 4th – in honor of our celebration of our Declaration of Independence from Britain.  At Stock Market Companion, we give great thanks to those in our armed services,  – both active and retired – for their sacrifice to protect our freedom.
  • There are some break-outs taking place – Notably Coinstar, Inc. (CSTR $68.65) – but we want to see how the markets respond over the next days before committing more capital to stocks.

  • Quite frankly, we DO NOT like how the shares of automotive manufacturers like Ford Motor Co. (F $9.39) are falling hard.  This does not bode particularly well for the overall market.   From Friday… Ford Motor Co. is predicting perhaps as much as triple its losses in Europe from the 1st quarter, equally between $500 – $600 million in losses in Europe.  Strong sales in North and South America will help balance these losses, but Ford shares sank HARD below the important $10/share support line.  Here is an excellent article from Reuters on this development. Towards the end of this article you will get a picture as to how much Ford is investing in Asia.  We want to be BUYERS of Ford shares on extreme weakness in the shares.
  • At the same time, however, we do NOT want to miss-out on bargain values on the shares of companies like Hewlett-Packard (HPQ $20.16).

 

– Stock Market Companion – Current Holdings –

Nr. Co. Ticker Action Entry Date Current Gain (Loss)
1 Dendreon, Inc. DNDN Holding 6/13/2012 +5%
2 Alcoa AA Holding 6/19/2012 -0.5%
3 Nvidia NVDA Holding 6/19/2012 +1.5%
4 eBay EBAY Holding 6/19/2012 -1.5%
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 1,365.51 Index Flat
DOW-30 12,871.39 Index Flat
NASDAQ 2,951.23 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 –

 

Today the Institute for Supply Management (SIM)  released survey information that indicate CONTRACTION in the U.S. manufacturing complex.  We can see the ramifications of this when we look at the share price development at Ford Motor Co., Dell, Inc., Hewlett Packard, Inc., and many of the home builders.

Here is a good summary from the ISM report, of survey respondents and their industries –

  • “Business is still strong, with some nagging question whether it will be sustained.” (Machinery)
  • “The economy and general business seem to be getting better even though recent data say otherwise.” (Fabricated Metal Products)
  • “Significant raw materials price correction underway.” (Plastics & Rubber Products)
  • “Local labor market shows no signs of slowing down. Competition for technical services/skilled craft remains tight.” (Petroleum & Coal Products)
  • “Overall demand signals from sales forecast are trending down in all regions.” (Computer & Electronic Products)
  • “Although our shipments are up year over year and from prior month, we can feel some head winds, especially from Europe. We are watching our expenses very tightly and being cautious.” (Apparel, Leather & Allied Products)
  • “Business continues to exceed forecast in all markets.” (Primary Metals)
  • “Economy seems to be slowing slightly due to concerns in Europe; however, production has not changed a great deal.” (Transportation Equipment)
  • “Business has started to show signs of slowing.” (Furniture & Related Products)
  • “Slowing world economies, particularly China, are reducing 3Q and later orders and drastically dropping some raw material prices.” (Chemical Products)
It is however, when business is weak that we want to take advantage of “oversold” share prices and purchase equity in excellent companies with good recovery prospects.
The bold and larger font items are from Stock Market Companion.

 

– 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?)

 

Please see our Executive Summary, above.

 

– Benchmarks “At a Glance” –

US Dollar

1.2584 USD = 1 Euro

USD / EUR

Dollar = Flat against the euro.

Gold

$1,597

Ounce

Gold = Down a bit.

Oil

$83.69

Barrel (West Texas Crude)

Oil = Down a little over a buck.

30 Yr. Fixed Mortgage

3.76%

Percent

Down below 4%.

10 Yr. Bond Yield

1.65%

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.
  • Please click here to send us your feedback.  Let us know how we

Categories: Archives, Daily Updates
Tags:

Comments are closed.