Weekly Market Overview

U.S. stocks were mixed today after oil prices soared above $100 barrel and reignited fears that inflation will further injure the already troubled economy. These higher oil prices combined with falling home prices and a volatile stock market has many consumers curbing their spending and worried about the future. The Dow Jones moved down around 11 points while other major indexes also closed lower on the day, but advacing issues are head of decliners on the New York Stock Exchange. In the end, the economy still can add oil back to its concerns today as investors struggle to grip just how severely all of this will affect the all-important consumer.

Top 10 Stocks to Watch this Week

Fundamental Analysis

1. Tyco Electronics (TEL) - After recently spinning off from Tyco this stock is down almost 10%, but is starting to catch the attention of value investors. The company is trading well below its peers with strong cash flows. It is also a victim of the spin-off effect, which has made it an even greater value to opportunistic investors. We believe that this company will outperform in the long-term.
2. Capital Southwest (CSWC) - Activist investor Ned Sherwood came out with an analysis on this company showing a $200/share valuation. The only thing holding shares back are practices by the company that can easily be changed if they so desire. Unfortunately, the company seems resistant to change now, but this is definitely a stock to watch incase they change their mind.
3. United Online (UNTD) - Classmates.com is one of the fastest growing social networking websites on the Internet and this company plans to spin it off real soon. Investors should keep an eye on this development as spin-offs not only represent great investment opportunities, but the social networking space is red hot with names like Facebook and Myspace in the news constantly.
4. The Brinks Company (BCO) - Activist hedge funds Pirate Capital and MMI Investments are still fighting the company to unlock value through a divesture of several key businesses. Given the difficult credit market, some are now questioning whether or not this is possible. However, if credit markets improve and they hedge funds are successful during the next annual meeting, this stock could soar.
5. Ceridian Corporation (CEN) - This activist target has agreed to bend to the pressure of the hedge funds and is definitely a company to watch ahead of its annual meeting where it will fight to retain its incumbant board members. If Pershing Square is successful in installing its own board members, we could see significant share appreciation.
   

Technical Analysis

1. Priceline.Com Inc. (PCLN) - Intermediate-term bullish symmetrical continuation triangle.
2. Hansen Natural Corporation (HANS) - Intermediate-term bullish symmetrical continuation triangle.
3. Millicom International Cellular S.A. (MICC) - Intermediate-term bullish symmetrical continuation triangle.
4. Genentech Inc (DNA) - Intermediate-term bullish triple bottom.
5. Superior Essex Incorporated (SPSX) - Intermediate-term bullish megaphone bottom.
   

Stock of the Week : Verizon and AT&T (VZ, T)

Verizon Communications Inc. (NYSE: VZ) and AT&T Inc. (NYSE: T) shares moved sharply lower after the two telecom providers announced new flat-rate plans. The move marks a shift from high margin services to lower margin staples that could put pressure on margins and may spark further reduction in prices aimed at increasing users. The commoditization of the wireless voice service industry is a move that many investors expected but dreaded as it could end up curbing growth rates and reducing valuations for many telecom providers. So, what does all of this mean for shareholders of VZ and T? (Read More)

Article of the Week : Short Selling for the Average Investor

Short selling has traditionally been a technique reserved for the expert traders and investors, but a new set of ETFs released by ProShares may quickly change the landscape. Now, average investors can do more than just sit on the sidelines in a bear market – they can “safely” purchase ETFs that will enable them to profit from declines in the marketplace without being forced to open a margin account. (Read More)

Final Words

The market remains depressed and investors should be careful when investing in these climates. It is best to keep in stocks with international exposure and no credit risk.