Friday Morning Coffee with TradingMarkets

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Express Scripts Raises Forecast... Obama, Clinton Debate Health Care Mandates Versus Personal Responsibility... Freddie Mac, Fannie Mae Falling in Pre-Market... Serbian Rioters Set Fires at U.S. Embassy in Belgrade... Delta, Northwest Pilots Talk Seniority... Bank of New York Mellon: Stocks More Attractive than High Quality Bonds.

Asian stocks down... European stocks down... Greenbacks are moving lower against the Euro, Japanese yen... And the futures are flat in the hour before the bell.

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TradingMarkets 5 Business Stories You Need to Know

Weak Manufacturing Data Stymies Stocks - Wall Street Journal
A falling off of business activity as recorded by the Philadelphia Fed was blamed for stock market losses yesterday. The Dow Industrials were down more than 1%, as were the S&P 500 and the Nasdaq. We warned traders yesterday before the bell in our TradingMarkets Playbook that the high ratio of overbought stocks compared to oversold stocks meant the markets remained vulnerable to further pullback in the near term.

Oil Bounces Back - TCNN Money
Despite reports of increases in domestic crude inventories, the price of crude oil managed to remain above $98 per barrel. As we noted this week in Morning Coffee with TradingMarkets, speculators remain interested in investing in the oil market as a way of hedging against the weak U.S. dollar and growing worldwide inflation.

Bailing Out Underwater Homeowners - New York Times
At the urging of some of the biggest banks in the country, both the White House and Congress are wrestling with ideas about how to bail out what are believed to be hundreds of thousands of mortgage borrowers whose mortgages are worth more than the houses for which the money was borrowed. More homeowners are "underwater", with mortgages higher than the value of their homes, than at any other time since the Great Depression.

Is a Reversal in the USD/CAD at Hand? - DailyFX
Jamie Saettele, technical analyst and currency strategist for DailyFX, suggests that news from the retail sector in Canada may lead to an opportunity for traders looking at the USD/CAD currency pair.

Open Source Microsoft? - MarketWatch
Could Microssoft finally be making good on its promise to make its software more accessible to programmers? While far from completely opening the door to its source codes, Microsoft is increasingly under pressure to ensure that its products are compatible with the products and services of its rivals.

For more stories as they happen, go to our Breaking News section.

TradingMarkets 7 Stocks You Need to Know for Today

Here are 7 stocks for traders for today from TradingMarkets.com:

• Research in Motion (RIMM | Quote | Chart | News | PowerRating) surged on Thursday after the company raised its Q4 subscriber forecast.
  

• Microsoft (MSFT | Quote | Chart | News | PowerRating) announced plans to share more information about its products in an effort to win over anti-trust regulators in the EU.
  

• Starbucks (SBUX | Quote | Chart | News | PowerRating) is cutting 600 jobs, although only 220 of them are layoffs, with the rest being open positions that will remain unfilled.
  

• Huntsman (HUN | Quote | Chart | News | PowerRating), the chemical products and formulations manufacturer, reported Q4 earnings of $0.20 before the market opened, missing analyst estimates.
  

• Utility company PG&E (PCG | Quote | Chart | News | PowerRating) is expected to report Q4 earnings of $0.55 before the market opens.
  

• Nicor (GAS | Quote | Chart | News | PowerRating), the gas distribution company, is expected to report Q4 earnings of $1.10 before the market opens.
  

• Analysts are looking for St. Mary Land & Exploration (SM | Quote | Chart | News | PowerRating) to report earnings of $0.93.
  

For a list of today’s highest PowerRating stocks, click here.

TradingMarkets 5 Top PowerRatings Stocks for Today

TradingMarkets Tracking the Wizards

A Rough January For Hedge Funds - New York Times
Weakness in stocks has led to hedge funds around the world suffering their worst month in eight years this January. By one measure, the Eurekahedge Hedge Fund Index, hedge funds were down more than 3% on the month. The Eurekahedge Hedge Fund Index tracks nearly 2,500 globally-invested hedge funds.

Redemptions Force Hedge Fund Closures - Bloomberg
New York-based D.B. Zwirn & Company forced to liquidate two hedge funds after investors withdraw more than $2 billion from the troubled investment firm. A fund spokesperson says that it make take up to four years to finally close out the funds due to some of the relatively illiquid holdings in private equity and derivatives.

Up or Down? TradingMarkets New Trading Contest - TradingMarkets
We pick the stock. You pick the direction. Sign up today for TradingMarkets new stock market contest and compete for $14,000 in cash prizes. Registration is free and you can start playing today.

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TradingMarkets Playbook

We have been warning traders all week that the high ratio of overbought stocks to oversold stocks was such that the markets would have a difficult time moving higher. As such, we suggested that sideways movement might be the best that traders can expect from the broader markets in the near term. While the Dow, S&P 500 and Nasdaq all lost more than 1% yesterday, we are still in a short-term lateral consolidation. As long as this consolidation pattern holds, the possibility of the markets forming a base from which to move higher remains. The key levels for traders to watch going forward are the lows from the first half of the month. If these lows are breached by additional selling, then a retest of the year-to-date lows will become likely.

David Penn is Senior Editor at TradingMarkets.com.

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