• Market Overview = The market is in a confirmed up-trend and has moved higher on low volume.  Beaten-down stocks like Alcoa have found buyers, while previous market leaders like Priceline.com and Coinstar have been cut-down.  We are willing to bottom-fish, but will wait for a pull-back.We are getting our pull-back now in material stocks…We are CAUTIOUS at this time, due to light market volume and uncertainties related to the economy AND the upcoming U.S. elections.  At Stock Market Companion, we remain focused on our S.I.M.P.L.E. Stock investments that offer us a clear “story” which includes expanding earnings and a catalyst for change that we can understand.  This year, the “pickings” have been pretty thin – but we have been successful identifying eBay, Mitek, Apple, 3-D Systems, Arena Pharma, Hovnanian this year – which have moved very significantly – although some for only a brief period of time. We have also made mistakes – particularly in the basic materials sector with Alcoa, and in the manufacturing sector with Ford.  Active trading without a clear understanding of catalyst and expanding earnings is a failed proposition.

•  Click here for today’s SMC S&P 500 (ETF SPY) chart.

• On Monday, after the markets closed, Groupon (GRPN $7.09) announced earnings that were a disappointment for investors.  Last November 4th, Groupon became a publicly traded company through the IPO process, with the shares GAPPING UP on the first day to over $31/share.  We taught at Stock Market Companion the importance of “price discovery”, discussed the Groupon model, and stayed CLEAR.  The shares are now trading at $6.06/share, down 81% from those November 4th highs!  Maybe there will come a time when the shares are a good value.  We will watch the stock chart and study the earnings reports to find out.

• Everything needs to now “settle-down” after this early August rally in the markets on LOW VOLUME.  At Stock Market Companion, we are in 100% cash and looking carefully at Hewlett Packard, Inc. (HPQ), Silicon Image (SIMG), Alcoa (AA), and JC. Penney.  We will report more later.  We are also attentive for NEW IDEAS.  We always keep an eye on new 52 week high stocks, moving out of nice “bases”, as well as stocks making new lows on HIGH Volume and then moving higher.

• Yesterday, The Home Depot, Inc. (HD $55) reported earnings expectations for 2012 to be +19% for the year.  Fiscal year sales will be approx. +4.6%.  This is excellent earnings performance on a moderate increase in sales.  This is a result of excellent leadership from HD CEO Frank Blake.   At Stock Market Companion, we have talked about him over the years and identified him as a very good leader, compared to the company’s previous CEO.  The shares of The Home Depot have already risen from approx. $42/share this year for a +31% increase.  This is 5% less than the total performance of eBay’s shares this year, which we focused on at SMC.The Home Depot shares are – from our standpoint – not a purchase we can make on strength, but are rather to consider on strong market weakness.

• Please click here to send us your feedback.  Let us know how we are doing – We are here to serve you.  Support@Stockmarketcompanion.com

• Here is a video interview of a father and son using the Stock Market Companion successfully together – as a teaching and investing tool.
  

– 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 …

– Markets “At a Glance” –

• 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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