Stocks had their biggest pullback in over a week on Thursday, a day after the Fed announced a $1.2 trillion asset purchase plan. Energy stocks were gainers however, as a falling greenback sent dollar denominated commodities higher; while crude closed the day over $51 per barrel. The Dow Jones industrial average fell 85.78, or 1.2 %, to 7,400.80. The Standard & Poor’s 500 index fell 10.31, or 1.3 %, to 784.04, while Nasdaq composite index fell 7.74, or 0.5 %, to 1,483.48. After hitting decade lows, the Dow is still up 13 % and the S&P 500 index is up 15.9 % over the past eight trading days.

The Treasury Department will provide up to $5 billion in financing to troubled auto parts suppliers who are linked to Detroit’s carmakers; with the funds coming out of the TARP.

Morning Outlook

Surging commodity and mining stocks weren’t enough to lift markets positive overseas. In Europe, financial led the market lower. Britain’s FTSE 100 lost 0.5 %, Germany’s DAX shed 0.8 % and France’s CAC-40 was off 1.6 %.

Hong Kong’s Hang Seng led the region’s declines, falling 297.41 points, or 2.3 %, to 12,833.51, and Australia’s benchmark S&P/ASX 200 stock index lost 0.4 % to 3,465.8. Japan’s market was closed for a holiday. The weaker dollar has really troubled the region over the past few days because of their heavy reliance on exports which will look more expensive.

In the U.S., Wall Street looks to close out the week on a high note. So far in the pre market, futures are mixed. Ahead of the market’s open, Dow Jones industrial average futures rose 3, or 0.04 %, at 7,414. Standard & Poor’s 500 index futures fell 2, or 0.3 %, to 773.10, while Nasdaq 100 index futures rose 0.75, or 0.06 %, to 1,204.25. There are no economic reports due out today; therefore it will be interesting to see what drives the day’s trading.

On the Corporate Front

General Electric (GE) expects GE Capital to be profitable in the first quarter of 2009 and for the full year. Shares of the company have been hammered on worries that their credit arm will continue to face severe losses. However, the stock has gained over 35% since S&P gave the company a stable credit outlook.

Xerox (XRX) is cutting its 1st quarter profit outlook by 80%; the company now expects earnings per share in a range of 3 cents to 5 cents, down from its earlier forecast of 16 cents to 20 cents.

Economic Calendar

We are free today!

This whole feud has become quite funny and has exposed CNBC as the joke to which they are. But I digress…

Wall Street surged for a third straight day as the market recovers off of its lows of the bear market. the Dow rose 239.66, or 3.5 %, to 7,170.06. The Standard & Poor’s 500 index climbed 29.38, or 4.1 %, to 750.74. The Nasdaq composite index gained 54.46, or 4 %, to 1,426.10. Standard & Poor’s stripped General Electric (GE) of its AAA rating, citing the expectation for poor earnings at its finance unit, and assigned a “stable” outlook. Despite the news, the cut of only one grade sent the market higher as many thought the rating agency would downgrade the company further. In addition, the chairman of the independent Financial Accounting Standards Board (FASB) came out and stated that new guidelines will be set forth regarding the mark to market accounting rules that have hammered financial institutions.

Morning Outlook

After falling yesterday, markets overseas rallied to close out the week. Renewed hopes of additional stimulus measures sent Asian equities higher. Japan’s Nikkei 225 stock average jumped 371.03 points, or 5.2 %, to 7,569.28, and Hong Kong’s Hang Seng climbed 524.27 points, or 4.4 %, to 12,525.80. In Europe, the FTSE 100 index of leading British shares was up 62.70 points, or 1.7 %, at 3,774.76, while Germany’s DAX rose 36.85 points, or 0.9 %, to 3,993.07. France’s CAC-40 was up 42.72 points, or 1.6 %, to 2,736.97.

Here in the U.S., the rally looks to be sustained for the 4th straight day. Dow futures rose 79, or 1.1 %, to 7,195. Standard & Poor’s 500 index futures jumped 8, or 1.1 %, to 756.40, while Nasdaq 100 index futures rose 3, or 0.3 %, to 1,166. This is the first rally the market has seen since November. With a lot of money on the sidelines, a rally fueled by traders combined with additional economic/corporate news could put some confidence back in equities.

Economics Calendar

The Federal Reserve reported that household net worth dropped by a record 9 % from the level in the third quarter. The decline was the sixth straight quarterly drop in net worth an0% below its 3rd quarter peak in 2007 of $64.36 trillion

8:30 AM
International Trade: Measures the difference between imports and exports of both tangible goods and services. Imports may act as a drag on domestic growth and they may also increase competitive pressures on domestic producers. Exports boost domestic production. We have had huge trade deficits in recent years, with foreign countries able to produce goods cheaper. The trade gap is expected to contract to $38.1 billion in January on reduced demand for imports. The trade gap narrowed by $39.9 billion in December.

8:30 AM
Import Prices: The prices of goods that are bought in the United States but produced abroad for the month of February. These prices indicate inflationary trends in internationally traded products. The consensus is for a decline in prices of 0.8%. Lower demand, equal supply, results in lower prices.

9:55 AM
Consumer Sentiment: Consumer sentiment is directly related to the strength of consumer spending, by questioning 500 households each month on their financial conditions and attitudes about the economy. The consensus reading for March is 55, down from February’s reading of 56.3.

The massive, diversified company seems to have fell into the trap of others, overreaching their capital units with extreme leverage and have now put the stability of the overall company at risk.

In January, General Electric (GE) announced that 4th quarter profit fell 46% to $3.65 billion, or 35 cents per share. Revenue fell 5 % to $46.2 billion from $48.5 billion a year ago. The report stated that 2009 will be “extremely difficult”, however the company stopped giving forward guidance.
In a statement Friday, CEO Jeff Immelt said that GE’s board of directors cut the payout to strengthen its balance sheet and provide “additional flexibility.” This will no doubt be CEO Jeff Immelt’s legacy after continually repeating that this step was not necessary.

Everyone knew that given the company’s falling share price, which the sustainability of a 31 cent quarterly dividend was unrealistic regardless of what the corporate executives said. GE, which has paid dividends every quarter since 1899, said in December that its dividend would cost $13.4 billion out of a projected 2009 cash flow of $16 billion. The reduction on Friday to 10 cents starting in the 3rd quarter marks the company’s first dividend cut to shareholders since 1938.

In mid December, Standard & Poor’s lowered the rating outlook on GE Capital Corp., the financial arm of General Electric Co.(GE) to negative from stable because of its reliance on confidence-sensitive wholesale funding. By definition, GE has a 1 in 3 chance of being downgraded from its AAA rating in the next 2 years.

According to one analyst, “GE is nothing but a hedge fund with a light bulb on top” The company derives about half their revenue from GE Capital, and in the current credit environment, what is on the company’s books isn’t extremely clear.

On Friday, GE shares fell 59 cents, or 6.5%, to close at $8.51 Friday. Based off of that closing price, the annual dividend yield is 4.7% which Is still pretty generous as the stock trades at its lowest levels since the mid 1990’s.

The market gave back some of its gains yesterday as financials continue to drag as well as news from Microsoft (MSFT). The Dow fell 105.30, or 1.28 %, to 8,122.80. The Standard & Poor’s 500 index fell 12.74, or 1.52 %, to 827.50 while the tech heavy Nasdaq composite got hit especially hard by the news from Microsoft, dropped 41.58, or 2.76 %, to 1,465.49. The Russell 2000 index of smaller companies fell 13.91, or 3.05 %, to 442.85. The small caps definitely lead the way up and conversely lead the way down in the volatile environment.

About 4 out of every 5 stocks on the NYSE were in the red in Thursday’s session.

Morning Outlook

Asian markets got hammered overnight, closing lower for the 3rd consecutive week. Japan’s Nikkei 225 dropped 3.8 % to 7,745.25, while Hong Kong’s Hang Seng Index lost 0.6 % to 12,578.60 and South Korea’s Kospi sank 2.1 % to 1,093.40.

It was announced today Britain fell into a recession in the 4th quarter; GDP fell 1.5%. Britain’s benchmark FTSE 100 index fell 1.6 % to 3,987.04. Germany’s DAX lost 2.7 % at 4,105.73 and the French CAC 40 is retreating 2.4 % at 2,802.34 in afternoon trading.

As we head into the weekend, yesterday’s losses seem to continue as futures trade downward. Dow Jones industrial average futures fell 167, or 2.06 %, to 7,925. Standard & Poor’s 500 index futures declined 15.2, or 1.84 %, to 810.30, while Nasdaq 100 index futures fell 22.25, or 1.90 %, to 1,150.00.

On the Corporate Front

Former Merrill Lynch CEO John Thain agreed to resign from Bank of America (BAC) less than a month after the brokerage giant was acquired by the nation’s largest bank by assets. He was placed under extreme scrutiny in December when he requested a $10 million bonus, then most recently after Merrill posted exorbitant losses in the 4th quarter.

Microsoft Corp. (MSFT) is cutting 5,000 jobs over the next 18 months — more than 5 % of its work force, including an immediate 1,400 on Thursday.

Google (GOOG) reported 4th quarter results after the bell, making $382 million, or $1.21 per share, in the three months ending in December; a 68 % drop from the same period in 2007. Revenue stood at $4.22 billion, approximately $100 million above estimates. After onetime expenses, the company beat the street by earning $5.10 per share compared to expectations of $4.95.

General Electric (GE) announced that 4th quarter profit fell 46% to $3.65 billion, or 35 cents per share. Revenue fell 5 % to $46.2 billion from $48.5 billion a year ago. The report stated that 2009 will be “extremely difficult”, however the company stopped giving forward guidance.

Samsung lost $14.4 million in the quarter ending in December. This is the company’s first quarterly loss as the global financial crisis halted demand for products from the world’s largest manufacturer of flat screen televisions, memory chips and liquid crystal displays. The most disturbing note from the report was how the company’s operating loss was almost 3 times greater than expected.

Wall Street extended its losses Thursday, as a negative ratings outlook on General Electric Co from S&P accelerated selloff in a fairly calm market. It was amusing watching CNBC try to spin that news. Energy stocks got whacked as the January contract, which closes on Friday, fell 9%, or $3.84, to settle at $36.22 after dropping as low as $35.98, levels last seen in June 2004. At the close, the Dow fell 219.35, or 2.49%, to 8,604.99. The Standard & Poor’s 500 index fell 19.14, or 2.12%, to 885.28, while the Nasdaq composite index fell 26.94, or 1.71%, to 1,552.37. The Russell 2000 index fell 7.42, or 1.52%, to 479.17.

Morning Outlook

Markets in Europe and Asia declined, led by commodity producers, on concern the deteriorating global economy will continue to cut demand for metals and oil. The Bank of Japan cut its main interest rate to 0.1%, a move that had been expected and announced that it will temporarily purchase commercial paper and increase its purchases of Japanese government bonds to lower yields on the government’s obligations and spur investor confidence. Tokyo’s 225 stock average dropped 78.71 points, or 0.9%, to 8,588.52. Hong Kong’s Hang Seng Index lost 2.4% to 15,127.51

The FTSE 100 index of leading British shares was down 117.91 points, or 2.72%, at 4,212.75. Germany’s DAX was 89.20 points, or 1.88% lower, at 4,667.20. The CAC-40 in France fell 52.09 points, or 1.61%, to 3,182.06.

U.S futures point to the downside in all three major indices on expiration Friday. Dow Jones industrial average futures are falling 73, to 8,605. Standard & Poor’s 500 index futures dropped 8 to 884.50, while Nasdaq 100 index futures lost 13.50, or to 1,212.00. There is still no clear future for the auto industry, and even though energy prices are plummeting and experts state that every $1 drop in the pump equates to $100 in consumer spending elsewhere and 3 million jobs, the state of the consume ris in no mood to spend their savings from the gas pump.

Auto Update

On the heels of plant shutdowns and other measures by the Big 3 as cash runs out, the Bush administration is seriously considering an “orderly” bankruptcy for the auto industry. White House press secretary Dana Perino said Thursday, “There’s an orderly way to do bankruptcies that provides for more of a soft landing. I think that’s what we would be talking about.”

On the Corporate Front

FedEx Corp (FDX) reported that net income for its fiscal second quarter ended November 30 rose to $493 million, or $1.58 per share. That compared with the $479 million, or $1.54 per share, the company reported a year earlier. The company reported revenue for the quarter of $9.54 billion, compared with $9.45 billion a year earlier. Analysts expected $9.78 billion.

Standard & Poor’s lowered the rating outlook on GE Capital Corp., the financial arm of General Electric Co.(GE) to negative from stable because of its reliance on confidence-sensitive wholesale funding. By definition, GE has a 1 in 3 chance of being downgraded from its AAA rating in the next 2 years.

Citigroup Inc. (C) had its senior debt rating cut two grades by Moody’s to A2 from Aa3 as a result of weakened earnings prospects.

Research in Motion Ltd.(RIMM) reported better-than-expected revenue guidance for the fourth quarter and strong holiday sales of its new smart phones. The company reported income of $396.3 million, or 69 cents per share, for the three months ended Nov. 29, compared with $370.5 million, or 65 cents per share, in the year-ago period. Excluding one-time charges, RIMM said its profit was $477.3 million, or 83 cents per share, while analysts expected income of 82 cents per share on sales $2.8 billion.

Stocks regained some lost ground as all three major indices finished green. Ford (F) stated the automaker has enough cash to make it through 2009 and might not need government help. Meanwhile, the market was encouraged after General Electric (GE) plans to pay a dividend despite projections that fourth-quarter results will near the low end of its previous guidance .In addition, the Federal Reserve said it will extend the duration of key programs aimed at loosening the credit markets and restoring stability to the financial sector. The Dow Jones Industrial Average rose 270.00, or 3.31%, to 8,419.09, the S&P rose 32.60, or 3.99%, to 848.81, while the NASDAQ gained 51.73, or 3.70%, to 1,449.80.

Morning Outlook

Indices advanced overnight in Asia after Wall Street rallied almost 4%. Japan’s Nikkei 225 stock average gained 140.41 points, or 1.79%. Hong Kong’s Hang Seng index rose 182.81 to 13,588.66 a 1.36% gain. The major European markets fell, led by Europe’s Dow Jones Stoxx 600 Index, which slid 1.5%. The FTSE 100 index of leading British shares was down 0.36%%, at 4,107.96. In Germany, Europe’s biggest economy had its index fall 53.23, or 1.17% to 4,478.56.

The market looks to return the gains made yesterday, where the Dow rose 3.31%, the S&P gained 3.99%, while the NASDAQ jumped 3.70%. Dow futures are down 75 points, or 1%, at 8357 and Standard & Poor’s futures off 9.3 points, or 1.1%, at 839.70. The NASDAQ is 1.5% to the downside at 1,117.25.

The final trading days of the week could be very volatile heading into the upcoming economic news of the employment situation and factory orders, which will shine a light as to how deep we are in the economic downturn.

Economic Calendar

8:15 AM
ADP Employment Report: The new ADP national employment report can help improve the payroll forecast by providing information in advance of the employment report. By tracking the jobs data, investors can sense the degree of tightness in the labor market. If wage inflation threatens, it’s a good bet that interest rates will rise in correlation with a fall in bond and stock prices.

8:30 AM
Productivity and Costs: Productivity measures the growth of labor efficiency in producing the economy’s goods and services for the 3rd quarter. Unit labor costs reflect the labor costs of producing each unit of output. Productivity growth is critical because it allows for higher wages and faster economic growth without inflationary consequences. The consensus change in nonfarm productivity is 0.9%, revised from 0.8% in orgional 3rd quarter estimates. A consensus change in unit labor costs of 3.6%, well up from original estimates of 2.8%. Expect this to be the highest figure to be seen in the next few quarters as growth and demand has steepened further. 4th quarter numbers are due out in February.

10:35 AM
EIA Petroleum Status Report: The Energy Information Administration (EIA) provides weekly information on petroleum inventories in the U.S. With the sharp fall in crude, it will be interesting to see if demand has continued to taper off as well. Any unexpected drop in inventories could signal strength in the economy, however a move up in crude oil prices could spark further inflationary fears and we could see a rebound in commodity prices.

No investor ever made money by sitting on the sidelines in times like these. However, you are never going to time the bottom. With those facts in mind, I looked at both value and how I could get some downside protection.

General Electric (GE) under $20, at its currents dividend would yield over 6%. As of Friday’s close, GE stands at $19.63, and is yielding 6.32%…Not too shabby. Now you may fear that GE Capital isn’t worth as much as previously thought or advertising revenue may fall even shorter than depressed expectations. However, at a 10 P/E I am ready to take a stake. Warren Buffett has warrants over $23 per share yielding 10% on his preferred stock

For downside protection in the current market, I looked at the March 2009 puts. The out of the money puts are pretty cheap, but also gives you a chance for profit if you don’t catch the bottom.

This is a Recap for Hot Stock Scan for Friday the 19th of September found HERE.

Unfortunately WAL was not shortable due to the no short list of 799 financial firms

HSWI from scan Thursday night where we were looking for a gap and weakness panned out exactly as anticipated and was one of the best shorts all day falling 20% from the open

NCT our short watch as well did just that closing 20% down on hte day and that’s after a full dollar and a half recovery. Near 30-35% gains from open!

AIG turned out to have two great intraday reversals, I played it pre market looking for the $4 break and got it

SKF was a great trade to start the open out on the right foot. I road it from low 87’s to over 90 twice within two minutes

AAPL had a nice gap and was up nearly $10 before selling off throughout the day and providing many many trading opportunities

GS consolidated mid day and based around $127 before testing $128 where I anticipated a squeeze through $130

GE thanks to CNBC gave us one of the best no brainer shorts of the day. It was at its prior resistance near $29 before the entire financial collapse so first and foremost the risk was low. Second, it was based on a move on the request to be added to the short list, not a bad pump on the day 799 financial stocks can no longer be shorted. They very well may be added BUT not before it gave us a $2/short to the downside from $28.72

GE also gave an exit to the value trade and those who did it cashed in on the dividend as well!

OK Let’s start the list of how many CEO & CNBC sponsored pump’s we can develop…

First GE asked to be added to the list heads from mid $26’s to nearly $29 first on the rumor, then the formal request, then thanks CNBC for letting us know when to short – wait 5 minutes let it squeeze, and walla you have yourself a short.  As you saw it gave us a great shorting opportunity at $28.72 locking in $1/share profit (since I wasn’t greedy and I like quick gains) but could have cashed in on nearly $2/share

Next is CIT waking up at $10.50 a share spiking to over $12 is just a little under two minutes, my question… whose next?

ISSC great short right out of the gate when it lost $7 support closing down 13%

PCYC another great short right out of open closing down 18%

IDMI reversal as anticipated closed up 12%

DTG great shorting opportunity today, at one point down over $2.00s/share!! Down over 30% climbing back and closing down 15% for the day.

ZYXI held $5 for now, should head towards $4s if it loses $4.90s

BIOD nice trade from the $5 range held support, might continue towards $5.50 tomorrow not sure how much more it has in it

COIN provided a lot of great trades today, this is a complete squeeze hoping to see a spike tomorrow offering more shorting opportunities intraday

Our value trade GE posted last night with a limit order buy at $27.75 did just that bottomed at $27.75 before hitting $28.43 after the dip.

We added a few stocks to the under the radar scan as well today.