Dear Subscribers,

A basically breakeven finish for stocks on Friday was a fitting end to the week. With the market down about 12% from its peak, the valuations are very tempting to some. But others are looking at the same set of information and cannot sell stocks fast enough. Here are a couple great examples of this bi-polar scenario from Friday.

Government Employment Situation shows 117,000 jobs added versus expectations of 75,000. The glass is half full view believes that beating estimates is a reason for stocks to rise. And they did for a while. The glass is half empty view notes that you need 150,000+ jobs added each month to just keep up with population growth. So we are only slipping further behind and a reason to sell stocks.

Or how about the "new and improved" solutions in Europe. Those seeing the half full glass pushed the market higher on the news. Those with a more pessimistic slant believe that Europe's problems are too large to be solved and this new plan does not stop the economic damage to come. Their trades brought the market back to breakeven by the finish.

Now throw in the S&P downgrade of US Government debt and clearly the glass is half empty crowd will have the upper hand in the near term. And that is why the risk remains to the downside. But that is the playbook for active traders. More patient, long term, investors may be able to snap up incredible values now and hold out for profits further down the road. Which strategy is right for you depends on your internal make up.

The only strategy I abhor right now is sitting in all cash. That is for cowards and I am glad that some banks are starting to charge fees to customers for their cash holdings (an emerging trend to keep your eye on). The market allows us to make a profit whether it goes up, down or sideways…but that is only if you get off the sidelines and get in the game. So pick a strategy and get going!

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Best,

Steve Reitmeister
Executive VP, Zacks Investment Research

Today's Top Stories: Monday- August 08, 2011

ZACKS RANK BUY STOCKS

• Aggressive Growth - Quality Distribution, Inc . (QLTY) earnings more than doubled to $5.6 million, from $2.2 million for the second quarter. That works out to $0.23 per share, 6 cents higher than expected. Read More...
   
• Growth & Income - Holly Energy Partners, L.P. (HRP) EPS came in at 69 cents, well ahead of the Zacks Consensus Estimate of 61 cents. It was a 42% increase over the same quarter in 2010. Read More...
   
• Momentum - Herbalife Ltd. (HLF) second-quarter revenue was up 27% from last year to $880 million. Earnings also came in strong at 88 cents, 17% ahead of the Zacks Consensus Estimate. Read More...
   
• Value - Gardner Denver, Inc. (GDI) reported second quarter results and beat the Zacks Consensus by 5.8%. EPS were a record at $1.27. This was an increase of 79% made in the second quarter of 2010. Read More...
   

Learn how to profit from our exclusive Zacks Rank stock-ranking system with free resources. Read More...

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• Zacks Industry Outlook: Health Insurance Stock Outlook - Aug. '11
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PeopleAndPicks.com:

VIP "InvestmentMAGE" is taking over the top spot with BUY calls in (CUT), (DBA), (LVMHF) and (MOO). Read More...

EARNINGS PREVIEW Earnings Season Not Done Yet

Second quarter earnings season is winding down, but there will still be 480 firms reporting next week, including 20 in the S&P 500 (mostly retailers). Read More...

• WORLD MARKETS SELL OFF @ CNNMoney.com
• S&P: U.S. Faces Further Downgrade Beyond AA+ @ FOXBUSINESS.com

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Best,

Steve Reitmeister
Executive VP, Zacks Investment Research

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