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The Afternoon Snack: Market Rebounds on Fed News, Big Day for Oxen Group

|Includes: LTM, M, Sonic Corp. (SONC), URBN, USAT


2011 continued to show strength as the market rebounded off midday lows to finish neutral. The major news on the day was that the Fed has announced they will continue $600B treasury bond buying program that is supposed to help jumpstart the economy by giving more money for the government to use for employment purposes. The market fell early as investors started to take profits on a number of overvalued equities, but the market rallied after the Fed minutes as investors were happy to hear that the Fed is continuing to pump money into the economy.

The Dow finished up 19. The Nasdaq finished down 10. The S&P 500 finished down 2. Gold finished down 43. Oil finished down 2.5.

On the economics front, there was positive news out from factory orders and auto sales. Factory orders rose in December to 0.7%, while consensus estimates were expected to be at -0.3%. Auto sales were on the upswing to finish out 2010, which is a positive sign for what may happen in 2011 as buyers continue to move back into big-ticket items.
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Company news was very limited before the first major round of earnings in 2011 and in a couple weeks. Ford and General Motors announced that they saw sales rose 15% and 6%, respectively. Grocery stores were downgrade targets on Tuesday as the companies appear slightly overvalued moving into 2011.

The Oxen Group performed very well on the day. We entered four positions on the day, and we were able to exit four positions. In the morning Oxen Report, we recommended a position in USAT at 1.31 that we were able to quicklyturn for a 2.3% gain to exit at 1.34. We were able to exit our Buy Pick from yesterday in Urban Outfitters (NASDAQ:URBN) for a 2.09% as the stock rallied after a Monday downgrade. We got out of half of our Dec. 30 Macy's position at 25.40 for a 0.80% gain as the stock was looking to move down. We also were able to exit SONC at 10.14 on average for 80% of the position, holding the rest into earnings.

Moving into tomorrow, we are holding positions in Macy's (NYSE:M), RUTH, Sonic (NASDAQ:SONC), and TAM. We reentered Macy's at 24.75 as the stock looked too weak moving into what could be a big day for retail tomorrow on December sales news. We picked up RUTH as it hit a low it has not seen in weeks at 4.59, and we are looking to exit at 4.68. We also picked up shares of SONC at lunchtime to play a late-day move. We exited 80% before the close, but we are 20% into earnings as the company looks underestimated and does not have a lot of downward movement left in it. Finally, we are still holding our Play of the Week in TAM. We are waiting for a Goldman Sachs upgrade to take shape. We have lowered our estimates to 24.62 for this one.

We had a really positive thing happen today. At the beginning of the day, I speculated for members that we would probably see this pulldown as a buying opportunity. We bought three new positions that have all gone green. The market is still very bullish, and we should use pullbacks as chances to reload on positions we like. Moving into tomorrow, we have important retail earnings. Those will be pretty crucial to tomorrow. I am expecting them to be positive.

That's it for today.

Good Investing!

David Ristau

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.