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Big and Steady Money Flowing Back In By: Charles Payne

|Includes:Amex Pharmaceutical Index (DRG)

Once again, the market is exhibiting resolve when it doesn't have any fundamental reasoning for doing so, which is botha good and bad thing.

> It's good that the market has found a groundswell of buyers willing to buy on weakness, albeit, it's a small groundswell...a puddle.

> The bad thing is we've witnessed dubious rallies end in thuds; although general upside bias isn't dubious per se, green shoots rallies aren't deeply rooted.

I like the action in drug stocks and pharmaceutical distribution stocks today as it points to small, value-oriented buying that says "smart money" to me. Drug stocks have been super hot and mostly under the radar, but now that the DRG has cleared a key resistance point maybe more than just value players are jumping on board.

I like when value guys put money to work because it's more thought out and the money isn't fly-by-night. We need much greater commitment to the market, although I would say there are legitimate reasons keeping people from not betting the farm. On that note, I believe the pros outweigh the cons, although the Administration must be derailed from its ability to do anymore harm to the national economy and the psyche of its citizens. Last night, some Republicans moaned at the election outcome in Delaware, joining the chorus of those suggesting Tea Party candidates can't win general elections.

* A year ago they were Astroturf.
* At the beginning of this year they were a fading fad.
* A couple of months ago they were not organized enough to beat established GOP candidates.

The stock market is begging for free market sensibilities and less intrusion by government. Instead of creating fodder for MSNBC, those old school Republicans better get on the bandwagon. The stock market isn't going to rally with the same old folks in Washington playing class warfare and attacking prosperity.

Economic Data

The Fed's Empire State Manufacturing index came in a tad lower than consensus estimates this morning, remaining at a low level of 4.1 for September, and slowing from 7.1 in August. Looking into the components, it didn't seem all that bad, as new orders, prices received and employment all showed improvements. However, the weakness seems to be coming from shipments, which although it improved from August, was still in negative territory.

Prices for both imports and exports rose in August. The biggest gain was in agriculture exports, which rose by 4.2% month to month, marking the largest increase since June of last year. Some of the strength is likely attributable to crop export restrictions in Russia following a drought in the Black Sea region.

How to Spot a Dog of an Investment
By: Brian Sozzi, Equity Research Analyst

Oftentimes a company trying to cover-up the holes in its fundamentals will go through great lengths to assure analysts and investors that all is fine and dandy. Quarterly earnings calls are usually dominated by sell-side analysts, so if management can pull off a good spin job on what is otherwise a leaky ship, then positive notes are likely in the days following. Presentations to analysts, typically held mid-quarter or when management is conducting "roadshows" to drum up interest in the stock also tend to be devoid of any gloom and doom commentary by those running the ship. You would be surprised (or maybe you wouldn't) at how polished executives could tell a lovely tale...just snoop around the internet for a Lehman Brothers conference call circa 2007.

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Disclosure: None
Stocks: DRG