Layoffs loom at Lockheed Martin after Marine One cancellation

Lockheed currently has 800 employees assigned to the contract, and about 225 of those workers are expected to be laid off as early as next week. Rep. Maurice Hinchey (D-NY) called the White House's decision to cancel the order "irrational and fiscally irresponsible," since officials have admitted that its aging fleet of copters still needs to be replaced. Defense Secretary Robert Gates has given the Navy 30 days to come up with a cheaper alternative.

Investors today are relatively unfazed by the news, with LMT fractionally higher at last check. The stock is consolidating into its rising 20-day moving average, which has collaborated with its 10-day counterpart to provide support since mid-March. The defense issue's advance was stopped short of the $85 neighborhood, which has capped LMT's rally attempts throughout 2009.

Skeptical traders seem keenly aware of the equity's technical struggles in this neighborhood, as short interest on the shares vaulted 15.5% higher during the most recent reporting period. The surge in bearish bets may have contributed to LMT's recent pullback, and a continuation of this trend could act as a troublesome headwind during the short term. Continued setbacks on the fundamental front, such as the cancelled copter order, could exacerbate LMT's difficulties.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.