The stock market moved mostly sideways today without much economic data or major stories on the break today. The market opened slightly lower and traded in a thirty point range most of the day to end in the red. The large story of the day that lingered over the market revolved around Europe and fears over the bloc’s inability to maintain low debt and improve growth. The financial leaders from the 16-country EU-bloc gathered to try to address a way to stabilize the bloc’s economic problems. Yet, fears of more problems in Italy, Spain, Portugal, Hungary, and other nations is growing. At the same rate, the US economy was bolstered by comments from Bernanke that the Fed is prepared to buy $600 billion Treasury bonds if necessary in order to boost economic growth. The two stories weighed against one another, causing the market to trade sideways.
The Dow finished down almost 20 The Nasdaq finished up 3.5. The S&P 500 finished down 1.5. Gold finished up 20.
There was a major lack of economic data and news out today. Goldman Sachs commented that they are bullish on the US economy, and think 2011 will be another year of gains for the market. The financial institution thinks the economy will grow 4%, but gains will not be substantial as investor fears should continue to be maintained. Additionally, it appears that for the time being Washington will not be able to cut any taxes as Obama has to make successions to the new powerful Republicans. Right now, The Oxen Group is bullish on the USA’s economy. We are seeing a lot of positive things going on here, and we continue to be bogged down by outside forces and stories. These price in much smaller than US problems, and with most of them into the figures, a lot of green could be ahead.
On the docket for tomorrow, we have same-store sales for retail and the Redbook weekly measure of store sales. Other than that, we have consumer credit at 3 PM. Nothing too big as far as economic data. There will probably be something out of Europe as well on their decision as to what to do for helping their credit that should be bullish.
The Oxen Group performed well today with two winners and entry into two new positions. We ended the day holding KERX, BIG, and IRE. The big winner of the morning was Trina Solar (TSL). We had an average entry at 23.20, and we exited already 1/3 of the position for a 2% gain. We got out of the last 2/3 for a 4.25% gain at 24.20. That gave us a solid average exit of 24.01 or 3.4%. We also were able to exit HGSI, our Midterm Trade from Friday, for a gain of 2% at 25.65 after entering at 25.15 on Friday. The stock made large gains to start the day, but an FDA decision to delay approval of the company’s new drug weighed on the stock, and we wanted to take gains before that occurred.
Moving into tomorrow, as I noted, we are holding KERX, BIG, and IRE as buys. We are targeting exits for KERX above 5, BIG above 29.50, and IRE above 2.20. I am confident about the markets, moving into tomorrow. The market has priced in fears of Europe at this point, and the USA economy and data has been very solid as of late. Lots of bullish stories that are not really moving the market. I expect a bullish move on European news that they are going to have some instrument in place to help with credit problems as well as more positive news for the American economy.
The top performer in the marketplace was Verigy Ltd. (VRGY), moving over 43% today. The company announced today that they are close to a deal to be bought by Advantest. This news come just after last week Verigy went out to buy LTX-Credence. The deal is worth $727M, which is a 33% premium for VRGY shares. Unfortunately, we exited VRGY last week. On the flip side, LTX-Credence was hit with a major loss over 12% on the day upon the news of Advantest’s purchase of VRGY as it led the way for the dogs of the day. The news of the VRGY purchase would wipe out the LTXC deal, and the company lost a lot of value.
Oil hit its highest price of the year and the past 26 months as it rose to $89.38, rising 19 cents. Oil moved higher on news from Bernanke about the possible stimulus option. Additionally, the cold has set in upon many parts of the USA, which will raise the demand for oil for heating purposes. Oil may be hit though if the Euro cannot recover, and the dollar continues higher.
This afternoon, the only earnings are coming from Pepboys (PBY), which is expecting a 0.08 EPS over 0.04 from one year ago. I liked this stock as a possible Overnight Trade, but it is too overvalued at this time. For tomorrow morning, Autozone (AZO) and Talbots (TLB) lead the way for earnings. We are in the doldrum days of earnings, so this will not be a huge part of our investment outlook over the next couple weeks.
Blunder of the Day: This comes from the wonderful production studio of Universal Pictures, Rogue Pictures, GE, and soon-to-be parent Comcast. While movies are never a huge drag on GE, the whole NBC Universal group was not a smart investment. The latest proof comes from The Warrior’s Way. The only new release over the weekend, which I had never heard of before this story, was obviously not heard of by anyone else. The movie only brought in just over $3M, and it finished in 9th place. The movie cost $45M at least to produce. Yikes!
Cartoon of the Day: 
Quote of the Day: Ben Bernanke commenting that he is 100% sure he can maintain inflation…YEAH RIGHT!
Good Investing,
David Ristau
