Last week was no different. About the only thing good we can say about it is that the rally on Friday recaptured most, but not all, of the week’s losses. The week ended with three of the four major indexes down: the S&P 500 (-0.7%), the Dow, (-0.6%), and the Nasdaq (-1.2%). Only the Russell 2000 was up, +1.0%.

Despite Friday’s rally, the week was replete with bad news, especially on the housing front. Existing home sales fell dramatically, more than 27%, and new home sales declined to 276,000 versus a predicted 334,000. (The consensus writers might want to sharpen their pencils.) The rally was even more bizarre when you consider that the second quarter GDP was revised downward a full 33%—from 2.4% to 1.6%. Apparently, the market was peering under every rock for signs of encouragement and chose to compare the 1.6% number with the 1.4% that some had expected.  But it’s hard to find joy in a stock rally based on a negative reality.

It is increasingly difficult to find actual support that the economy is recovering, when reality points toward a double-dip recession. Corporate America, flush with record levels of cash, might make it happen with renewed M&A activity. BHP’s (BHP) substantial offer to buy Potash (POT) led the M&A action (could it be they misunderstood what POT stands for?). Dell (DELL) and Hewlett-Packard (HPQ) quibbled over who will make the best offer for data storage company 3Par (PAR). In a buying mood, Intel (INTC) announced a couple of acquisitions but at the same time lowered its Q3 revenue guidance below what had been expected.

But M&A can’t do it alone. Some thought that Chairman Bernanke’s speech on Friday could turn things around — he expects growth to pick up in 2011 and said that the Fed will use “unconventional measures if it proves necessary . . .” to help it along. But the bottom line is that the market is still heading south, despite the slightly positive economic news today, Monday, which saw personal spending rising more than expected, to +0 .4%, against a flat to slightly-lower-than-expected personal income. The S&P 500 closed today at 1048.9, down 1.47%.

In the past few weeks the S&P 500 has found technical support at 1040 on several occasions, but whether or not that support will hold probably depends on this week’s remaining economic news. Some fairly important indicators will bring the month to a close. On Tuesday, we have the consumer confidence and Chicago PMI reports; on Wednesday, construction spending and auto and truck sales; on Thursday, factory orders and the weekly initial jobless claims; and on Friday, the all-important unemployment report which will reveal how many of us can celebrate Labor Day with a job. If this market is to turn around and head in the other direction, that unemployment number better be good.

Market Stats. The weekly market stats will not be included this week. Sabrient is undergoing a substantial data upgrade that will in the long run provide a full set of international data for the company’s various products and services. However, the upgrade process is causing a glitch here and there, one of which is in our weekly market stats. I can tell you though that there was barely any difference between growth and value performance last week and that the market preferred small caps over large.

4 Stock Ideas for this Market

This week, I used Sabrient’s GARP (Growth at a Reasonable Price) preset search on MyStockFinder (http://MyStockFinder.com). Here are 4 stock ideas to consider from the highest ranked sectors:

Horace Mann Educators Corp (NYSE: HMN) – Financials
Xyratex Ltd. (Nasdaq: XRTX) – InfoTech
Insituform Technologies (Nasdaq: INSU) – Industrials
Hess Corp (NYSE: HES) – Energy

Until next week,

David Brown
Chief Market Strategist
Sabrient Systems, LLC
Leaders in Investment Research
http://www.sabrient.com
and  http://Twitter.com/ScottMartindale

Full disclosure:  The author does not personally hold any of the stocks mentioned in this week’s “Stock Ideas.”

Disclaimer: This newsletter is published solely for informational purposes and is not to be construed as advice or a recommendation to specific individuals. Individuals should take into account their personal financial circumstances in acting on any rankings or stock selections provided by Sabrient. Sabrient makes no representations that the techniques used in its rankings or selections will result in or guarantee profits in trading. Trading involves risk, including possible loss of principal and other losses, and past performance is no indication of future results.

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The week started with weak signals from the Empire State Manufacturing Index and ended with initial jobless claims hitting 500,000 on Thursday for first time in nine months and the Philly Fed’s atrocious turnabout from a positive +7.5 to a negative -7.7.

The bottom line is, despite better-than-expected earnings and optimistic guidance from the corporate corner, the market is stuck on the gloomy economic picture, which includes the worrisome fact that banks simply aren’t lending to small businesses or anyone else.

What will it take to get the market unstuck and moving forward again?  Tangible evidence that we’re not headed into a follow-up recession.

We may or may not get that evidence this week. Tomorrow we’ll see the existing home sales for July; Wednesday, we’ll see July’s durable goods orders; Thursday will show us the weekly initial jobless claims; and on Friday we’ll get the second look at second quarter GDP.

Market stats. Last week’s market stats are about as ho-hum as any we’ve seen in recent weeks.  Small-cap growth was the best cap-style, up +0.58%, while large-cap value was the worst, falling one full percent (-1.03%).  Although the whole mid-cap index and the whole small-cap index each gained +0.21%, the whole large cap index fell -0.56%. Absolutely nothing to get excited about.

Click here to see the market stats.

From a sector viewpoint, the Materials Sector led at +1.5%.  Information Technology also did well, as our forward looking sector model had projected, gaining almost a full percent (+0.99%).  And we can take some encouragement from the Consumer Discretionary Sector being up +0.56%.   All other sectors were down, with the worst being Energy (-1.78%) and the troubled Financial Sector (-1.01%).

Our forward looking model continues to favor Financials, although this is unlikely to come to pass as long as the new Federal regulations of the banking industry remain unclear, but Information Technology looks solid as No. 2.  Sitting at the bottom of the group are Consumer Discretionary and Consumer Staples; their constituent stocks are unlikely to produce much success on the long side.

It’s clear that we need to batten down the hatches, look for the few bargains that are out there, sell off fully valued companies, and hedge where possible.  If you’re reluctant to sell your fully valued positions, this is a good time to enhance your yield with options (selling calls on your long positions).  By the Way, Scott Martindale’s recent blog post on “Hedging a Stock Portfolio” might interest you: http://sabrient.com/blog/?p=1808.

4 Stock Ideas for This Market

This week, I started with Sabrient’s GARP (Growth at a Reasonable Price) preset search on MyStockFinder (http://MyStockFinder.com). I excluded Micro Caps, and upweighted Technicals. Here are 4 intriguing stock ideas from the top-ranked sectors:

Aviva PLC ADR (NYSE: AV) – Financials
JinkoSolar Holding Co ADR (NYSE: JKS) – InfoTech
Owens Corning (NYSE: OC) – Industrials
Alliance Resource Partners (Nasdaq: ARLP) – Energy

Until next week,

David Brown
Chief Market Strategist
Sabrient Systems, LLC
Leaders in Investment Research
http://www.sabrient.com
and  http://Twitter.com/ScottMartindale

Full disclosure:  The author does not personally hold any of the stocks mentioned in this week’s “Stock Ideas.”

Disclaimer: This newsletter is published solely for informational purposes and is not to be construed as advice or a recommendation to specific individuals. Individuals should take into account their personal financial circumstances in acting on any rankings or stock selections provided by Sabrient. Sabrient makes no representations that the techniques used in its rankings or selections will result in or guarantee profits in trading. Trading involves risk, including possible loss of principal and other losses, and past performance is no indication of future results.

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As we wind down the summer doldrums, are we heading toward another low-volume August?  Today was one of the lowest volume sessions of the year on the NYSE. Kids are returning to school in some parts of the country already, and many portfolio managers and traders will begin returning to their desks. But what they are finding in the market this week is quite different than they would have seen last week.

At this time last week, the market was creeping on an upward trajectory on low volume, and the S&P 500 was above its 50- and 200-day moving averages. But I cautioned that it was too early to declare that the bulls were home free and that the market seemed to be in a wait-and-see attitude from Bernanke and the FOMC.

Here is how it unfolded.  After the usual volatility before and after the FOMC report on Tuesday, traders seemed to be celebrating the Fed’s announcement. But Wednesday launched a precipitous decline that briefly found support at the 50-day MA (for at least the S&P 500 and Nasdaq 100), but then sold off further on Thursday. It was exacerbated by disappointing data from China and Japan, and a somber outlook for Europe. Some of the retailers gave disappointing outlooks, and there was a flight to safety as treasuries and gold firmed up and the dollar put in a weekly gain of 3.1%. On Friday the market finished down nearly 4% on the week.

There aren’t many high-impact economic reports this week. Today we saw the NY Fed Manufacturing Index and NAHB Housing Market Index, both of which disappointed a bit but didn’t really show much impact. On Tuesday, we’ll see Core PPI, Industrial Production, and Capacity Utilization. Wednesday brings Crude Inventories; and then Thursday reveals Continuing Jobless Claims, Philly Fed Index, and Leading Economic Indicators (LEI).

On the earnings report front, Lowe’s (LOW) missed slightly but didn’t sell off any further than it already has. InterOil (IOC) beat estimates and is up afterhours today. For the rest of the week, possible market movers include Wal-Mart (WMT), Applied Materials (AMAT), Dell (DELL), Hewlett-Packard (HPQ), and Gap Inc. (GPS). This is also options expiration week, which could add some volatility to the market.

Market Stats. Last week, the larger caps held up much better as the market sold off, as you would expect.  Large-cap value was down the least at -3.6%, while the worst performer was small-cap growth, down -6.3%.  For the past four weeks, small caps have lagged mid caps and large caps by a large margin.

Utilities and Consumer Staples held up the best as normal safe-haven sectors, and the more economically-sensitive sectors — Consumer Discretionary, Info Tech, Industrials, Financials, and Energy — led the way down. The Materials Sector was supported a bit by the flight to the safety of gold.

Click here to see the market stats.

Our forward-looking sector model still places Financials in the top spot, with Information Technology and Industrials in the second and third spots. Healthcare has slipped a bit on some cautionary revisions for some of the stocks. At the bottom is Consumer Discretionary, preceded by Consumer Staples and Telecommunications. The continued low relative ranking of Consumer Discretionary is a cautionary signal regarding improvement in the economy.

Investors should continue to shop for bargains in the top ranked sectors and close positions that might be fully valued given their fundamental outlook. You also might implement portfolio hedges where appropriate.  (Note that Scott Martindale wrote a blog post last week about “Hedging a Stock Portfolio” that might interest you: http://sabrient.com/blog/?p=1808.)

4 Stock Ideas for This Market

This week, I’m sticking with a conservative stock search by starting with Sabrient’s Undervalued Large Cap Growth preset search on MyStockFinder (http://MyStockFinder.com). I added in Mid Caps to the mix, and slightly up-weighted Technicals. Here are 4 intriguing stock ideas:

Ameriprise Financial (NYSE: AMP) – Financials
Veeco Instruments (Nasdaq: VECO) – InfoTech
HealthSpring (NYSE: HS) – Healthcare
Alliant Techsystems (NYSE: ATK) – Industrials

Until next week,

David Brown
Chief Market Strategist
Sabrient Systems, LLC
Leaders in Investment Research
http://www.sabrient.com
and  http://Twitter.com/ScottMartindale

Full disclosure:  The author does not personally hold any of the stocks mentioned in this week’s “Stock Ideas.”

Disclaimer: This newsletter is published solely for informational purposes and is not to be construed as advice or a recommendation to specific individuals. Individuals should take into account their personal financial circumstances in acting on any rankings or stock selections provided by Sabrient. Sabrient makes no representations that the techniques used in its rankings or selections will result in or guarantee profits in trading. Trading involves risk, including possible loss of principal and other losses, and past performance is no indication of future results.

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Perhaps we’ll get more clarity this week as a number of economic reports are in the offing. On Tuesday, the Fed will give us its reading on where the economy is headed, with the FOMC (Federal Open Market Committee) report. We’ll also get the numbers for productivity and wholesale inventory. Wednesday brings the international trade balance and Treasury budget reports; Thursday will give us export and import prices and weekly initial jobless claims; and Friday will see consumer sentiment, retail sales, and business inventories.

Tomorrow’s FOMC report is probably the most important of these, and it is likely that today’s relatively lifeless market is due to the wait-and-see attitude about the FOMC.

Market Stats. Last week, the larger you were the better you did.  The market favored large-cap growth, up +2.0%, while the least favored was small-cap growth, down -0.08%.  Signs of preference for growth or value were mixed with no clear favorite.

Sectors were also mixed.  Energy led last week, together with Healthcare and Materials. Consumer Staples came in dead last, which is usually a sign that investors are not fleeing to safety.  Despite a positive forward outlook score last week, Financials were next to last in sector performance, no doubt reflecting the continued concern about capital and lending capability of banks.

Click here to see the market stats.

Information Technology was also an underachiever for the week (third from bottom), most likely due to the questionable Q2 performance of IBM (IBM), Hewlett Packard (HP), Google (GOOG) and Amazon (AMZN).  Nevertheless, corporate earnings were better than virtually anyone could have expected, with most companies surprising to the upside.  Yet concern about the economy continues.

Our forward-looking sector model still places Financials in the top spot, despite its poor performance last week, with Information Technology and Healthcare in the second and third spots.  At the bottom is Consumer Discretionary, preceded by Consumer Staples and Telecommunications.

Investors should continue to shop for bargains in the top three to five sectors, close positions that are fully valued, and utilize hedging where appropriate.   (For a look at a hedged portfolio, check out the Sabrient Investor’s (H)Edge Portfolio at http://www.sabrient.com/investors-hedge.php.)

4 Stock Ideas for This Market

This week, let’s revert to a more conservative stock search. I started with Sabrient’s Undervalued Large Cap Growth preset search on MyStockFinder (http://MyStockFinder.com), but I also included Mid and Small Caps and slightly upweighted Technicals. Here are 4 intriguing stock ideas:

AmTrust Financial Services (Nasdaq: AFSI) – Financials
Vishay Intertechnology (NYSE: VSH) – InfoTech
LifePoint Hospitals (Nasdaq: LPNT) – Healthcare
China Yuchai (NYSE: CYD) – Industrials

Until next week,

David Brown
Chief Market Strategist
Sabrient Systems, LLC
Leaders in Investment Research
http://www.sabrient.com
and  http://Twitter.com/ScottMartindale

Full disclosure:  The author does not personally hold any of the stocks mentioned in this week’s “Stock Ideas.”

Disclaimer: This newsletter is published solely for informational purposes and is not to be construed as advice or a recommendation to specific individuals. Individuals should take into account their personal financial circumstances in acting on any rankings or stock selections provided by Sabrient. Sabrient makes no representations that the techniques used in its rankings or selections will result in or guarantee profits in trading. Trading involves risk, including possible loss of principal and other losses, and past performance is no indication of future results.

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The slipping and sliding were caused primarily by mixed news.  Last week started off strong with new home sales coming in well above expectations, but consumer confidence and durable goods both missed their marks.  To cap off the disappointing numbers, GDP came in on Friday at 2.4%, which was weaker than expected.  Although it was only 0.1% below expectations, the bulk of that small growth seemed to be in inventory buildups and government spending.

Things turned on Friday, however, with the Chicago PMI coming in better than expected.  That, combined with positive news over the weekend from European banks and today’s construction spending report beating expectations (+0.1% versus a negative -0.8%), powered the bulls. Today the S&P 500 closed at 1125.86 (+2.2%), climbing well above its 200-day MA.  Its new upward channel is now well formed.

Corporate earnings continued their solid streak throughout last week.  With about two-thirds of the S&P 500 having reported, analysts estimate that Q2 earnings growth will be 30% better than the comparable quarter last year and revenues will be 10%  better.  To be sure, there have been mild disappointments here and there, but overwhelmingly, the majority of the companies have beat expectations.

Upcoming reports. Market moving events should start to slow down a bit this week, with fewer important economic reports and fewer public companies reporting.  Today’s reports—the ISM manufacturing index and the above-mentioned construction spending—were both positive (ISM was 55.5 versus an expected 54.0).

Tomorrow we get personal income, factory orders, and auto and truck sales.  Wednesday brings ADP employment and ISM services.  Thursday we’ll have the weekly initial jobless claims and on Friday, the two reports with the potentially greatest impact: the unemployment rate and consumer credit.

Key companies reporting this week include MGM Resorts (MGM), Cigna (CI), Beazer Homes (BZH), Loews (L), Proctor & Gamble (PG), Pfizer (PFE) and Kraft (KFT).

Market stats. The small-cap bulls did the best, with small-cap value up +3.7% for the week.  Large-cap growth did the worst, up only +0.29%.  In general, small caps led the mid caps which led the large caps, and value did better than growth.

Click here to see the market stats.

Few of the sectors did very well last week.  Financials led, +3.5%, followed by Industrials, +2.1%.  But Consumer Staples, Technology and Healthcare were all negative for the week.  Our forward-looking SectorCast model continues to favor Financials, Technology and Energy and continues to project the two consumer sectors and Utilities at the low end of the rankings.

While there is still plenty to worry about, I believe it is time to be a little more aggressive in our investing by concentrating on small-cap and mid cap-growth companies.

4 Stock Ideas for This Market

This week, given the continued relative strength in small caps, I used Sabrient’s Momentum Small Caps preset search on MyStockFinder (http://MyStockFinder.com). Here are 4 new stock ideas that look interesting:

DDi Corp (Nasdaq: DDIC) – InfoTech
Williams Pipeline Partners (NYSE: WMZ) – Energy
Medifast (NYSE: MED) – Consumer Staples
Buffalo Wild Wings (Nasdaq: BWLD) – Consumer Discretionary

Until next week,

David Brown
Chief Market Strategist
Sabrient Systems, LLC
Leaders in Investment Research
http://www.sabrient.com
and  http://Twitter.com/ScottMartindale

Full disclosure:  The author does not personally hold any of the stocks mentioned in this week’s “Stock Ideas.”

Disclaimer: This newsletter is published solely for informational purposes and is not to be construed as advice or a recommendation to specific individuals. Individuals should take into account their personal financial circumstances in acting on any rankings or stock selections provided by Sabrient. Sabrient makes no representations that the techniques used in its rankings or selections will result in or guarantee profits in trading. Trading involves risk, including possible loss of principal and other losses, and past performance is no indication of future results.

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Apple (AAPL), Morgan Stanley (MS), and Ford (F) powered the corporate side with excellent earnings reports, while today’s positive news from FedEx (FDX) and the housing industry — new home sales were up 23.6% in June — lifted the gloom from the economic side. To be sure, there were a few corporate disappointments last week — IBM’s (IBM) revenues, Amazon’s (AMZN) earnings, Google (GOOG) — but on the economic side, most of the reports were at least tolerable.

All this positive news rapidly shifted the market from its flight to safety to chasing the bulls. The baby bulls led the charge, with all small-caps turning in a +6.5% or better performance. Among the small caps, small-cap growth was the best (+6.7%). The worst cap/style was large-cap value, up +3.3%, which is still pretty good.

Sector Review. As for sectors, Materials led the way last week, as predicted, followed by Industrials, Utilities (which continues to surprise) and Consumer Discretionary.  Healthcare and Consumer Staples, normally safe havens, were trampled by the bulls at the bottom of the heap.

Sector behavior has been somewhat unpredictable these past few months, and I’d like to spend a few minutes explaining some of the challenges we face with our forward-looking model. Materials, for example, can move across the entire spectrum of rankings in one week, depending on the fluctuations in the dollar. Our model got it right the week of July 16, predicting Materials would be in the No. 1 spot last week, and sure enough it was, pacing a strong dollar. But in today’s returns (July 26), it trails dead last alongside a weak dollar. The current SectorCast predicts it will be in the middle this week.

Click here to see the Market Stats.

Telecom sits in one of top three spots in the current forward rankings, but this is likely to happen only if we consider Telecom ADRs, as well as domestic Telecoms. Why? Because ADRs are much, much larger than U.S. telecoms, which have been doing poorly.

We can attribute the instability of the Healthcare predictions (#2 in the current forward rankings) to the impending healthcare reform, which makes it unclear who the winners and losers are. The future of the Financial Sector is also murky because of the significant reforms it faces, reforms that Bank of America claims could have very serious repercussions. The unreliability of Consumer Discretionary — it remains at the bottom of our projections, but ended up in the broad middle in last week’s returns — reflects the uncertainties in the whole mortgage market.

The Utilities Sector has been everywhere except where we expected it to be, and frankly, we have no idea why. The one sweet spot seems to be Information Technology. IT turns in a fairly decent performance week after week, regardless of the macroeconomic variables, and last week it came in seventh, despite bad reports from Google and Amazon.

So I will continue to share our forward-looking rankings. I just wanted you to know some of the challenges it presents.

The Week Ahead. We have another week of heavy economic news, which could threaten our baby bull. Today’s new home sales report, mentioned above, got the week off to a good start, but there are some biggies in the offing. On Tuesday we get the consumer confidence index; on Wednesday, durable goods; and on Thursday the weekly initial jobless claims. Friday is the blockbuster, with an advanced look at second quarter GDP, consumer sentiment, the Chicago PMI and the employment cost index.

Add to this mix a plethora of major corporate reports due this week. Today, FedEx raised its guidance, saying that Q3 should be significantly better than previously expected. Two insurance giants — Aetna (AET) and Aflac (AFL) — will report on Tuesday, and we’ll hear from technology bellwethers Sprint (S) on Wednesday and Motorola (MOT) on Thursday. Also reporting on Wednesday are Boeing (BA) and Visa (V), and on Thursday, Exxon Mobil (XOM) and Sony (SNE). On Friday, Merck (MRK) will give us a peek at the pharmaceutical sector.

A couple of wild cards bear watching on Wednesday. Las Vegas Sands (LVS) will tell us if people are feeling confident enough to resume gambling, but the CIT Group (CIT) on Tuesday could be the most crucial. This  massive lender to the middle market, operating under bankruptcy protection, is expected to make $0.30, but the short interest has risen dramatically in recent weeks, as has call transactions and call/put ratios — which could signal a major surprise in either direction.

All in all, we have a week in which much could go right, but unfortunately the reverse is also quite possible.

4 Stock Ideas for This Market

This week, given the relative strength in small caps, I started with Sabrient’s Small Wonders preset search on MyStockFinder (http://MyStockFinder.com). Then, I adjusted the parameters by including both Small and Micro Caps, and upweighting Technicals. Here are 4 new stock ideas that look intriguing to me:

First Cash Financial Services (Nasdaq: FCFS) – Financials
National Technical Systems (Nasdaq: NTSC) – Industrials
TESSCO Technologies (Nasdaq: TESS) – InfoTech
Sturm, Ruger & Co. (NYSE: RGR) – Consumer Discretionary

Until next week,

David Brown
Chief Market Strategist
Sabrient Systems, LLC
Leaders in Investment Research
http://www.sabrient.com
and  http://Twitter.com/ScottMartindale

Full disclosure:  The author does not personally hold any of the stocks mentioned in this week’s “Stock Ideas.”

Disclaimer: This newsletter is published solely for informational purposes and is not to be construed as advice or a recommendation to specific individuals. Individuals should take into account their personal financial circumstances in acting on any rankings or stock selections provided by Sabrient. Sabrient makes no representations that the techniques used in its rankings or selections will result in or guarantee profits in trading. Trading involves risk, including possible loss of principal and other losses, and past performance is no indication of future results.

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by David Brown, Chief Market Strategist, Sabrient Systems

Seems like we were here just last week, waiting for the market break out of its “Channel of Gloom” or tip further into the Channel’s murky depths.  In fact, we came close to tipping to the positive side last week but were held down by a poor consumer sentiment report on Friday and negative earnings from Google (GOOG), plus a double negative whammy from Bank of America (BAC).  Not only did BAC announce negative revenues, it let loose with a scary warning about the negative impact of write-offs from the new financial regulations. So on Friday, the S&P 500 tipped further into the three-month Channel of Gloom.

Today  the market drifted near the unchanged mark most of the day, but S&P 500 managed to close up +0.6%, well below the top of the Channel and still submerged below its 50-day and 200-day moving averages.  In the after-market, following IBM’s disappointing revenues report, the market gave it all back, and then some.

Market Stats. The market stats show a classic flight to safety.  In general, the larger the cap, the better it did.  The best cap/style was large-cap growth, down -1.0%; the worst was small-cap value, down more than -3%.  Overall, growth out-performed value in all 3 caps.

Sector performance reflected the flight to safety, with Consumer Staples, Healthcare and Utilities taking three of the top four positions.  The exception was Information Technology, which came in second as predicted by our system. Worries about a second dip recession pushed Materials all the way to the bottom.

Click here to see the Market Stats.

Our forward looking model continues to place Materials in a leadership slot, due to the strong corporate earnings reports that indicate recovery is on its way.  Our model sees Information Technology and Energy in second and third place.

The Week Ahead. The market is tipping toward the negative, with the nearest strong support for the S&P 500 at 1040, so it will take a solid week of good news to steer us away from the Channel of Gloom.

Can the housing industry do it?  Housing indicators will dominate this week’s economic news, but the first one out of the chute doesn’t bode well.  Today, the National Association of Home Builders reported the weakest conditions since April 2009, with the July housing market index falling to 14, which is 8 points from its recovery high of 22 in May.  Tuesday, we’ll see housing starts and new building permits, and on Friday, existing home sales. If all these reports are poor to neutral, Thursday’s initial jobless claims and Friday’s leading indicators (LEI) report won’t matter much.

The more likely savior will be the corporate earnings reports due out this week. There are at least 70 significant ones.  IBM (IBM)  and Texas Instruments (TXN) reported today (IBM disappointed; TXN did not).  Johnson & Johnson (JNJ) and Goldman Sachs (GS) report on Tuesday, Coca Cola (KO) and Morgan Stanley (MS) on Wednesday, and AT&T (T) and United Parcel (UPS) on Thursday.

As long as we remain in this Channel of Gloom, I urge exceptional prudence.  Take your profits in stocks that are pushing overvaluation, and search for bargains and hedges.  (For a look at a hedged portfolio, check out the Sabrient Investor’s (H)Edge Portfolio.)

4 Stock Ideas for This Market

This week, I started with Sabrient’s GARP (Growth at a Reasonable Price) preset search on MyStockFinder (http://MyStockFinder.com). Then, I adjusted the parameters by up-weighting Technicals. Here are 4 new stock ideas that look particularly intriguing to me:

NewMarket Corp (NYSE: NEU) – Materials
WellPoint Inc. (NYSE: WLP) – Healthcare
Credicorp Ltd (NYSE: BAP) – Financials
Lincoln Educational Services (Nasdaq: LINC) – Consumer Discretionary

Until next week,

David Brown
Chief Market Strategist
Sabrient Systems, LLC
Leaders in Investment Research
http://www.sabrient.com
and  http://Twitter.com/ScottMartindale

Full disclosure:  The author does not personally hold any of the stocks mentioned in this week’s “Stock Ideas.”

Disclaimer: This newsletter is published solely for informational purposes and is not to be construed as advice or a recommendation to specific individuals. Individuals should take into account their personal financial circumstances in acting on any rankings or stock selections provided by Sabrient. Sabrient makes no representations that the techniques used in its rankings or selections will result in or guarantee profits in trading. Trading involves risk, including possible loss of principal and other losses, and past performance is no indication of future results.

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The bottom of the channel was reached about two weeks ago at 1010, and the top is now about 1080, as you can see from the chart below. Coincidentally, the top is close to where the 50-day and 200-day moving averages currently reside.

The S&P 500 blithely ignored the Dark Cross myth last week when its 50-day MA crossed below its 200-day MA. That is usually an ominous sign according to adherents, but the index just kept on going up. Now it is poised either to continue its downtrend or break upward through the channel and its 50-day and 200-day moving averages. Which way it tips will depend on the negative or positive power generated by the market-moving reports from the first key week of the Q2 earnings season and the plethora of economic indicators due out this week.

Today we have after-market earnings reports from Alcoa (AA) and CSX Corporation (CSX). Tomorrow, we have trade balance data, treasury budget data, and important announcements from Intel Systems (INTC) and Novellus Systems (NVLS), among others. It doesn’t get easier on Wednesday as retail sales, business inventories and import/export pricing are announced, followed by Thursday’s weekly initial jobless claims, PPI, industrial production, and capacity utilization. Friday tops off the economic data with CPI and the University of Michigan Consumer Sentiment Report. Mixed in with these economic reports are more Q2 earnings announcements from financial behemoths Bank of America (BAC) and JP Morgan (JPM), technology giants Advanced Micro Devices (AMD) and Google (GOOG), and conglomerate General Electric (GE).

It could be that the market will continue its dull summer behavior, despite all these announcements, but I think it is more likely that they tip it one way or the other — either accelerating the downward decline of the S&P 500 or, if sufficiently positive, providing the impetus for the index to break out of its downtrend and push above its long–term moving averages.

Two additional events could affect the tipping point. This is options expiration week, always good for a little volatility, and China’s announcement over the weekend of its strong economic growth (both exports and imports) could have a positive effect on our own economy. We should note, however, that Chinese exports led its imports, which takes a little bit of the shine off this bright new penny, renewing calls for a free-floating yuan. Forecasters are predicting an even larger trade surplus for the second half of 2010.

Market Stats. All cap/styles moved up last week, tightly grouped between +5.1% (Large-cap Value) and +4.0% (Small-cap Growth).

The sectors gave us a couple of surprises last week, with Utilities leading the way (+8.3%) and Healthcare in last place (+3.3%). The rest were pretty much as expected, with Financials (+7.1%), Materials (+7.0%), Energy (+6.4%) and Technology (+5.3%) in the top half of the group, and Consumer Discretionary (+3.6%), Telecom (+3.9%), Consumer Staples (+4.0%) and Industrials (+4.9%) rounding out the bottom half.

Click here to see the Market Stats.

Our forward-looking SectorCast still favors Materials, Technology and Energy. We expect Healthcare and Financials to be somewhere in the middle, with Consumer Staples and Consumer Discretionary at the bottom.

4 Stock Ideas for This Market

This week, I am staying on the conservative path by starting with Sabrient’s Undervalued Large Cap Growth preset search on MyStockFinder (http://MyStockFinder.com), but I also included Mid Caps. Also, I adjusted the parameters by up-weighting Technicals and Insider Buying. Here are 4 new stock ideas from the top-ranked sectors that look intriguing:

Compania de Minas Buenaventura (NYSE: BVN) – Materials
Interdigital Inc. (Nasdaq: IDCC) – InfoTech
Transocean Ltd. (NYSE: RIG) – Energy
Medicis Pharmaceutical (NYSE: MRX) – Healthcare

Until next week,

David Brown
Chief Market Strategist
Sabrient Systems, LLC
Leaders in Investment Research
http://www.sabrient.com
and  http://Twitter.com/ScottMartindale

Full disclosure:  The author does not personally hold any of the stocks mentioned in this week’s “Stock Ideas.”

Disclaimer: This newsletter is published solely for informational purposes and is not to be construed as advice or a recommendation to specific individuals. Individuals should take into account their personal financial circumstances in acting on any rankings or stock selections provided by Sabrient. Sabrient makes no representations that the techniques used in its rankings or selections will result in or guarantee profits in trading. Trading involves risk, including possible loss of principal and other losses, and past performance is no indication of future results.

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Last week we warned that if most of the impending economic releases were negative, the market would likely fall worse than it did the week before.  And that’s what happened.  In fact, it dropped approximately twice as much as the week before. (It doesn’t feel so good to be right.)

Interestingly, the numbers weren’t all that bad, just somewhat lower than expected. In fact, there was a better-than-expected unemployment figure on Friday (9.5 versus the expected 9.6), but that was offset by the employment number (nonfarm payrolls) which fell -125,000.

The market’s 15% drop since late April seems to have turned Wall Street into a bargain basement. This morning, bargain hunters gave the market a nice pop, with the S&P 500 reaching an intraday high of 1042 (+2.0%), but it closed the day almost flat, up only +0.5%.

There’s not much on the horizon to boost the market, as we’re looking at fairly slim economic pickings during this short post-holiday week. This morning gave us yet another small disappointment from ISM (the June report on non-manufacturing was 53.8 vs. the expected 55.0). On Thursday we’ll see the chain store sales figures, the weekly initial jobless claims, and outstanding consumer credit; and on Friday we’ll get the wholesale trade report.

It’s hard to imagine anything particularly positive coming out of any of those numbers.

Market Stats. Small-cap Value turned in the worst cap/style performance for the week, down almost 8%, while Large-cap Growth did the best, losing “only” 5%.  Overall, growth stocks did a little better than value stocks in all three cap/styles, but the numbers were nothing to get excited about.

Click here to see the Market Stats.

The sectors lined up in a classic flight to safety, with three of the top four slots going to Consumer Staples, Healthcare and Utilities, although all had negative numbers. Despite the dollar having a bad week, worries about reduced demand sent the Materials Sector, which we had expected to be near the top, into dead last.  Forward looking, our system still favors Materials, along with Information Technology, Energy, Financials and Healthcare.

At 1022, the S&P 500 is now below both its 50-day and 200-day moving averages. To some experts, the fact that the 50-day MA has now fallen below the 200-day MA is particularly ominous. I’m not sure that matters, but the S&P 500 clearly broke major support when it dropped below 1040, and it will likely have a struggle going back above that level. There should be token support at 1000, but the next major support would be around 980, then 940.

4 Stock Ideas for this Market

This week, I stayed conservative by starting with Sabrient’s Undervalued Large Cap Growth preset search on MyStockFinder (http://MyStockFinder.com), but I also included Mid Caps. I also adjusted the parameters by upweighting Technicals, Insider Buying, and Analyst Upgrades. Here are 4 new stock ideas that look interesting:

Treehouse Foods (NYSE: THS) – Consumer Staples
Apple Inc. (Nasdaq: AAPL) – InfoTech
Repsol YPF S.A. (NYSE: REP) – Energy
Symetra Financial (NYSE: SYA) – Financials

Until next week,

David Brown
Chief Market Strategist
Sabrient Systems, LLC
Leaders in Investment Research
http://www.sabrient.com
and  http://Twitter.com/ScottMartindale

Full disclosure:  The author does not personally hold any of the stocks mentioned in this week’s “Stock Ideas.”

Disclaimer: This newsletter is published solely for informational purposes and is not to be construed as advice or a recommendation to specific individuals. Individuals should take into account their personal financial circumstances in acting on any rankings or stock selections provided by Sabrient. Sabrient makes no representations that the techniques used in its rankings or selections will result in or guarantee profits in trading. Trading involves risk, including possible loss of principal and other losses, and past performance is no indication of future results.

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The decline since then can be attributed to some really bad economic reports.  The worst news last week was the horrid new home sales figures, which came in at a 47-year historical low.  Durable goods fell more than expected. GDP for Q1 was revised downward, although it was still over 2%. Consumer sentiment was the only news of the week that was even a tad positive.  Nor did much happen to improve the global gloom. The oil spill is still flowing with hurricane season upon us, and European debt received additional ratings downgrades.

The current week offers a plethora of important economic releases, which is a little scary after last week’s carnage.  Today we saw the personal income report come in a little less than expected at 0.4%. The more important consumer confidence figure will be released Tuesday, followed by the Chicago Purchasing Manager Index on Wednesday.  On Thursday we’ll get the weekly initial jobless claims, along with ISM and pending home sales, but the blockbuster will come on Friday when the quarterly unemployment figure is released, along with auto sales and factory orders.

If most of these numbers are okay, the S&P 500 may rally back above its 200-day moving average.  If most are negative, the market is likely to fall worse than it did last week.

Caps/Styles. In last week’s carnage all cap/styles fell more than -3% for the week, with the best of the worst being Small-cap Growth, down -3.1% and the absolute Mid-caps, which fell almost -4%.  The one-month cap/style figures are all hanging right around the zero line, but the trailing quarter is solidly in the red, with Small-cap Growth down -4.5% and Large-cap Growth down  -7.7%.

Click here to see the Market Stats.

Sectors. Although negative, Telecom led the sectors, followed by Materials, Healthcare and Financials, all near the top as we had expected.  Unexpected was Energy coming in last.  Looking ahead, Materials, Information Technology, Energy and Healthcare all look strong, with Industrials and the two Consumer sectors trailing.

Obviously, this is a time for caution. It would probably be best to seek some well valued small-cap growth stocks in the higher ranked sectors.

4 Stock Ideas for this Market

This week, I started with Sabrient’s Undervalued Large Cap Growth preset search on MyStockFinder (http://MyStockFinder.com), but I changed the cap focus to find Small Caps only. I also adjusted the parameters by up-weighting Technicals and asking only for stocks from Materials, InfoTech, Energy, and Healthcare. Here are 4 new stock ideas that look interesting:

P.H. Glatfelter (NYSE: GLT) – Materials
Ebix, Inc. (Nasdaq: EBIX) – InfoTech
Miller Petroleum (Nasdaq: MILL) – Energy
Par Pharmaceutical (NYSE: PRX) – Healthcare

Until next week,

David Brown
Chief Market Strategist
Sabrient Systems, LLC
Leaders in Investment Research
http://www.sabrient.com
and  http://Twitter.com/ScottMartindale

Full disclosure:  The author does not personally hold any of the stocks mentioned in this week’s “Stock Ideas.”

Disclaimer: This newsletter is published solely for informational purposes and is not to be construed as advice or a recommendation to specific individuals. Individuals should take into account their personal financial circumstances in acting on any rankings or stock selections provided by Sabrient. Sabrient makes no representations that the techniques used in its rankings or selections will result in or guarantee profits in trading. Trading involves risk, including possible loss of principal and other losses, and past performance is no indication of future results.

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