Tag - Cbl

As of press time, 4:00 P.M. Eastern, stocks on the broader indices were up. The Dow was down 2.49 points to 8,762, the Nasdaq up 17.73 points to 1,860.13, and the S&P 500 was up 3.22 points to 942.42.

The Russell 2000, the index tracking the 2,000 largest small cap stocks, was up 4.02 points, or 0.77%, to 528.57.

Leading today's small cap gainers was Sequenom (Nasdaq:SQNM) up 45.97%. Sequenom provides genetic analysis products for biomedical research, molecular medicine, and non-invasive prenatal testing. As I've been saying for the past couple weeks, the sector rotation to defensive stocks like biotech and healthcare has started.

Other small caps showing leadership today include Spreadtrum Communications (Nasdaq:SPRD) up 23.76%; Satyam Computer Services (NYSE:SAY) up 34.93% on surprising the market with profits from the December quarter; Movado Group (NYSE:MOV) up 25.8%; and American Axle & Manufacturing (NYSE:AXL) up 22.45% after having broken through it's 200 day moving average for the second time since over a year ago and despite reporting that it will encounter production shutdowns due to the bankruptcy proceedings of General Motors (OTC:GMGMQ.PK) and Chrysler.

Showing the wrong kind of leadership in today's session-that is, the biggest decliner-was youth fashion creator Quiksilver (NYSE:ZQK) shedding 20.17% off it's opening price to be at $2.88 at press time. Shares dropped precipitously after it was announced that Quiksilver's profit was a penny shy of analysts' estimates.

Other stocks with investors seeing red today include LCA-Vision (Nasdaq:LCAV), provider of LasikPlus, down 14.11%; famed golf equipment maker Callaway Golf (NYSE:ELY) down 15.8% on news of it's dividend cut from 7 cents per share to just one cent per share; CBL & Associates Properties (NYSE:CBL) down 12.8% after releasing its full year outlook below consensus expectations and announcing an offering of 50 million shares of common stock.

*****Bravo. The government's handling of the financial crisis and recovery should be recognized as a masterful performance. At least, so long as you don't look too deeply into the numbers…

Bernanke and Co. have managed to restore confidence to the point that economist Paul Krugman has joined the ranks of those who think we are only a couple months away from actual GDP growth.

And they've accomplished this remarkable feat by stringing investors along with one carrot after another…

*****The first carrot was bailouts and stimulus packages. There was a time when stimulus spending was going to save or create 3.5 million jobs. Now, states are wondering where the stimulus money is. And the president is now promising 600,000 jobs will be created by stimulus spending.

But layoffs have slowed considerably according to the most recent non-farm payroll report. And Americans, feeling more secure in their jobs, may not notice that stimulus jobs won't be there, even if they need them.

*****The Public-Private Investment Program (PPIP) was supposed to remove toxic assets from bank balance sheets. Never mind that the banks probably never had any intention of selling at fire-sale prices and investors weren't thrilled with paying unreasonable prices, no matter how much of the transaction would be funded by the Treasury.

Geithner's "stress tests" resulted in banks raising their capital bases. That has helped remove the incentive to dump those toxic assets. 

And as for the $74 billion banks have raised so far, do not misunderstand all the talk of "green shoots". These green shoots were not economic recovery per se. Rather, the green shoots were the banks stock prices shooting higher after accounting rule changes allowed them to show a profit where there was none.

In other words, the economic recovery is something akin to an illusion -- those inflated stock prices have allowed the banks to raise enough capital to appear healthy and last a little while longer…

*****Now that investors have breathed a sigh of relief that the problems with the auto industry are being resolved, the Chrysler sale to Fiat has been put on hold. Funny, I would swear a couple weeks ago, Chrysler would go bankrupt and millions would lose their job if Fiat didn't buy Chrysler right away.

*****And then there's TARP - the $700 billion boondoggle. Some banks have been asking to repay the money for months. But ever-sensitive to the all-important timing element of a good comedy, the Treasury has been unwilling to accept payment.

After all, why spoil the party by letting all the good news out at once? Why not wait until the rally is looking weak to release the news that, hey, maybe we'll accept TARP repayments after all? And maybe those payments will be more than anyone expects?

But let's make sure we string the announcement out as long as possible and let the threat of good news keep the bears at bay…

*****Of course, you can only fool all of the people for a while. Eventually, without a real pickup in economic activity, the millions of Americans who are barely keeping their head above water will sink. And then all the issues the "stress tests" glossed over (higher unemployment, rising foreclosure rate, etc.) will cripple the banks once again.

As economist Joseph Stiglitz of Columbia University recently told Bloomberg: "There's a chance that it might work...If it does, then they'll look like the brilliant general. But all these efforts also bank on the economy recovering and housing prices not falling too much further. Those are not safe assumptions."

P.S. I normally don't like to be the guy who says "I told you so", but for today I will. Back when the PPIP was first floated by the Treasury my diligent research in my Top Stock Insights advisory service spotted three stocks that would profit big time if the PPIP went through and profit modestly even if it did not. We did it. In a matter of weeks - not months or years - we profited on Legg Mason (NYSE:LM) for 8.16%, BlackRock (NYSE:BLK) for 9.1%, and AllianceBernstein (NYSE:AB) for 12.77%. Top Stock Insights readers booked these gains DESPITE the collapse of Geithner's PPIP plan. To find out how you can see steady and consistent gains no matter what happens, check out Top Stock Insights at http://www.topstockinsights.com/.

The Russell 2000 (NYSE:IWM) managed to end Monday in the green, rising 1.28% at closing. Some of today’s small-cap gainers were TransGlobe Energy Corporation (NYSE:TGA), RXi Pharmaceuticals (NYSE:EAT) and Anaren Inc. (Nasdaq:ANEN).

Other Market Watch highlights today included:

• Existing home sales came in at an annual rate of 4.74M units, above the forecast of 4.4M. Sales were up 6.5%, compared with a slide of 9.4% in Nov.
• Leading indicators came in at +0.3%, better than the projection for -0.3%. This marked the first rise in leading indicators since June 2008.
• For the New Year, the Russell is now down 9.9%, while the Dow is off 7.5% and the S&P 500 is down 7.3%.
• Commodities in general rose slightly on the day, with the Commodity Research Bureau Index up 0.6%. 
• The biggest percentage movers today were dominated by small banks and financial institutions (the KBW Banking Index tumbled 1.7%). 
• Looking at the chart picture for small caps, the market is basically waffling up and down in the range set on Obama’s inauguration day.
• The market will get more information on the housing sector via Thursday’s . . .

Small-cap stocks eked out a modest advance Monday, enduring an up and down session in which better-than-expected economic data and enthusiasm about M&A activity dueled with bank worries and job loss jitters. In the end, the Russell 2000 (NYSE:IWM) closed up 5.70, or 1.28%, at 450.06. For the New Year, the Russell is now down 9.9%, while the Dow is off 7.5% and the S&P 500 is down 7.3%.

On the data front this morning, reports on existing home sales and leading indicators both beat the forecast for a rare upbeat showing out of economic data. The National Association of Realtors said that existing home sales rose 6.5% in December to an annual rate of 4.74 million units, well ahead of the projection of 4.40 million. As for leading indicators, the Conference Board said that an index of economic indicators rose 0.3% in December, which also was a much better showing than the forecast for a drop of 0.3%. It also marked the first rise in leading indicators since June.

The market will get more information on the housing sector via Thursday’s new home sales report, but the bulk of homes sold in America come via existing home sales, so today’s report was truly a ray of sunshine for a market that is teetering back on the verge of the bear market lows from November. The Russell is now down more than 13% from the January peak and last Friday generated the lowest weekly close since those bear market lows were carved out in November and the second-lowest weekly finish in more than five years. There is a large segment of market watchers who believe that the economic collapse started in the housing arena and the recovery won’t start until home prices stabilize and start to work higher. That camp got a rare positive signal today.

In addition to the economic data, a massive acquisition in the pharmaceutical arena was announced this morning before the open, with Pfizer Inc. (NYSE:PFE) — the world’s largest pharma firm — announcing plans to buy Wyeth (NYSE:WYE) for $68 billion, the largest deal in that sector for years. Pfizer shareholders didn’t care much for the news because the company will cut dividends to help pay for the purchase, and PFE shares retreated some 10%. From an overall market standpoint, . . .