We're right around the mid-point of earnings season, and so far so good. As of the 26th, roughly 75% of the S&P 500 companies that have reported (about 212) have topped earnings estimates. Nearly 84% of those companies beat last year's operating earnings, and approximately the same number have topped year-over-year GAAP earnings.  And just FYI, the Q3 earnings projections for the S&P 500 - and beyond - have been pushed upward again. If my math is right, the revised outlooks put the market's trailing operating P/E right at 15.01, and the projected twelve-month P/E ratio at 12.99. That's still amazingly low on both fronts, but thanks to the moon-shot stocks made back in September, it's a slightly higher valuation than we were seeing at the end of August. The $1,000,000 question is, however, are stocks cheap enough to buy right now? That's something I've been thinking about for quite some time, going as far back as in June when the trailing P/E ratios were closer to 13.0, and here in late October when stocks are actually as expensive as they've been (on a forward-looking basis) in several months. I have an answer to the question, though it may not be one you like. I'll voice it first, but then - and as usual - we'll hit the highlights from the community's commentary and picks.    'Cheap' Doesn't Always Mean 'Bullish'  Sure, stocks are cheap on a historical basis. The thing is, it may not matter in the least.  Having not just been an investor for a couple decades, but also an unbiased observer of the market and its participants, I've managed to absorb at least one 'tough to accept' reality.... stocks usually don't trade at what they're worth. Oh, that's not to say they never do or never will; by my estimates a stock hits its actual 'value' a handful of times a year. The rest of the time though (the bulk of the time), stocks as well as the broad market are either undervalued or overvalued.  Now, for the truly patient buy-and-hold folk, the overvalued/undervalued ebb and flow doesn't matter. For the other 90% of us, however, these tops and bottoms and swings in between are opportunities if played right, but maddening if played wrong.  See, you can't take 'value' to the bank. You can only clear a profit from a trade by buying low and selling high, and to do that, your stocks must go higher while you own them. Whether they deserve to move higher or not - based on perceived value - is irrelevant. And I'll just add this ....I've seen plenty of (too many) undervalued stocks move lower, and plenty of overvalued stocks move higher. It never made sense on paper, but it was painful reality for investors all the same.  Or all of this said in simpler terms, the road to the poor house is paved with stocks that 'should have' gone higher. They just didn't.  What's this got to do with today? Everything.  One of the points I've been making recently in my Rhino Report is just that we don't want to indiscriminately add new long/bullish positions right now. If the market is at a near-term peak (and I think it is), we'd be stepping in at what's apt to be a short-term high for those stocks as well. See, three out of four stocks move the same direction as the market does; if the broad market heads lower it's going to drag most of those stocks down with them. The solution is simply to wait for short-term low.  And yes, it IS possible to time the market this way, despite the critics saying it's not. It's just a matter of using the right tools. [Test drive the Rhino Report risk-free to see what I mean.]  But is it worth it? Absolutely. Here's why.  Year-to-date, the S&P 500 is up a pitiful 6%. Given the number alone, you'd think there's just not been much opportunity for growth in the equity market. >From all the major tops to bottoms though, there have been some incredible trade-worthy moves.  So far this year, we've seen eight 'swings' of more than 7%... most of them much more. All told, the market may be only up 6% year-to-date, but it's traveled a whopping 92.2% worth of distance; that's the sum total of all the swings indicated on the nearby chart.  Get the point? Even if you're strictly a long-termer, you're leaving money on the table by not tweaking your entries and exits. Let's just conservatively assume you were only effectively able to capture half of that total traveled distance - that's still 46% worth of potential long and short gains, which beats the socks off the market's net 6%. So yeah, it's worth it.  Usana (USNA) is a great example of how this kind of patience paid off for Rhino Report subscribers.  I wanted to buy the stock - for fundamental reasons - late least year. It was a sinking ship then though. Then when Usana finally came back to life in Q2, the market started to deteriorate and sure enough, USNA began to struggle again. Finally on June 9th, not only did Usana perk up, but the market had just made a major bottom and was giving strong upside clues. With the stock's trend as well as the market's tend finally aligned, I pulled the trigger. Glad I did, too - the trade's up about 16% versus the market's gain of about 9%.  Continental Airlines (CAL) is another great example from the Rhino Report of how it pays to pick and choose your battles.  I actually wanted to purchase CAL early in the year. But, with the market as well as the stock pulling back, I knew I'd be stepping in at a peak price. By waiting until February 26th when the broad market as well as Continental Airlines shares had just given us strong upside reversal clues, I knew the headwind was gone. Eight months later, we booked a 20% gain by selling the stock on the 7th of this month... after the buyout announcement drove the stock's price to its final destination.  In fact, most (not all, but most) of the Rhino Report's big winners this year have been entered specifically because the market was at a likely low point at that time. That, or it was clear the individual stock didn't need the market's tide to move higher.  Though I can't divulge the newer Rhino trades - since I have to protect the subscribers' value - there's no harm in looking at the trades that are too far gone to chase down now. That's what you see on the nearby table. There are a few more you don't see that aren't as profitable yet, mainly because they aren't as old. If you want to see them too, like I said, there's a risk-free trial. I've got a feeling some of the names on the watchlist I looked at last week could eventually be just as big, if not bigger.  The lesson to learn here is clear... making money in the stock market is just as much about being in the market or out of the market at the right time as it is about picking the right stocks.  The value aspect? Yeah, I still think stocks eventually gravitate toward their perceived value (even if 'value' is a moving target). And yes, stocks are cheap by comparison right now. It can take weeks if not months for that value to be realized though.  If you need an example, I've got eight of them; do you really think the market's 'value' has changed as much as the 17% high-to-low span suggests it has over the last eight major swings? The value's been much more consistent than the volatility would imply. Yet, stocks continued to rock back and forth the whole time. If you're not capitalizing on that ebb and flow in the meantime, you're not making the most of the market.  Bottom line: If you get the market right first, so many other things fall into place. Get the market wrong, and you're fighting a headwind no matter how great your stock picks are. That's why our market timing models are the first thing Rhino report subscribers see - it's the most important piece of the puzzle.  Helping you get more out of the market, James Brumley Editor - Small Cap Network    From The Community  - Latest Commentary - Product to Market and Sales Win the Day: IRBT, ALVR, BIOF Twelve month revenues of $373 million? Check. A positive ttm diluted EPS of +$0.73? Check. No debt and $98 million in cash on hand? Check. It's no wonder Denis Askew is liking iRobot Corporation (NASDAQ:IRBT). The biggest attraction the growth of those numbers, however. Dennis has the stats.  Are They Worth Betting the Farm On? UNTD, SHFL, CLDA For what it's worth, casino and gaming stocks are among the very top performers for the month of October. The move is well-founded on earnings growth. Thinking a little 'bigger picture', however, puts Shuffle Master, Inc. (NASDAQ:SHFL) at the top of the list of indirect beneficiaries of gambling's revival. Check out how that's treating SHFL.  Update on CXM Medpodium Product and Excellagen Product Releases If you want to know something about a company, sometimes the smartest way to find out is the most direct route..... ASK THE COMPANY. We thank Biagio R. Rao for asking Cardium Therapeutics Inc. (AMEX:CXM) about Medpodium and Excellagen. Here are the e-mail responses he got back.  One Up, One Down, and One to Bail On - MDCO, AXL, and STEC in Focus It may have been marginal then, but there's nothing marginal about it now. The Medicines Company (NASDAQ:MDCO) just slipped from bad to worse this morning, moving well under the support line at $13.03. There's even less that can be done to salvage it now.  Wait For It..... Wait For It....EMMS, ENA, and PLUG in Focus The setup is halfway complete. When James Brumley mentioned that Plug Power Inc. (NASDAQ:PLUG) was close to a trade-worthy move above the 200-day moving average line, he also warned the healthiest thing it could do at that point was give up a little ground and regroup. That's what we're seeing today. Here's the initial outlook though.  - Newest Picks -  Technology Isn't As Complicated As It Seems: Ness Technologies Inc. (NASDAQ: NSTC)- Mark Kingston is off to a good start with this business software name.  EHealth Looking Healthy: eHealth, Inc. (NASDAQ: EHTH) - The insurance group has been quietly hot of late, and Max Rios is playing it with on online broker.  Sell Short FL: Foot Locker, Inc. (NYSE: FL) - The only recent short trade we've seen form the community, Joseph Chanine is betting against the specialty retailer.  Buy Long WRLD: World Acceptance Corp. (NASDAQ: WRLD) - Scott Brown is grabbing this consumer lender right as it seems to be coming out of a consolidation phase and entering a rally phase.    We Value Your Feedback Got comments, questions or suggestions? Send 'em on over: Email the Editor If you wish to send a written request or inquiry, please send it to our physical address: TGR Group, LLC  4653 Carmel Mtn Rd  Suite 308 #402  San Diego, CA 92130   Share the SCN Newsletter If you find the Small Cap Network Newsletter informative and profitable, please forward our newsletter alert service to like-minded friends and associates who share similar market interests.   Ensure Newsletter Delivery To ensure newsletter delivery, you can add any additional email addresses you may have to the Small Cap Network Member List. Receiving the Small Cap Network Newsletter in multiple locations is the best way of making sure you don't miss the next investing or trading opportunity! 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