Yesterday, Wednesday, we saw the long awaited release of the The Beige Book. If I had to write a teaser for the New York Times for this release of the Beige Book it would sound something like this:

"Weeks in the making, while thousands waited in suspense for the next installment of Ben's Beige Book, the 12 co-authors toiled to explain just what is this economy doing? While only using the word 'suggests' and 'however' 47 times (we did the document search-try it if you don't believe me) the district feds attempted to instill some confidence in employers and investors. Having failed to do so this book should go straight to DVD."

It was not a note worthy edition of the nonbiased fact based state of the economy. No great news but less bad news than usual if you can ignore all the suggests and howevers.

So yesterday the market opened lower because of Euro-fears about the Spanish and Italian Bond offerings today but slowly worked their way into positive territory with little conviction and little volume.

As far as the Salve Lucrum family of portfolios, Microsoft got taken down a little because of the weak pc shipments report put out by that industry. We considered adding on the dip as MSFT is rated 90 by IBD and has a nice pattern working on the technical's. Decided not to so we can get in the game elsewhere.

Since I was at the controls early, I played with the FINVIZ screen I showed you earlier in the week. I decided to drop the price screen to $10.00 just to see what was out there. The resulting list went from 18 stocks to 112. We found two worth checking out further.

One is a small bank stock (How many times am I going to that well hoping to find water.) SMBC Southern Missouri Bancorp, Inc. operates as the bank holding company for the Southern Missouri Savings Bank that provides community banking services in Missouri. The fundamentals look good, IBD rates it a 98, and the chart is pretty. It is on the watch list.

I was more excited about CATM Cardtronics, Inc., together with its subsidiaries, provides automated consumer financial services through its network of automated teller machines (ATMs) and multi-function financial services kiosks.

Fundamentals are fabulous, IBD has a 99 (highest), the chart was sexy pretty with a nice clean buypoint at 25.95 (Set October 28, 2011). We pulled the trigger after reading a few SEC docs. We are in at $26.64, well with in the 5% up rule from the buy point and we immediately set a stop at $23.87 to protect our downside risk at 8%. DO YOUR HOMEWORK. We love that FINVIZ screen.

Today was another interesting but dull day in the market. When we heard (at 5:13 am) that the Spanish and Italian Bond float went well, the market was up 45 points in the premarket. We were thinking a 2-3% day to the upside. Then we got initial jobless claims. As we indicated, I think, it disappointed. We came in just below the magic number of 400,000. At the end of the race all three indexes finished up, but still no volume.

Here are a couple of charts to explain the impact of volume. The first is the S&P 500 SPY ETF.

You can see the nice growth curve, which continued again today. But you can see the lack of energy as the Relative Strength line is at 66. That is a lackluster number as we like anything over 80. More importantly look at the volume bar on the bottom. The last decent up volume day we had was December 27 (circled). Since then everyday has been trading below its 50 day average (The red line). It would be nice to see a spike up in price and in volume.

Then we have the DJIA Chart.

Very similar markings as we have had only two days up with above average volume since Christmas. We have had one down day above volume as well. All three are circled.

To summarize, the uptrend without above average volume is very precarious. It shows signs of uncertainty. It would take only one or two days of positive volume to make more of the big money get in and move this rally (which started on December 20) along.

Step Right Up He Walks, He Talks, He Crawls On His Belly Like A Reptile.

Ok we owe a couple of people answers on stocks.

Ellen is still patiently waiting for me to do Macy's, and Jerene, still holding a grudge against Netflix, is asking if it might be a good time to get back in NFLX. I am going to do NFLX because retail kinda bores me and there are almost hourly reports coming out as to how the holiday retail season finished up.

I am sure we all know who Netflix is, but for those that don't NFLX Netflix, Inc. provides subscription based Internet services for TV shows and movies in the United States and internationally.

If we look at the fundamentals, when it was flying high around 300 the P/E ratio was high at about 70. Now the stock is down to 92 and change, but if forward looking earnings are 22 cents giving it a P/E of an astronomical 418. I believe they will do better than 22 cents for 2012, but this is still a VERY expensive stock. However as William O'Neil teaches us, we should be willing to pay for quality.

Now here is where it gets tricky. We are doing our best to play by the CAN SLIM Rules and right now NFLX fails to meet any of the buy criteria. The sector is under performing, EPS and EPS estimates are not if a good place, institutional owner have bailed since last September, and the composite rating is 47 which is pitiful. When you look at the chart, it is obviously coming back very strong over the last two weeks, but I can't see an entry point. There has been no base to see a good entry point.

I went to my very expensive charting home study course and tried to find a pattern. With a little creativity, when you look at a 6-9 month daily chart, starting on Nov 25th can see a flat base ranging from 62.90 on the 25th to Jan 3rd 2012 and a high on that day of 72.72. During that base formation you had a high of 77.59 on the 13th of December. If you see that as a base, you could call a buy point of 72.82 (10 cents above the 3rds price).

Unfortunately, according to the CAN SLIM rules you don't want to buy a stock more than 5% above its buy point. That would be $76.46 maximum.

So you got no fundamental reason to buy, and you may have missed your technical entry point if I am reading the tea leaves correctly. My suggestion (DO YOUR OWN HOMEWORK) is to put it on your watch list, wait for the fundamentals to solidify a bit and wait for the technicals to form a clear and decisive entry point, even if it take a quarter or two to do so and you have to pay 200 a share.

Hope that helps. 

Salve Lucrum