The American equities market is not letting some worries in Asia drive down its valuations. Although China’s Hang Seng was deep in the red again overnight, the folks on the Street have managed to pull all three major indices into positive territory today.

The big question we are waiting to get answered is if the 1,000 level will be a spot of resistance or support for the S&P 500.

For a handful of companies, the action on the broad market has no relevance. They are surging today whether their trading brethren come along for the ride or not.

One of the biggest movers so far this week has been American Axle (NYSE:AXL). For the second day in a row, the drivetrain manufacturer has watched its share price soar. On Monday, shares were trading for less $3. Today, it took as much as $7.11 to get your hands on the action.

What’s behind the surge? It comes thanks to good news from General Motors.

Good news… from Detroit?

The recently bankrupt automaker has pledged to give the company $110 million to cover costs realized when GM filed Chapter 11. The Detroit automaker also helped American Axle secure a $100 million loan facility.

Together, the financing action helped prove to investors American Axle has the liquidity it needs to continue its operations well into the future. A boosted sales projection (doubling in the next four years) added even more fuel to the fire.

If you are fan of the micro-cap world, you will want to check out the action at Hallwood Group (AMEX:HWG). The tiny textile maker and natural gas producer (it owns a 22% stake in an E&P firm) has watched as its valuation has more than doubled in the past few days thanks to an earnings report released late last week.

During the past three months, the company managed to record a profit of $3.6 million, compared to a net loss of $1.3 million a year ago. Even though revenues were down by nearly 6% from the year ago quarter, investors are rewarding the company because things could have been a whole lot worse.

A company that specializes in military fabrics and natural gas has a lot of obstacles in its way in the current economic environment.

If you think $23 seems like an odd price for a share of a $35 million company, just remember a year ago they were trading for close $75 each.

Finally, with a Category 4 hurricane churning off America’s coast, it is no wonder we are seeing shares of PGT Inc. (NYSE:PGTI) up by double-digit proportions today. The $100 million window and door company just finalized a deal to purchase Hurricane Window and Door.

The move gives PGT a nice exposure to the hurricane-protection sector with perfect timing.

While PGT has a lot going for it right now (it will surely be a strong recipient of American stimulus money), once the Hurricane story deflates, share price will likely drop. If you are looking to buy shares, do it then.

With market volatility on the rise, expect to see more big swings from the country’s smallest companies. They may be tiny, but they are worth watching.

Source: Three Winners: More Big Moves from Little Companies

It turns out, according to some analysts, shareholder equity could be wiped out if Washington gets its way. Shares of General Motors (NYSE:GM) are down by nearly 20% today thanks to a report from Credit Suisse that says shareholders may suffer as the company restructures.

The analyst that researched the report cut his outlook for the company’s shares to just $1 each, down from $2 per share. That is not the kind of news shareholders were looking to start the week with.

Toyota’s (NYSE:TM) bad news this morning is not helping the situation in Detroit. It slashed its earnings outlook for the second  time in less than two months. Now, the company expects its first ever annual loss. Its share price is down by 5% on the news the company will likely lose about $1.7 billion during its fiscal year ending in March.

Pay attention this time

As I said last week, this is not the time to be buying shares of automakers, but it is the perfect time to be buying shares of their suppliers. Companies like BorgWarner (NYSE:BWA), American Axle (NYSE:AXL) and Tenneco (NYSE:TEN) are all seeing cuts to their valuations on the recent negative news. It is creating a prime buying opportunity.

Just because Ford (NYSE:F), General Motors and Chrysler are forced to make concessions does not mean their suppliers will. In fact, the supply chain will be the chief benefactor of the bailout. UAW will lose power. Detroit bondholders will certainly suffer. And equity owners will lose even more money. But suppliers will be the first (maybe second after Uncle Sam) to get their money.

Do not try to speculate on the future of the Big Three. Once the government gets involved, logic and reasoning get tossed out the window. Forget about trying to pet the sharks and invest in the remoras that feed off their supply chain.

One of my favorites is Tenneco. With its solid Walker brand and the company’s focus on emissions technology, it will be a long-term winner as the industry cycles back to a stronger state. It is taking healthy steps to deal with its debt load and will emerge as a winner in 2009.

Start doing your research and take advantage of today’s low prices. Little Johnny’s toys are not the only things selling for a deep discount.

Source: For General Motors (GM) the News Keeps Getting Worse

This from Today’s Financial News:

Detroit is once again on its knees in Washington begging for help. The nation’s automakers are desperate to paint a dire picture of their financial woes.

Whether their pleas are founded or are merely lame attempts at grabbing some free advertising is up to you to decide. To me, it is all a show. After all, the Big Three have not had this much free TV time since the last time they were begging for a handout.

Today, Ford (NYSE:F) is tugging on the economic hearts of Americans by releasing a report that shows if it fails over 3,000 workers in at least 25 states will lose their jobs. It is a disheartening failure, but last I heard Ford claimed it was not in danger of failing.

The company’s latest figures show Ford has a cash horde of over $18.5 billion and is planning to increase that position (through cutbacks and sales of assets) by as much as $17 billion in the near future. What’s more, Ford has ready access to a $10 billion line of credit.

If Ford has enough cash to keep its creditors at bay and its operations running, why is it on Capitol Hill begging for money?

Simple answer: easy money.

If somebody were to offer you an ultra-cheap loan that would increase your profit potential, wouldn’t you take it? As long as the interest rate (Congress is proposing a 5% rate) is lower than what Ford is currently paying, which it most certainly is, the loan is a good idea.

But Washington is not in the business of loaning corporations money, or at least it is not supposed to be. Congress needs to ensure it only intervenes in the most serious cases.

General Motors (NYSE:GM) with its dangerously low liquidity may truly need help, but Ford does not. If Ford gets a piece of the bailout action, Congress will unleash an avalanche of cries from major companies across the country searching for similar help.

Invest in the supply chain

Washington has the potential to send a handful of auto-related stocks soaring. While Wall Street is focusing on the Big Three, their suppliers are the ones truly getting a bailout. Many companies depend solely on the health of Detroit to fund their profits. If General Motors were to disappear, so would they.

That is why smart investors are not focusing on whether or not Ford, GM, or Chrysler will get a loan from the Treasury Department. They are looking to see which companies will benefit the most from a Washington-induced cash infusion.

Check out companies like American Axle and Manufacturing (NYSE:AXL) and its $1.50 share price. Or Magna International (NYSE:MGA). And you cannot miss Dana (NYSE:DAN) and its recent credit downgrades.

All three of these companies would likely see a strong surge in share price if news of successful bailout package leaks out of Washington. But you must not get carried away with your profit expectations. Analysts are already expecting some sort of industry relief, so government assistance is already priced into share price to a degree.

Anytime I find a stock that is about to make a big move in one direction or the other, I instantly think of a straddle opportunity. This options strategy (an investor buys call and puts options on the same strike price and expiration) will profit as long as the underlying stock makes a significant move in either direction.

This strategy may be unknown or confusing to many investors, so let me know if you would like more details. If I get enough demand, I will create a strategy for you to follow and post it on the site.

A desperate situation

There is no doubt that Washington has its work cut out. Detroit is begging for help. Americans know it is wrong to intervene with the free markets, but do not want to see their fellow citizens lose their livelihoods.

As investors, we must stand back and take an objective look to it all. When we do, the profit opportunities begin to shine through quite clearly.

Take a look at the automotive supply chain and the companies upstream of Detroit that will profit from Washington’s blank check.

I will leave you with this as food for thought: Obama’s economic aides are telling us any new economic stimulus must focus on the middle-class and not the nation’s rich elite. Their reasoning is that average Americans are better at spending their money than the nation’s upper class.

Source: Profit from Washington’s bailouts