Can I draw a copyrighted item and sell the drawing.

What is the name of your state (only U.S. law)? NY

I'm trying to figure out what kind of crayon drawings I can and can't sell.

My son has a stuffed animal version of the The Very Hungry Caterpillar (http://en.wikipedia.org/wiki/The_Very_Hungry_Caterpillar). I looked at it and then drew it on a blank sheet of paper with crayons. Can I sell the drawing?

Another example...

I look at an Elmo doll and color it with crayons on blank sheet of paper, can I sell that drawing? What if I draw his converse shoes?

Copying is copying whether you do it by hand or by mechanical means.
You'll also be running afoul on trademarks on things that are heavily merchandised like Elmo.

Thank you for your help.