Weekly Market Overview

Stocks fell modestly on Columbus Day as many investors remain cautious going into earnings season along with a slew of economic reports due out later this week. Many are especially cautious after some early earnings troubles in the transportation sector, which is seen as bad news under the so-called "Dow Theory". Weak transportation may signal weakness in the broader market since the sector often serves as a precursor for companies other than technology. More, with several major indexes at near-peak levels, many investors are concerned about a possible retracement upon weakness. In the end, investors should invest very cautiously in today's markets.

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. (Read More)
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. (Read More)
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. (Read More)
4. 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. (Read More)
5. Ceridian Corp. (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. (Read More)

Technical Analysis

1. Wal-Mart Stores  Incorporated (WMT) - Intermediate term bullish head and shoulders bottom.
2. Liberty Media Holding Corporation Interactive (LINTA) - Intermediate term bullish double bottom.
3. Sears Holdings Corporation (SHLD) - Intermediate term bullish double bottom.
4. Bookham  Incorporated (BKHM) - Long term bullish head and shoulders bottom.
5. Wyeth (WYE) - Intermediate term bullish double bottom.
   

Stock of the Week : Sprint Nextel Weights Its Options (S)

Sprint Nextel (NYSE:S) is being pressured to field shareholder questions about the future strategic and operational direction of the telecom provider following Ralph Whitman's growing impatience with CEO Gary Forsee. Many analysts are now looking at a wide range of strategic options that the company could consider to unlock value and narrow its focus. (Read More)

Article of the Week : New Profits From Closed-End Funds

A look into a new strategy being used by some hedge funds to unlock value in their investments quickly through corporate restructuring. (Read More)

Final Words

The market remains optimistic despite questionable yields and other economic data. While this is good news for investors in the short term, be sure to use caution and only invest prudently.

Weekly Market Overview

Stocks began the week on a positive note after the Dow crossed the psychological 14,000 mark for the first time since late July. Many investors and analysts seem confident that the credit crunch is over and that further interest rate cuts lie ahead. Meanwhile, fourth quarter earnings are widely expected to beat estimates after a series of writedowns by major investment banks and other companies. Some factors should have weighed down on the market, such as a decline in manufacturing activity, but didn't seem to stop the market from moving up over 200 points intraday. This is great news for investors, but everyone should be careful in this volatile market.

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. (Read More)
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. (Read More)
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. (Read More)
4. 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. (Read More)
5. Ceridian Corp. (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. (Read More)

Technical Analysis

1. 3com Corporation (COMS) - Intermediate term bullish megaphone bottom.
2. China Bak Battery  Incorporated (CBAK) - Long term bullish rounded bottom.
3. Ncr Corporation (NCR) - Intermediate term bullish symmetrical continuation triangle.
4. Owens-Illinois  Inc. (OI) - Intermediate term bullish continuation diamond.
5. Weight Watchers International  Incorporated (WTW) - Intermediate term bullish symmetrical continuation triangle.
   

Stock of the Week : Biovision Faces Uphill Battle (BIVN)

Bioenvision Inc. (NDAQ:BIVN) may have trouble pushing through its proposed merger with Genzyme after a major shareholder reiterated its intentions to vote against it in the company's upcoming annual meeting. Shareholders are divided on the issue that promises to be a close call on October 14th. (Read More)

Article of the Week : Understanding Subprime Mortgages

Subprime mortgages have been causing quite the stir in Wall Street, but what are these types of mortgages and how might the failure in this relatively small sector of mortgages affect the larger economy? (Read More)

Final Words

The market remains optimistic despite questionable yields and other economic data. While this is good news for investors in the short term, be sure to use caution and only invest prudently.