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MV Weather Report: Three Stock Picks for a Cloudy Market


Rain or shine, we review the day's biggest stock stories.

After yesterday's excitement, the market decided to just coast today. The biggest news occurred last night, when Alcoa (AA) reported its quarterly results. The Street liked the numbers, and the stock traded higher in pre-market trading. It then slowly sold off, however, and ended up closing down 2.43%.

Today on the Buzz and Banter, Minyan Peter gave his thoughts on the company:

"Last night Alcoa beat lowered expectations.

"But to me that's just data. The message was in the headline - "Solid Cash Performance".

"As THE corporation which coined the phrase "financial staying power" it should come as no surprise that management's focus is on liquidity first and earnings second.

"But while the Street celebrates the beat, I would advise Minyans to consider the implications to the global economy if CEO's around the world all turn from GAAP earnings growth to "cash performance".

"While in no way suggesting that Alcoa's strategy is flawed - in fact as a first mover, I think they will ultimately reap great benefits - but as Irving Fisher wrote in his 1932 book "Booms and Depressions" "Everyman who hoards does it for his own protection; yet by hoarding he aggravates the very condition that started his fear."

"And just a friendly reminder -- recoveries come from corporations investing not hoarding their cash."

As for the S&P 500, it closed the day higher by 0.35%, to 882, almost unchanged from yesterday on extremely light volume. There were some individual winners from today's session: The financials traded strong, including Goldman Sachs (GS) and JPMorgan (JPM). In tech land, Google (GOOG) and Baidu (BIDU) were strong; Apple (AAPL) lagged.

For quite some time, we've been seeing a slowdown in the equity markets, most likely due to summer and skeptical trading into earnings season. When markets start to move sideways, the best approach is typically to favor individual stock-picking.

Here are some ideas from Professor Fil Zucchi:

"First Solar (FSLR): About as close to major support as you can get, while getting a Perfected Buy signal. The weekly chart argues for lower prices, so this is for gamblers.

Click here to enlarge.

"SuperValue (SVU): Similar setup as FSLR only this is on the polar opposite of the risk spectrum.

Click here to enlarge.

"Wellpoint Health (WLP): I continue to think that with or without a "public option" plan within healthcare reform, the excision of these companies' profit-making operations is the pound of flesh that will be exacted by the populace. The question is when will that happen. From a chart standpoint, this looks like a decent short entry level."

Click here to enlarge

This long week is about to end. Heads up tomorrow on Export Prices, Import Prices, and Trade Balance at 8:30 a.m., then Michigan Sentiment at 9:55.

Have a great night!
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No positions in stocks mentioned.

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