– The Stock Market Companion –

15Minute Market Update

September 10, 2012

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

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-Executive Summary-

• Markets NOT yet following through on last week’s powerful up move.  S&P 500 (-.61%); DOW (-.39%); NASDAQ (-1.03%) 
  

   

• Market Overview = We are cautious as we balance the realities of a slowing global economy, uncertainty with the U.S. elections, and efforts in Europe to stabilize their sovereign debt problems.   At Stock Market Companion, we are willing to consider purchasing stocks at this junction in the economy.  We are hunting for new stories of companies with excellent leadership and products / services that have not yet already moved too far away from logical levels for “stops”, which allow us to manage our risk.
  

• Please click here to view today’s Stock Market Companion Daily Chart of the S&P 500 ETF (SPY) – Our Roadmap for Successfully Investing in the U.S. Domestic Stock Markets

• Friday’s disappointing “jobs report” (August “Non-Farm” Payroll Report) really threw a ‘wet rag’ on the market.  Some however, look at these results and hope that the U.S. Federal Reserve – with its “Employment Mandate” – will find a way to further stimulate the economy and thereby increase asset prices (read: stock prices).  Others, like us, are trying to carefully weigh weak global economic indicators with specific company earnings performance and new trends.  Please click here for the Employment Situation – August 2012 – presented by the U.S. Bureau of Labor.
  

  
  Please observe this measure of total unemployed- buried in the Bureau of Labor’s report – which measures more than 14% (but still an improvement over last year).  This measure is known as “U6”.  This is an eye opener.  There are over 6.5 million Americans who would like to be working, and are not.
  

  
  

• SMC members know that we have initiated an investment in Facebook shares (FB $18.96) last week at Stock Market Companion.
  
• On Thursday, we identified these company stocks that we like – and each moved strongly higher on Friday.  Today they have pulled-back some –
  

  
  AK Steel (AKS $5.37) – Manufactures flat rolled steel and specialty steel products.  Almost every week over the last few months we have caught wind of the company raising prices on steel.Ford Motor Co.
  

  
  (F $9.91) – Ford and other domestic car companies demonstrated yesterday that year to date car and truck sales are STRONG.  Pressuring the automaker has been concerns up the road, with a slowing global economy.  Today the shares confirmed their current uptrend.Alcoa (AA $8.76) – Every SMC member knows that we believe that Alcoa is under-valued.  But we have not profited this year from this thinking.  The technical developments in the share price look pretty good here.

  Bank of Ireland (IRE $5.54) – More risk tolerant investors may find this idea interesting, acknowledging the possibly favorable implications of the European Central Banks decision for this destroyed bank.

  Facebook (FB $19.96) – For all the reasons that we have been reporting over the last 3 weeks.

  Bank of America (BAC $8.35) – This is a much better looking chart and conditions for the U.S. bank have improved.

• Last week we adjusted our SMC Trend Table to reflect Thursday’s powerful move, but have only taken the “DOWN” element away from the short term trend.  We need to see a bit more follow-through before we can call a short term UP TREND in place.
  

• On Thursday we reported that if the euro stabilizes here, it may be that the U.S. dollar will diminish some in value against the euro, AND with U.S. and China manufacturing in a downtrend, the price of crude oil may also drop a bit.  On Friday morning, the price of a barrel of crude oil DROPPED $2, but THEN recovered all those losses.
  

• 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.