Abel/Noser is out with their newest Liquidity Study looking at which US equities are trading the most volume :

Excluding ETFs, July’s top 6 most liquid equities accounted for just over 10% of domestic principal traded: Apple (Nasdaq: AAPL), Bank of America (NYSE: BAC), Citigroup (NYSE: C), Microsoft (Nasdaq: MSFT), Exxon (NYSE: XOM), and Intel (Nasdaq: INTC).

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Despite the temptation to oversimplify a complicated world by being a bull or bear, we are sticking with the Mixed Bag theme we laid out for our subs many months ago. In an economy full of both positive and negative events, there is no other logical conclusion.

One of the major confusions in a choppy economy is the differing perspectives from our primary information sources. Currently, we are seeing this play out on a weekly basis as macro economic data continues to flash warning signals while bellwether corporations offer a rosier view.

For example, yesterday the Commerce Department declared consumer spending and income remained flat month over month. However, this morning I awoke to an earnings report from Toyota (NYSE: TM) stating global market conditions are improving and they are increasing their financial forecasts for the year.

These are just two examples of the daily “he said, she said” between economic data reports in corporate earnings announcements. So, who should an investor to believe?

Only one opinion matters: Mr. Market’s. In the case of a choppy economy, savvy investors know that each piece of big information has the potential to move the markets. If you look at a chart of the S&P 500 (NYSE: SPY), you can see that we’ve basically been in a trading range for the past year:

Notice how the markets took a spill from mid-April until earnings season started in early July. During that time, the sovereign debt crisis and other bleak macro economic data took center stage in the media. Then, as we all returned from 4th of July parties, surprisingly good and contradictory information came pouring out of companies such as Intel (Nasdaq: INTC), FedEx (NYSE: FDX), Ford (NYSE: F), Publicis, 3M (NYSE: MMM), Caterpillar (NYSE: CAT), DuPont (NYSE: DD), and many more.

This information was only a surprise to those who were not paying attention to guidance and comments coming out of corporate America. While there was no guarantees that earnings season on Wall Street would be decent, we knew we had to position ourselves as the spotlight switched to corporate earnings season. Blindly following an uber-bear like Robert Prechter or a perma-bull like Jim Cramer was simply bad for our health.

As we have noted many times before, a pure play the bull market is when both the economy and corporations are humming along to the same tune. Conversely, a pure play bear market is when both the economy and corporations are screaming the same horrors. Apparently, we are not in a pure play market where we can simply go long or short and then “set it and forget it.” Therefore, the winners in this type of Mixed Bag environment will be those who use a strong combination of common sense, agility, and the discipline to acutely listen to the message gaining the most attention in the moment.

So, the question is not necessarily whether we should believe one set of data over another. Rather, the question is who has the bully pulpit of the moment and what are they saying.

If you like our strategy and are interested in more details about our CHEAT SHEET™ framework, we invite you to enjoy a free copy of our flagship newsletter — Wall St. Cheat Sheet Premium. If you sign up today, you will get both our July issue and our fresh August issue when it releases this Friday evening.

Friday’s GDP number has generated quite the mixed response from analysts.  Two common trends however shed some important light on the true nature of the recovery from the credit crisis: business investment has rebounded robustly, while consumer demand remains tepid.  Why is this important?  Well if you watch Larry Kudlow and his cohorts everyday, he would have you believing that what is troubling about this recovery is the LACK of business investment caused by a hostility from Washington towards the business community at large.  Meanwhile, the real stories continue to be the productivity gains following the financial crisis, and the continued deleveraging of the US consumer.

The Rhetoric:

As the market was plunging during the second quarter, the volume of the rhetoric increased exponentially: business investment is the missing link, or so the story went. Not only was business investment the missing link, but the lack thereof was directly attributable to government policies.  The overhang of potential regulator reforms with fin-reg, the oil drilling industry, and cap-and-trade, allegedly left businesses unwilling to invest.  Steve Wynn went as far as suggesting that China’s politics and policies are better than the US.  Realign the incentive system and lo and behold, all would be well.  Or so the story goes.

Reality:

In reality, things are not quite as they may seem.  These policy arguments do not align with the underlying economic reality.  As Barclay’s Capital observes:

“While strong gains in business investment, inventories and imports are supportive of a backdrop of improving domestic demand, the weak trajectory of consumer spending held back growth in the first half of 2010…. [emphasis from original]“

Contrary to the rhetoric, the true problem for the economy in the second quarter was not a lack of business investment, but rather, a lack of end demand.  Business investment itself was rather strong.  As Donald Marron points out:

“Business investment in equipment and software (E&S) grew at a 22% pace, thus adding about 1.4 percentage points to overall GDP growth….And business investment in new structures recorded its first gain in two years….

Despite solid growth in disposable incomes–up 4.4% adjusted for inflation–consumer spending grew at only a 1.6% pace.”

What it comes down to is that businesses will invest when and where it will lead to tangible gains.  Incentive need not come from the government.  Even in the harshest of regulatory environments (which is not present in the US), businesses will invest IF AND ONLY IF it will lead to a tangible change for the better in their bottom line.  Without the opportunity for profit there is simply no reason to invest.  The lack of opportunity clearly comes far more from the sluggish uptick in consumer spending than it does an unwillingness on the part of businesses to invest.  Unless businesses can sell more of their products to consumers, there is simply little reason for them to invest in increasing their manufacturing capacity or in hiring new workers.

The point of this writeup is not to take issue with any particular policy position, but to focus investors on the real, subtle and emerging trends in this economic recovery.  An underlying theme that has been lost amidst the financial crisis is the rapid technological advancement in technology, particularly with regard to Cloud Computing–the virtualization of access to technological infrastructure and software.  It has been a consistent theme on this blog to point out reinvestment in the technological infrastructure. and have discussed this theme with particular attention given to EMC (NYSE: EMC), Intel (NASDAQ: INTC), and Microsoft (NASDAQ: MSFT).

Clearly the GDP report provides the context necessary to understand the impressive rally in Cloud Computing stocks like EMC, VMWare (NYSE: VMW) and NetApp (NASDAQ: NTAP) during the past quarter.  Companies are willing to invest in such products because they generate tangible productivity gains and these productivity gains translate directly into improved earnings.  We all know that lower costs have gone a long way to helping corporate bottom lines; however, it’s easy to attribute the full extent of these lower costs to elevated levels of unemployment.  As is often the case, that is but one component of a much larger story.  Innovation has been a major driving force behind the productivity gains that are leading to the improving earnings landscape in corporate America.

Disclosure: Long EMC and VMW

The last time I wrote this quote it was May 2009 and I argued that the market had upside even after the 33% rally off lows in “So Much for Shorting the Markets” (shameless reference I know). I wrote this article following an extraordinarily anomalous time and the opportunity was the once-in-a-decade type of opportunity. While we are far from those extreme circumstances, the equity market has just experienced a 17% correction from highs and we are now 9% off those lows. Many are wondering whether the bull market is back on or this is just a bear market rally. I believe we could be at another quality buying opportunity, not nearly the extreme of 2009, but a great chance to pick up stocks on a 10% discount. Below are my five reasons for being bullish:

1. Europe learned from the US crisis and made all the right moves.

The world has been in a rolling credit crisis for three years now. The deflationary collapse struck in the United States first causing an incredible drop in asset prices in late 2008. The government was fairly quick to respond to the massive demand-side slump. In fact, the government intervention was accomplished much earlier along in comparison to the Great Depression largely accounting for why another depression was avoided.

The $700 billion Troubled Asset Relief Program (TARP) achieved major feats in restoring confidence in the banking system. Re-capitalizing major financial firms was the first step in stabilizing the collapsing equity markets and frozen credit markets.

European markets started to fall in mid-April as sovereign debt fears hit front page and calls for the complete collapse in the euro monetary union were abound as the euro was dropping from highs of over $1.50 to cracking $1.20 on the downside. The EU responded even more quickly than the US did with the TARP program. The playbook had already been written by the US, the EU borrowed the best plays and put them into action earlier and more effectively. The EU announced a debt aid package for €700 billion that quickly halted the euro’s decline.

The next step for Europe was to give its banking system the seal of approval. The stress tests in the United States worked very well to build confidence by helping struggling banks re-capitalize and systematically show that most banks would be fine even in the face of possible worsening economic headwinds.

The EU’s stress tests were carried out brilliantly. They were just harsh enough as not to be seen as a farce finding seven banks in need of €3.5 billion in capital. Many may disagree with that statement in terms of the test’s rigor and plenty of analysts did complain but the US equity market response Friday was muted to positive signaling a broader acceptance. The names of the failing banks were wisely leaked ahead of the results so there were no surprises for participants. The tests offered the needed assurance that most of the system was in good shape to withstand foreseeable volatility.

2. Second-quarter earnings reports have been great & the sentiment pendulum has swung positive.

The chief concern this earnings season was weakness on the top line. Analysts have been arguing for months that while cost-cutting is great and improves the bottom line, sustainable growth in earnings will only come from top line growth. Bespoke has a great chart out showing that these fears have not been realized so far. As of Wednesday 73% of companies have beat expectations on their revenue numbers, far better than the historical 62% average. While earnings reporting is inherently backward-looking, it is clear that analysts continue to underestimate this recovery.

Source: Bespoke Investment Group

On top of strong reports, earnings sentiment has dramatically shifted from week one of this season to week two. Bespoke assessed as of Wednesday that the average earnings reaction has been -0.4%. Yet, Friday was a game-changer. Anecdotally, the reaction difference between Intel (INTC) and Amazon (AMZN) was rather shocking.

In week one of earnings season, on Tuesday night Intel (Nasdaq: INTC) reported an absolutely astounding quarter amazing the Street by exceeding top and bottom line estimates on higher margins and aggressively raising guidance. INTC reported EPS of $0.51 versus $0.43 expected and revenues of $10.8 billion versus $10.3 billion expected. Gross margins expanded year-over-year from 51% to 67% for the second quarter 2010! INTC topped it off by raising Q3 revenue guidance well above $10.9 billion estimate to $11.6 billion. Second quarter 2010 was Intel’s “best quarter in the company’s 42-year history”. How did the market reward INTC? After opening the following day 5% higher shares were sold aggressively throughout the day to close the stock up a marginal 1.7% for the day. By Friday all the post-earnings gains were wiped out.

Amazon (Nasdaq: AMZN), on the other hand, reported earnings on Thursday night this past week. AMZN produced a huge miss of analysts estimates with EPS coming in at $0.45, far lower than the $0.54 consensus estimate. AMZN eked out a top line beat by $100 million reporting $6.6 billion. The large prices cut for the Kindle device from an original selling price of $399 down to $189 to maintain competitiveness with the iPad, Reader and nook caused a significant reduction in margins. This report was the first major miss of estimates by a market leading company. Did the market punish AMZN? Hardly. While AMZN opened on Friday at $105.93, down 16.8% from the previous close, buyers immediately stepped in on the open snapping up the discounted shares. AMZN continued rallying throughout the day and recaptured nearly all of the day’s losses to close down a very mild 1%.

The change in sentiment is quite drastic. The pendulum has swung to the positive side as even a very disappointing report was confidently bought, that response coming in stark contrast to the selling seen after the absolutely steller INTC report the previous week.

3. The leaders to the downside have stabilized, GS & BP.

The SEC investigation into Goldman Sachs (NYSE: GS) in mid-April marked the first significant drop in a leader of the market. Over the ensuing months shares of GS dropped from $185 to below $130 by the beginning of July. The hearings, speculations, rumors all worked as an overhang to shares for months and acted as a major drag on the equity market. The Deepwater Horizon rig explosion on April 20th was another blow to the market. Shares of BP (NYSE: BP) melted from over $60 to well below $30 by late June. The oil spill pulled down many others in the oil sector, particularly Halliburton (NYSE: HAL), Cameron (NYSE: CAM), Transocean (NYSE: RIG) and Anadarko (NYSE: APC), among others.

Now, the SEC has settled with GS for a minor $550 million fine. In a broader context, the uncertainty over financial reform is behind us as Congress finally passed the financial reform bill. Shares of GS are on the rebound back up to the $150 area now. BP finally managed to stop the leak in the Gulf quelling fears of an unstoppable disaster, bankruptcy, etc. Shares of BP are now over $10 off the lows and the cleanup is well underway.

4. The first higher low is in place confirming buying interest.

For the first time in this market correction, there is a convincing higher low in place on the charts. After a series of three lower lows, buyers have stepped in to buy at higher prices. Along with the higher low, the close on Friday amounts to the first higher high and takes out the descending trendline. While the break of a trendline is not inherently bullish, it does signal a significant change in the rate of decline. The cocktail napkin technicals point to an encouraging change in previous trend.

5. Doctor Copper is forecasting a strengthening economy.

What is Doctor Copper saying? A reading of the technical tea leaves in both copper and crude oil offers compelling evidence for the bullish argument. Something has clearly changed in the dynamics of copper. Once again, similar to equity markets copper had its first higher low put in and this past week achieved its first higher high. In just this last week, copper rallied 8.9% from below $3 to challenge the $3.20 level. It may take a few days but recouping the $3.20 level will be final confirmation of this rally.

Crude oil is also showing signs of increasing demand. After breaking down below $70 per barrel in late May, crude prices have rebounded and are now bumping up against the $80 resistance level. Oil also has a higher low in place on the charts.

Actively trading this new rally:

Right when a trader gets used to trading one way, the market changes. This is happening again as it will become increasingly difficult to trade on the short side should my call be realized. Shorting can be thrilling because gains come very rapidly when they do come as a result of panic-induced selling. As far as strategy goes, gains on the short side are meant to be taken off the table very quickly. As Keith McCullough of Hedgeye.com says, “There is no such thing as short and hold”. I should have heeded this advice and brought in my shorts earlier rather than holding them back to flat after equities found support at the 1,050 level.

The short squeeze is often the first move up the market. This squeeze is rapid because it is exactly the same type of buying as the selling was: panic-induced. Yet, after the first move, the momentum typically slows. Buying occurs in a much more controlled and logical manner than selling often does. I think of it in this way: buyers looking to enter positions use limit orders, capitulating sellers use market orders. The buying is concerted and rational, the selling is fast and indiscriminate. Buyers say, “work me into this position”; sellers say, “get me out now!” Profit-taking definitely occurs more logically than this but a lot of selling, especially in sizable corrections like the one we just saw results from irrational panic.

Trading a new move higher will require longer holding times and much greater relaxation of anticipated levels. Panicking sellers are more acutely aware of price and will make decisions based on declining price. Buyers are typically not as aware of specific price and look to buy on pull-ins. Levels are therefore more fluid and active traders should be more diversified not only in the number of positions but also the timing of entering those positions. Allowing yourself to be wrong on timing by starting smaller and legging into a position slowly will reduce much of the stress that comes from mistiming purchases.

I have been accumulating long positions slowly over the last couple of weeks. Although I was net short as of two weeks because of a long volatility and short market position, I kept buying small amounts of individual names. Now, all my shorts are off the table and I have a broad basket of individual names that I believe will do well in the next wave higher. Time to see if this thesis plays out.

Disclosure of full portfolio: Long SPY, VMW, EMC, GS, AONE, LLY, SPWRA, IRBT, IMAX, DNDN, STP, CREE, ILMN, LOGM, AGU. Short GLD.

Everyone knows Microsoft (NASDAQ: MSFT) holds a horde of cash, but many also question its ability to monetize on that latent value.  After the bell today, Microsoft delivered a blowout quarter, reporting EPS of $0.51 compared to analyst estimates of $0.46 on revenues of $16 billion compared to estimates of $15.3 billion.  This should help quell some of the recent concerns.

Microsoft has been particularly beaten down both in terms of share price and reputation as people have questioned the company’s ability to evolve in a dynamic technology environment.  Things are so bad that Steve Ballmer retirement rumors find their way to the Internet on a daily basis. Despite the negativity, we featured Microsoft as one of our long plays in the Premium Newsletter , and on the CBS Radio Stock Picker Segment, as a great way to weather the recent volatility storm taking hold of global markets.

Revenues came in higher on all four major subdivisions of the company, with the Servers and the Business segments delivering the biggest beats.  For the year-to-date, 175 million Windows 7 licenses have already been sold, contributing nicely to Microsoft’s earnings beat and the newest version of Microsoft Office continues to be a powerhouse money-maker for the company.  In our earnings preview for Microsoft, we highlighted the fact that Intel’s (NASDAQ: INTC) earnings gave investors an early clue as to the strong demand from enterprises in upgrading their technological infrastructure.

This earnings report should soothe investor concerns that Microsoft is not well positioned for the shift into the “cloud,” as the company demonstrated solid revenue growth in exactly the areas in which the cloud should theoretically chip away.  With the newly unveiled Kinect for Xbox, Microsoft is once again looking to turn the video gaming division of the company into a key driver of future revenue growth.

Afterhours, the stock is floating between unchanged and slightly negative.  After closing above the 50-day moving average for the first time since early May, Microsoft shareholders will be looking for the stock to hold above recent highs in the $25.50 area before starting a new move higher.

Disclosure: No position.

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Earnings Estimates (High/Mean/Low): $0.53 / $0.464 / $0.42

Microsoft (NASDAQ: MSFT) is expected to report significant YOY gains when it reports FQ4 earnings this Thursday after the bell.  Mean estimates are currently pegged at $0.464 on revenue of $15.3 billion, well ahead of year-ago earnings of $0.36 and $13.1 billion.

The enthusiasm for the Q is fueled largely by data indicating improvements in demand for new computers outfitted with the company’s software.  Such sentiment was boosted in no small part by Intel’s (NASDAQ: INTC) Q2 earnings release last week.  In it, the chip giant seemed to indicate that businesses and consumers are accumulating new computers, most of which are loaded with Microsoft software, at a healthy clip.

Indeed, one analyst who has a $37 target on shares stated that “Intel’s earnings reaffirm a few things that we have been highlighting.”  He added that, “in particular, businesses are buying new computers and demand for pared-down netbook computers remains strong, as does demand for higher-end servers.”

Despite rallying upwards of 10% over the past couple of weeks, shares of MSFT remain nearly 21% below recent highs.  With shares yielding over 2%, it’s easy to see why the Street remains largely bullish of the stock.  However, all is far from well at the company, as they’ve seemingly swung-and-missed at every “killer app” they’ve tried to produce for what has felt like a very, very long time.  Windows 7 seems to be bucking this trend, but Mr. Softy will need to do more if it wants to break back into the mid-30s and beyond.

MSFT’s report is sure to move the market and should be followed attentively by any responsible investor.  You’d probably be best off not accumulating shares ahead of the report as they’re liable to sell off for any number of reasons following the release, but, generally speaking, shares do seem attractive at current levels.

Disclosure: No holdings in MSFT.

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We’ve had a manic week on Wall Street which started with positive news from Alcoa (NYSE: AA) and Intel (Nasdaq: INTC) yet finished with depressing news from Bank of America (NYSE: BAC), Citigroup (NYSE: C) and Google (Nasdaq: GOOG):

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Much of the rage these days has been about “how to get businesses to spend.”  Watching CNBC, one would easily conclude that we are in the midst of a supply side slump, in which businesses curtailed production due to uncertainty in policies from Washington.

With the US Chamber of Commerce unleashing a wave of negativity on the present policy landscape, I think it’s important to take a step back and look at what is fundamentally taking shape in our economy. Economics has become so politicized to the point that discourse has become detached from the source of the problem.   Let’s analyze where we are and where we came from in an apolitical manner, focusing solely on the simplified economic elements.

What is the problem?

In a nutshell, the problem is debt.  We are in the middle of a rolling credit crisis.  It all started with the private sector accumulating far too much debt–the leverage ratios in the financial and residential sectors reached unprecedented heights–and has now transitioned into one in which the US government has accrued a substantial fiscal debt.  The following chart, borrowed from Steve Keen’s Are We “It” Yet paper (definitely worth the read for those who enjoy more advanced economics), offers a great illustration of exactly what has transpired.  As you can clearly see, when the lines representing finance and business turn downward, the government’s line accelerates upwards.

Once the first shock (sub-prime trouble started in 2006 and heightened throughout 2007) hit debt markets, the shock sent ripples throughout US debt markets.  When Lehman Brothers collapsed in September 2008 and AIG required a bailout just to meet its collateral requirements, debt markets completely froze and finance essentially came to a halt.

In the meantime, as the financial sector of the economy collapsed, and the unemployment rate rose, the cycle of defaults and increasing unemployment continued to accelerate in pace.  Demand in the economy took a shift to the left.

In the short-run, the aggregate supply is a vertical line, as production capacity itself is static.  One can clearly see that when demand shifts left, both price and total production also take a corresponding shift to the left.  This is rather different than your typical post-Great Depression recession.  In fact, it is the first time since the Great Depression that we have seen such a shift.

What this means for monetary and fiscal policy?

When aggregate demand takes a leftward shift the remedy called for is different than what has worked in other recent recessions.  In the past, cutting interest rates would induce firms to increase production, as a supply-side recession led to a shortage in production.   We saw this play out as the Fed rather quickly moved interest rates to the zero bound, and sure enough there was no uptick in economic activity. Fiscal policy, on the other hand, could be implemented to fill some of that “demand gap” that results from a shift in aggregate demand, and this is exactly why our government pursued a stimulus plan.

The common thread through all of this is that the problem started as one of too much debt in the private sector.  As a result, demand for dollars increased–demand for dollars is equivalent to saying that firms and households cut consumption in order to save and/or pay down debt.  Debt was (and is still) getting capitalized far faster than the money supply was increasing.  Essentially, we are in the midst of a massive debt to equity conversion in the private sector.  In order to soften the landing, the government lent a helping hand and took on more debt itself so that the private sector could afford to capitalize.  And perhaps most importantly, Helicopter Ben Bernanke unleashed a massive wave of quantitative easing and drastically increased our money supply in order to accommodate the increasing demand for dollars.

Where are we now?

Well now, the government’s deficit has expanded rather quickly.  This is not a bad thing.  Meanwhile, private sector balance sheets have continued to improve, to the point where people are now complaining that companies have too much cash.  This too is not a bad thing.  The next step is to get us into a position for demand to start increasing in the private sector.  Clearly there is demand for investment (as opposed to consumption goods), as is evidenced by the fact that even since the Federal Reserve stopped purchasing mortgage backed securities, interest rates on 30 year mortgages continue to plunge to new record lows: demand outweighs supply in that market.

Why is that?  Well what bank wouldn’t want to lend when they could borrow from the Fed at next to no interest and lend that money out at about 4.5%.  That’s a healthy profit margin right there!  The problem is that demand for mortgages is incredibly low, as over levered households are in no position to take on more debt in buying new real estate (hat tip to Hedgeye for the chart):

Is investment light right now?  Sure it is,  But, while we’re not seeing investment in increased production capacity, we are seeing investment in increased productivity.  Companies are spending large quantities of money investing in the new technology infrastructure.  Intel’s (NASDAQ: INTC) earnings highlight this trend on the supply side, as does Federal Express’s (NYSE: FDX) on the demand side.  Intel beat on account of increased demand from the cloud computing trend, while Federal Express invested in improving the company’s efficiency infrastructure.

We need to add a little more context to what is going on.  Business cycles are just that–cycles.  There are peaks and there are troughs, but all in all, changes take time.  Subprime “popped” in 2006, totally crashed in 2008 and bottomed in 2009.  That was a good three years of negativity there.  We are just through year one of the recovery in equity markets.  Anyone who expects the economy back at full capacity at this point has some sort of agenda.  It’s just impossible and unrealistic.  The key is to remain cognizant of where we came from and where we are, and to continue implementing effective policies to mitigate the deflationary pressures coming from households and financials and to encourage investment in innovative ideas.

In April we were all clear and May-June the world was ending.  There are inherent emotions that contribute to the fluctuations of market prices.  As investors and traders, it’s important to look at this through an unemotional lens.  The market will do its thing (check out Ben Graham’s Mr. Market to get an idea), and the economy will do its own thing.  Now is one of those times to take a step back and put things into perspective.

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Reality is chaotic and largely unpredictable. Most people (e.g., economists) like to model everything into clean theoretical algorithms. As the global economy has become a Mixed Bag, over-simplifiers seem to be having a major system malfunction.

Make no mistake: the global macro picture is ugly. The sovereign debt crisis continues to unfold as this week Moody’s (NYSE: MDO) downgraded Portugal. Growth in China (NYSE: FXI) has slowed. The UK and EU are moving forward with plans for austerity. Housing markets have cooled again. And, most frighteningly, deficits and debt-to-GDP levels are astronomical.

However, there are many emerging signs of a classic bottoming of the business cycle. Credit markets are functioning again. Corporations are sitting on piles of cash after cutting costs to the bone. Business spending on tech has starting to rebound. CEO hiring confidence has drastically improved year-over-year. M&A has picked up nicely. The system is flush with liquidity and backstop protection. New startups are making headlines everyday. And cyclical bellwether Intel (Nasdaq: INTC) just reported their best quarter ever (i.e., 42 years).

Unfortunately, this is a scenario which causes smoke to emerge from the ears of most people. In theory, we can look at macro economic data and make clean conclusions. In reality, human beings are extremely unpredictable and trillions of variables escape our over-simplifying eye.

Thus, we end up with two camps: bulls and bears. The bulls ignore the ugly macro picture, focus on the legitimate green sprouts, and optimistically imagine a future in which entrepreneurial zeal and consumption resurrect from the ashes. On the other hand, the bears ignore the positive developments, marginalize growing catalysts for growth, and pessimistically envision a future in which the entire system of blind faith in finance spontaneously combusts in a fiery apocalyptic finale.

As with just about everything, the truth probably lies somewhere in the middle when there is a Mixed Bag of data points.

As a media outlet, we know the shock of great depression and the awe of materialist utopia increases views and clicks. That’s why the mainstream media can’t wrestle itself from the addiction of the polarized circus.

However, if you want to make money — real money — the secret is to ignore the economists and showmen. Instead, spend your time doing the hard diligence which leads to successful investments. That way, if the market crashes or irrationally blasts off, you will win. Or, if the market chops for years, you will still win. All the unilateralists will win only when their broken clock briefly aligns with the sun.

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Yesterday, Intel (Nasdaq: INTC) blew out earnings and setoff stop-losses heard ’round the world. In this video, I take a look at an additional breakout in EMC (NYSE: EMC) and a prospective trading setup in Cisco (NYSE: CSCO):

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