Weekly Market Overview
U.S. markets were closed on Monday for Presidents Day, but quickly picked up where things left off on Tuesday. The week started off with several big stories, including oil spiking back above $60/barrel, the yen weakening vs. the dollar driving the Nikkei, and gold rallying on inflation worries. Meanwhile, Latin American markets reversed recent losses to make record closes, making a continued upward trend that has already lasted through last year. Domestic markets ended down so far this week with inflationary concerns and Fed uncertainties weighing down on stocks. Overall, this week should be mixed for most stocks as the economic climate struggles to find a balance.


Top 10 Stocks to Watch this Week
Fundamental Analysis
Our top five stocks to watch for fundamental investors are:

1. Cost-U-Less, Inc. (CULS) - There are two hedge funds currently involved with this stock, both calling for the company to put itself up for sale. One of the hedge funds has even said it would make an offer. If the two hedge funds are successful in lobbying management, the company should sell for at least $12 per share - a 40% gain. (More CULS articles...)
   
2. Temple Inland Inc. (TIN) - Carl Icahn said that this company is being held back due to its conglomorate structure. Consequently, he recommended that the company be broken up and its different division spun off into new companies. This presents a great spin off opportunity led by one of the best activist investors of our time. (More TIN articles...)
   
3. Ceridian Corporation (CEN) - Bill Ackman propposed that Ceridian spin off its Comdata division since the two share almost no synergies. Moreover, he said that the segment was being held back by the parent company. This is another great spin off opportunity that would help both the parent company and the child company... and Bill Ackman definitely knows what he is doing! (More CEN articles...)
   
4. Applebees International Inc. (APPB) - The Breeden Partners recently filed a series of Schedule 13Ds suggesting that the company improve several defficiencies, including its excessive executive compensation. If these issues are appropriately addressed, it could help the company save millions and increase their share price significantly. (More APPB articles...)
   
5. Electro Scientific Industries (ESIO) - Nierenberg Investment Management first lobbied this company to take several actions to return shareholder value. Since then, they have been joined by another hedge fund. Combined, these two should have enough leverage to at least warrant a response by management. If they are successful, it could mean special dividends or other measures aimed at unlocking value. (More ESIO articles...)
   

Technical Analysis
Our top five stocks to watch for technical analysts are:

1. UTStarcom, Inc. (UTSI) - Chart shows a head and shoulders bottom pattern, intermediate-term bullish signal.
   
2. FuelCell Energy, Inc. (FCEL) - Chart shows a megaphone bottom, intermediate-term bullish signal.
   
3. Kohl's Corporation (KSS) - Chart shows an upside breakout, intermediate-term bullish signal.
   
4. L-1 Identity Solutions, Inc. (ID) - Charts shows a symmetrical continuation triangle, intermediate-term bullish signal.
   
5. Smart & Final, Inc. (SMF) - Chart shows an ascending continuation triangle, intermediate-term bullish signal.
   

Stock of the Week : CSK Auto Corporation (CAO)
We believe that this company presents great opportunities for investors to profit over the next year. Karsch Capital Management has been involved with the company for some time, attempting to unlock value through a sale. The problem is that the company has been struggling with earnings restatements to satisfy both the SEC and exchange listing requirements. These restatements have caused uncertainty, which has led to a depressed share valuation. Consequently, Karsch believes that once the company has solved these problems, they could become an attractive takeover target. While the company has denied their request to voluntarily accept proxy solicitations to make this plan materialize, the hedge fund vowed to continue their fight. They insist that they have been contacted by several private equity parties interested in a potential acquisition. And with a 9% stake in the company, they may have enough say to make it happen at a nice premium for shareholders. This makes CAO a stock definitely worth watching!

Read More on SECInvestor.com…


Filing of the Week : Form 8-K
Most information reported by a company comes in the form of an 8-K filing. These filings are classified as "Current Event" filings that encompass almost anything that may happen to a company. One trick that investors can use when evaluating a company's news is to skip past the standard media which can be biased and move directly to the related 8-K statement to find the exact numbers and information behind the story. Recently, executive compensation laws have also made compensation discussion and analysis an important part of 8-K filings covering changes in executive compensation contracts and agreements. These make for interesting reading when evaluating such information for potential investments.

You can easily track these SEC filings with e-mail and RSS alerts using SECFilings.com!


Tip of the Week : Stocks Versus Commodities
Many individual investors are only familiar with the stock and bond markets along with their derivatives (like options). While both of these offer the most liquidity and investment information, there are many other opportunities in the futures and commodities markets. Commodities like corn, wheat, and other grains actually offer greater volatility, and therefore greater opportunities for profit or loss. Rather than transacting shares of stock, futures traders buy and sell contracts for future delivery of goods. Factors affecting pricing of these commodities are far more supply and demand based rather than fundamentally driven. Specifically, factors like weather and worker strikes can greatly affect prices. Recently, corn has appreciated significantly in value due to shortages in Mexico along with the dramatic growth in corn-based fuels (ie. Ethanol). While this market can be complex for beginners, it offers opportunities for more advanced investors looking to move into the trading aspect of the capital markets.


Final Words
This week should be mostly mixed as investors await a clearer sign of economic direction. However, investors to date have shown significant optimism in their decision to stay vested in stocks and bonds, so there may be a bias to the upside towards the end of the week. Good luck trading!