Here is the commentary I am posting at Investools.com. It would have shown up during business hours but I forgot to hit "publish." Enjoy.

Market Commentary

Jeff Kohler

Lo and behold, the market ends the week on a sour note. The Dow Jones finished 120 points lower today, closing at 12,745. The NASDAQ finished down 5 points, closing at 2445; and the S&P 500 finished down 9 points closing out the week at 1388. Higher oil prices have put added pressure on the market this week as crude oil increased another $2.27 today, closing at $125.96 per barrel.

The big news in the financial sector came from Dow component American International Group (AIG). The company reported a larger than expected loss and chased it with a credit rating cut issued by Standard & Poors. The stock finished the day with an 8.8% loss and news that they are planning to raise over $12 billion in capital through an equity “bake-sale.” They also increased their dividend by 10% in the efforts of luring shareholders back to the sinking ship.

Soft commodity prices have been on fire lately with Corn staging a significant breakout this week, along with Pork Bellies, Soybeans, and Coffee trading higher within their respective “bottoms.” As you already know, Oil prices are out of control, and as of recently this has created an inverse performance with the broader market. If you’d like to see how this trend was played out over the last few days take a look at this comparison chart of the S&P and crude futures contract.

A month ago, the market responded positively to the surge in oil prices, but at these levels, there is a concern that higher energy costs will make it harder for companies to turn profits next quarter. As you continue to trade energy stocks to the upside, watch for bearish opportunities in the refiners. Gas prices are not increasing with the rise in Oil, and as a result this has put tremendous pressure on the refiners. Take a look at a recent favorite of mine, VLO.

Do not bet against hard commodities yet just, with the exception of Gold. Gold and gold mining companies look great for short or put opportunities at these levels. Keep an eye on GLD as the trend continues lower, and keep a few miners on your radar, such as BVN, AEM, GOLD, or ABX.

Speaking of commodities, one of my recurring themes I have discussed in each article over the last few weeks is that “I LOVE NATURAL GAS.” 2 weeks ago I discussed UNG, which is the ETF that tracks the performance of Natural Gas prices via futures contracts. UNG should present great profit opportunities when buying dips. However, if you are looking for top performing companies within the industry, here are the stocks I provided last week: ATLS, EGN, EOG, APA, and DVN.

Last but not least, the Dollar fell against most major currencies today. However, as I have mentioned in the past, I like the idea of buying dips in the dollar. You can do this through put options on the FXE, a long position in UUP, or a short position on UDN.

Technically Speaking

When planning your market posture for the upcoming week, pay close attention to the trend of the broad market over the last two months and the psychological levels of 1400 in the S&P, and 13,000 in the Dow. Hopefully we will see some conviction in which way prices are likely to trend. Looking at the image below, you can see we are near some good support levels.

Transports

FedEx (FDX) reported today that higher fuel costs are weighing on company profits. The company warned today that fourth quarter profits are likely to come up quite short of expectations. As a result, FDX traded down $2.84 today closing at $90.37.

The Dow Jones transportation index ($TRAN), which tracks 20 various airlines, railroads, and shippers still trends higher. If you are watching this group closely, pay attention to the relative strength/weakness candidates in this index. For example, over the last few articles I mentioned looking for opportunities to short airline stocks. Yet at the same time, I have also recommended looking at Dry Bulk Shippers to buy call options. Even though the trend of the group is moving higher, you can see the difference in opportunities that exist by breaking groups down even more.

Financials

Citigroup has announced that they are implementing plans to eliminate $500 billion in assets and continue its warpath of downsizing, which would cut the size of the company by nearly a fifth. The plan in being put into play to help the company grow revenue levels by as much as 9% over the next three years.

If you happen to be bargain shopping in this space, try to focus on some of the stronger performing stocks, and trade within the short term upward trends. A few examples include GS, MER, or a few of the online brokers, such as IBKR, TROW, or AMTD.

Technology

The NASDAQ continues to lead the market to the upside. Today Activision (ATVI) reported better than expected game sales, which pushed the company higher by more than 14%. Keep an eye on their main competitor Electronic Arts (ERTS) as they approach their earnings report next week. They are currently in the process of an acquisition of Take Two Interactive (TTWO), which happens to be the company that recently released the latest craze in video games, Grand Theft Auto 4.

Don’t forget about “Top Pick” Price line (PCLN), who reported stellar earnings last night. The company reported that economic troubles are not postponing their customers travel plans as they’ve noted a significant rise in travel bookings. The stock posted a $14.85 increase or a 12% rise in the stock price.

Semiconductors

NVIDIA (NVDA), which was one of this weeks “top picks,” reported an increase in quarterly profits by more than 34%, which topped analyst’s expectations. Not to mention, this increase happened to generate an analyst upgrade from “Sell” to “Buy.”

First Solar (FSLR) announced today that Citigroup has initiated coverage on their company, which included a price target increase set to $450 per share. As energy prices increase, there has been a steady demand for alternative energy solutions. Keep an eye on solar stocks over the next couple months via FSLR, LDK, TSL, JASO, and my favorite, CSIQ.

Follow Up

This week brought great returns in “Top Picks” PCLN, HANS, HOLX, GME, TSCO, CSIQ, and NVDA. As always, make sure you are tightening stop orders, or doing whatever is necessary to protect profits.

Economic Announcements

There are plenty of economic reports due out next week, including retail sales and CPI. To see the economic calendar, click here.

Earnings

Click here to see which companies will be reporting earnings next week.

Stock Splits

Take note of the companies that have upcoming stock splits. A few of these names are companies I trade personally, so you might want to double check the list. To do so, click here.

Homework

Have a relaxing weekend and enjoy this weeks gains.

Regards,

Jeff Kohler

Investools Content Manager