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US stock futures are tracking solidly higher Tuesday ahead of what could be, you guessed it, a historic winter storm. Nearly 2/3 of the US is expected to be affected, with the heaviest snow coming in the Midwest. New York City is expected to get only a few inches of snow, but a heavy dose of “ice pellets”. Sounds like a good time.

It seems like investors have put the anti-government protests in Egypt on the back burner and instead focused on a strong earnings season and improving economic data. Yesterday stocks got a lift after Friday’s beatdown, and the bounce back continued overnight following gains in the European and Asian markets. For their part, the Egyptian people have staged largely peaceful protests and the military has emphasized that it will not invoke violence upon the dissidents. Today is expected to be the largest of the protests so far, with organizers aiming for a million person march through the streets of Cairo.

Baidu.com, Inc. (BIDU) and BP PLC (BP) were two of the latest notable companies to report earnings yesterday, and the results were starkly contrasted for each. The former beat solidly across the board and is trading nearly 8% higher, while the latter came in light of expectations and is trading 2% lower. With net profits up 30% BP resumed payout of a dividend, although it is only half the pre-Gulf oil spill rate.

China MediaExpress Holdings, Inc. (CCME) has been a controversial stock, with pundits weighing on whether the company could be another Chinese fraud. A report from little know Citron Research outlined its case for why it believes CCME to be a “phantom company”, while Forbes has put the company at the top of its small-to-medium Chinese stock with greatest potential. The stock has continued to get hit after hours.

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Oil in Focus

Despite the demonstrations remaining mostly peaceful for now, there is still apprehension of possible supply disruption through the nearby Suez Canal. Oil stocks, which have been extremely strong since September, have gotten a further boost due to the unrest. Schlumberger Limited (SLB) is our favorite in the oil group, and technically the stock began to breakout above $88 yesterday. Others we like in the energy group are Halliburton Company (HAL), EOG Resources, Inc. (EOG) and Devon Energy Corporation (DVN).

Buy On Pullbacks: FCX and WLT

At this stage of the rally, you are not getting paid trying to buy every breakout, but you need to switch your mindset to a buy the dips mentality, says Marc Sperling of T3Live.com. Two stocks that fit the bill are gold and copper miner Freeport-McMoran Copper & Gold Inc. (FCX) and coal producer Walter Energy, Inc. (WLT).

FCX has gotten hit in January as gold and silver prices have pulled in, but has found a floor above $105. The stock should get back to highs around $122 over the next few weeks. WLT operates in the coal sector, which got a lift when Alpha Natural Resources Inc. (ANR) paid a 55% premium to acquire coal giant Massey Energy Company (MEE).

Gold, Silver Looking to Continue Bounce

Gold and silver have been weak over the past few months, since gold’s false breakout on September 9. The yellow metal tried to break out again, and failed. Then on the first trading day of 2011, gold failed again and gapped down huge the next day, putting in a solid triple top and setting the stage for a significant pullback, says Scott Redler of T3Live.com. Gold capitulated to the downside last Thursday, but engulfed nearly that entire red bar the following day as investors saw a tremendous opportunity to get back involved.

The problem with gold and silver is that there has been no real discernible cost driver in recent months as economic data in the US has improved and Europe has avoided further bailouts. The unrest in Egypt perhaps re-ignited the fear component of the gold trade as investors seek a flight to safety in case the protests escalate and spread. Today’s million person march could ramp up those fears. Silver outperformed gold in 2010, and was much stronger yesterday after also reversing course Friday. Redler still believes we should be in “buy the dip in commodities” mode.

Magnet: RES Tight Range

The advance-decline line was back up Monday, although it felt like people were surprised the market was up, rather than itching to jump back in. Energy stocks did well, driven by both Egypt unrest and strong fundamentals.

While Friday’s potent down day presented an opportunity for the bold to buy a dip, a slightly deeper and more controlled pullback would have been great in order to feel more comfortable putting core money back into the market, says Jordan Kimmel of T3Live.com. But that is how this rally has gone. Anyone waiting around for the perfect moment to get long has missed the boat. If we continue to focus on fundamentals, though, technical timing becomes slightly less important, and you can feel secure entering strong stocks that may appear somewhat extended.

Alliance Fiber Optic Products, Inc. (AFOP) showed strength on Friday in a weak market, and continued to be strong yesterday after some early morning selling.
RPC, Inc. (RES) was up on good volume yesterday, but remains in the nearly month long consolidation. This is one of the highest conviction Magnet trades on the board right now, says Kimmel.
Acacia Research Corporation (ACTG) has been one of the most highly ranked Magnet stocks but has gotten hit hard over the last few weeks. The stock finally got a lift yesterday, and looks like an attractive buy in this area, says Kimmel.
LDK Solar Co., Ltd. (LDK), Renesola Ltd. (SOL), Power-One, Inc. (PWER) all look like they all have more upside. SOL and PWER have nice bases in place to provide a defined stop.

*DISCLOSURE: Marc is long BIDU. Scott has no positions. Jordan has no positions.

This material is being provided to you for educational purposes only. No information presented constitutes a recommendation by T3 LIVE or its affiliates to buy, sell or hold any security, financial product or instrument discussed therein or to engage in any specific investment strategy. The content neither is, nor should be construed as, an offer, or a solicitation of an offer, to buy, sell, or hold any securities. You are fully responsible for any investment decisions you make. Such decisions should be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance and liquidity needs. Visit the T3Live Homepage, Virtual Trading Floor, and Learn More About Us.

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