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Market Recap: Super Bowl Hangover; Stocks Fall


Bulls were hung-over on Super Bowl Monday. Stocks fell but a few sectors still managed to shine brightly.

Today was the Mother of all Mondays! The Dow Industrials fell -108 points, or -0.85% to 12635, the S&P 500 fell -14 points, or -1.05% to 1380, and the Nasdaq Composite fell -30 points, or -1.26% to 2382.

A day after the Giants beat the Patriots in Super Bowl 42, bulls had a tough time shaking off the Mother of All Mondays. "Seriously, is anyone else having a tough time shaking the Mondays?" asked Toddo. "Hoofy sure seems to be as the combination of upside resistance and Super Bowl Sunday is making for a somber session."

But Professor Markman's perspective was more optimistic. "The Giants have won twice before… And the S&P 500 has shown a very strong bullish edge that peaks eight weeks later. The S&P rallied in both cases by an average of 11.5, while the Nasdaq rallied in both cases by an average of 15%." For more, read his article Will Markets Follow the G-Men Higher?

The selling sentiment was evident in the financial sector, however. Stocks were pressured when a CNBC commentator said that a bailout on bond insurer Ambac (ABK) would likely cover only muni bonds insured by the company rather than collateralized debt obligations, or CDOs.

Professor Bennet Sedacca mentioned the scenario on the Buzz before the news broke, "I think that a bailout of MBIA (MBI) and Ambac (ABK) is much tougher than most imagine and will take much more capital than needed. A more likely scenario, in my book, is for MBIA, FGIC, and ABK to fail allowing stronger insurers like General Re to enter the market and "re-wrap" the bond issues."

Banking stocks proceeded to dip as the news hit the tape. The Philadelphia Bank Index (BKX) fell -4.11% to $92.16. Other stocks were hit hard as well including Wells Fargo (WFC) -6.7% to $31.39, Wachovia (WB) down -8.33% to $35.53 and J.P. Morgan Chase (JPM) -4.21% to $46.22. For more context, read Professor Sedacca's Municipal Bonds the Next Shoe Top Drop?

Pharma stocks were one of the bright spot in today's trading. Merck (MRK) led to the upside finishing +3.24% to $47.47. Schering Plough (SGP) finished +3.11% to $21.21, and Elan (ELN) closed +3.21% to $26.70 hitting a new 52-week high. Read Toddo's Random Thoughts.

Toddo also noted the drillers outperforming, "Keep OSX 270 on ye radar as that resistance is coming up quick." Individual performers included Baker Hughes (BHI) +2.10% to $65.57, Smith International (SII) +3.04% to $57.68, and Noble Corp (NE) +4.17% to $47.18. Check out more of Toddo's thoughts in Monday Morning Quarterback.

In commodities, crude oil gained +1.08 to 90.04. Gold recovered off its lows before settling -4.20 to 904.50. Silver finished -0.155 to 16.715, and copper finished +3.30 to 329.35.

For more summaries, check out Minyanville's Buzz Bits.

Idea Flow

Below is a recap of some of the idea flow on today's Buzz & Banter. Please note that stocks may appear in both bullish and bearish categories, due to long and short term trades by our many Minyanville professors.

Some bullish trade or investment ideas: SGP, ELN, JRJC, MSFT, ARG, EMN, ESLR, FRX, HRS, PKI, SYMC, MA, DXD (Inverse), STP, FSLR, JEC

Some bearish trade or investment ideas: MBI, ABK, GOOG, AZO, GHL, WYNN, RIMM, LEH, BKX, DRG, JRJC, Munis, Financials

What a day! Have a great night!

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No positions in stocks mentioned.

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