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Hedge Honcho Sells, Stocks Drop, Banks Struggle
By EDIT

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Hedge fund honcho, Steve Cohen of SAC, dramatically cut his holdings in the retail and pharmaceutical sectors near the end of 2008, per regulatory filings. This dismal news added additional weight to an already sagging stock market triggered by fears of 2009 being catastrophic for banks and gloomy retail sales. The DJIA gave back -248.42 to 8200.14, the tech heavy Nasdaq fell -56.82 to 1489.64 and the broad based market barometer S&P 500 fell -29.17 to 842.62.

Principal Financial (PFG | Quote | Chart | News | PowerRating) - Fell 11.15% or $2.13 to $16.97/share after fears rocked the insurance sector that losses on fixed income investment would exhaust capital.

American Express (AXP | Quote | Chart | News | PowerRating) - The soon to be bank dropped 6.16% or $1.17 to $17.82/share upon having its fourth quarter profit estimates cut by Barclays.

Nortel Networks (NT | Quote | Chart | News | PowerRating) - The once thriving Canadian telecommunication equipment maker declared bankruptcy today sending shares tumbling 77.34% or 0.24 cents to 0.07/share.

LaBranche (LAB | Quote | Chart | News | PowerRating) - The largest stock specialist firm on the NYSE was a bright spot on this dark day, climbing 16.45% or 0.75 cents to $5.31/share upon being raised to a buy by Goldman.

Oil fell another 0.50 cents to $37.47, gold dipped $11.90 to $808.80 and the VIX surged 13.57% to 49.14.

Market Snapshot
 
from 1.16


This was a tough week for the stock market. Earning fears and declining commodity prices due to shrinking demand pushed stocks lower on Monday. The market had a little boost Tuesday with Bernanke giving the thumbs up to Obama's stimulus plan. However, he urged the use of additional measures to help jump start the economy.

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News hit of mega influential hedge fund, SAC, selling its holdings in the retail and pharmaceutical sectors on Wednesday pushing the beleaguered stock market even further into the red. Dropping oil prices and good news about the economic bailout triggered a rally Thursday with stocks closing up across the board. Friday has been choppy with bad news from Bank of America and Citibank combined with good news on the bailout front pushed stocks in a roller coaster fashion mid afternoon. These types of topsy turvy situations are very painful to experience for long term investors. However, we are setting up for a once in a lifetime buying opportunity, as stocks hit bargain basement price levels.

EDIT

Estee Lauder (NYSE:EL - News) - One of the leading skin care and cosmetic companies worldwide has earned a 4 Long Term PowerRating. They are well known for many famous brands such as Clinique, MAC, Sean John, and Tom Ford. Amazingly, in these difficult times for consumer luxury products, the company posted impressive 1st fiscal quarter 2009 results. Earnings Per Share were up 30% with Sales Growing by 11%. The CEO, William Lauder, gave positive guidance into the rest of 2009, raising both the Sales Growth and EPS projections. Technically, the shares have been uptrending since November 24th with price hovering right above the 50-day Simple Moving Average at $30.01/share. $32.50 appears to be the next technical resistance level in the near term.

Flowers Foods (NYSE:FLO - News) - This packaged bakery foods company just moved to a 4 Long Term PowerRating. Flowers is well known for the Natures Own, Blue Bird, and White Wheat brands among others. Third quarter 2008 posted great results with sales being up 21.2% and a 21.8% increase in Net Income. They have upped their full year guidance for both 2008 and 2009. Another positive fact is they were just named the number one best managed food company among the 400 best big American companies by Forbes Magazine. However, the charts make one cautious with price downtrending below both the 50 and 200-day Simple Moving Averages. Fortunately, the stock may be starting a bounce here around the $22.00/share area.

EMC Corp (NYSE:EMC - News) - The world's leading developer of information infrastructure technology was upgraded to a 3 Long Term PowerRating. They specialize in data storage having recently posted record 3rd quarter results, 13% revenue growth and the 21st consecutive quarter of double digit revenue growth. Technically, the stock has been uptrending since November 24th, and is above the 50-day Simple Moving Average. Price seems to have hit a bit of resistance at the $12.00/share level.

Paychex (NasdaqGS:PAYX - News) - This outsourcing benefit, payroll and human resources company has been awarded a 4 Long Term PowerRating. Fiscal 2nd quarter 2009 was strong with a 6% increase in Revenue and a 7% increase in Net Income. Price is currently below the 50-day SMA and has been channeling between $25.00 and $27.00/share

Abbott Labs (NYSE:ABT - News) - The number one ranked stock in the S&P 500 with a 6 Long Term PowerRating. They just reported a 17.6 increase in sales for the 3rd quarter and raised the EPS outlook. Price is below the 50 and 200 day Simple Moving Averages but appears to be channeling between $49.00 and $54.00/share.

Stocks In The News

Here is a brief review of stocks that caught my eye from the news wires this week:

Apple (Nasdaq:APPL - News) - Dropped for the fifth straight day as fears of Steve Job's health pushed prices down.

Red Robin Burgers (NasdaqGS:RRGB - News) - Plunged after being downgraded by Piper Jaffray due to cutting its marketing budget.

Ecolab (NYSE:ECL - News) - The leading hotel cleaning chemical company climbed after announcing cutbacks and laying off 1000 workers.

Cypress Bioscience (NasdaqGM:CYPB - News) - Surged due to an FDA drug approval.

Prestige Brands (NYSE:PBH - News) - Collapsed after the maker of Prell shampoo and Clear Eye Drops was downgraded to underweight by JP Morgan.

Lexmark International (NYSE:LXK - News) - Fell as it missed revenue forecasts in the 4th quarter.

Bank of America (NYSE:BAC - News) - This bank dropped after agreeing to sell $10 billion dollars of stocks and warrants to the US Government.

Alcoa (NYSE:AA - News) - Posted its first quarterly loss in 6 years forcing the aluminum maker down.

This Week's Top Performers

Palm (NasdaqGS:PALM - News)

International Coal (NYSE:ICO - News)

Maguire Properties (NYSE:MPG - News)

This Week's Worst Performers

BlackRock (NYSE:BLK - News)

Monsanto (NYSE:MON - News)

M&T Bank (NYSE:MTB - News)

What To Look For Next Week

Thursday - Initial Claims, Housing Starts, Building Permits
 
Inaugural Stocks Slam, Financials Hit, VIX Spikes
January 20, 2009 | 04:50 PM

Optimism on the streets of Washington, DC, for Barack Obama's inauguration did not translate into a good day for the stock market. Stocks were slammed hard being led by the financial sector. Bloomberg's index of banks that receive government aid, the TARP index, plummeted 20% on fears that the federal intervention will not be enough to save the institutions. The DJIA broke the 8000 support level, falling -332.13 to 7949.09, the Nasdaq was knocked down -88.47 to 1440.86 and the broad based S&P 500 gave back -44.90 to 805.22.

State Street Securities (STT | Quote | Chart | News | PowerRating) - The world's largest money manager for institutions collapsed 59.83% or $21.75 to $14.60/share after posting a 71% fourth quarter earnings decline and not positive comments for 2009.

VSE Corp (VSEC | Quote | Chart | News | PowerRating) - The defense contractor dropped 45.01% or $20.90 to $25.54/share after the U.S. Army decided not to renew its contract.

Natus Medical (BABY | Quote | Chart | News | PowerRating) - The medical screener maker for newborns fell 25.73% or $2.55 to $7.36/share upon stating its EPS will miss analysts estimates.

Precision Castparts (PCP | Quote | Chart | News | PowerRating) - The biggest gainer in the S&P 500 climbing 5.51% or $3.05 to $58.39 after the jet engine forging maker beat analysts EPS estimates.

Oil climbed $2.23 to $38.74, gold added $15.30 to $855.20 and the fear index VIX spiked 22.86% to 56.65.

Market Snapshot
Dow
-332.13 7949.09

NASDAQ
-88.47 1440.86


S&P 500
-44.90 805.22






Economic News

Building Permits (Dec): Consensus: 615K, Prior: 616K

Housing Starts (Dec): Consensus: 610K, Prior: 625K

Initial Claims (Jan 17): Consensus: 548K, Prior: 524K

Crude Inventories (Jan 16): Consensus:NA, Prior: 1.14M
 
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