Welcome back, folks. Hopefully the winter weather that's ripping through the northeastern quarter of the country isn't proving to be too much of a drag for those of you in affected areas, but if you are catching the brunt of the snowfall, at least you can take some solace in the fact that that most of it is past us by this point. Whatever the case is with the weather, we'll start this week with a look at the earnings scoreboard so far, now that roughly 13% of the S&P 500's companies have reported last quarter's numbers. We'll wrap up with a quick look at the overall market, though the only thing to really say about today is that traders remain very much on the fence. Q4 Earnings Scoreboard Just for the record, 52 of the S&P 500's constituents have posted Q4's results. That's not enough of a sample size to draw any major conclusions about the market's health here, but it's enough to start the discussion. And how are things looking thus far on the earnings front? So far, 27 (52%) of the 52 companies that have reported fourth quarter's earnings have topped estimates, 18 (35%) missed estimates, and 7 (13%) have just met estimates. That's weaker than the normal "beat" rate of around 69%, but again, we don't have enough of a sample to jump to conclusions just yet. As far as an updated outlook on earnings goes, right now the S&P 500 is on pace to earn $28.33 per share for the fourth quarter of last year. That's actually a little higher than the $28.17 we were looking for right at the beginning of earnings season. Overall we'd have to give the fourth quarter's earnings results a C+. Again though, it's way too soon to worry about it either way. It's possible we'll get an updated earnings report from Standard & Poor's later this week, but I honestly don't think they'll get around to it until next week. Whenever its gets posted though, you'll read about it here in the newsletter on the same day. Portfolio Update, & Food for Thought Not a lot going on today with most of our picks. Our newest trade from Friday, Digital River (DRIV), didn't do much (not that we expected it to in one day), although we continue to see persistent - even if not impressive - progress from Fred's (FRED). Mostly though, our holdings were a bit lazy today and not worth dissecting as the market continues to figure out which direction it wants to move. There is one recent pick, however, that I want to talk about.... Green Automotive Company (GACR). In simplest terms, despite the great start for us - getting in right after what looked like a capitulation a week ago - GACR has become a complete debacle, prompting me to pass along two key reminders for all of you. First, penny stocks are penny stocks for a reason. Whenever we think we might have an idea that can provide gains on either a technical or fundamental basis, we put it out there for you because, well, that's what we do. The reality is, however, while the gains from right ideas can be enormous, the fundamentals are usually not there, which means these ideas are extremely speculative. GACR was by and large a technically driven-pick, and as such was no less speculative than many other penny stocks. Oh, while the upside was compelling enough to take a shot on, the market continued to see more risk than reward. It happens.... ...it happens quite often, in fact. See, though the few that work tend to pay off in huge ways, most penny stocks fail. That's why they're penny stocks. Nevertheless, they're still worth the risk. How so? Keep reading. Some of you who've been reading the SCN newsletter for a while may remember a number of years back we profiled a company called Force Protection (FRPT) when the stock was trading at $.10 cents per share. For a good year, the stock traded as high as $.20 cents and that was it. It even traded as low as $.05 at one point if I remember correctly. Well, the stock ended up on the NASDAQ four years later, reaching as high $35 per share! That's a speculation that was more than worth the risk. My point is, when it comes to penny stocks, one never knows. My second point is, I personally would only ever allocate money to a penny stock that I'd be completely willing to lose, and I sure wouldn't average down into a speculative stock. A more established, fundamentally-driven small cap? Sure, buying more of them when they dip is just prudent. When you're talking about small caps or micro caps that have more "story" than fundamentals, though - and when your trade is based on a technical situation that didn't pan out right from the get-go - averaging down is like throwing away good money after bad. Believe me, we're just as disappointed as you are to see GACR get no momentum on all of the recent volume. But, there's no need to keep trying to make the stock do something it's just not ready to do. We'll keep fishing for another capitulation to use as an entry point, but I hope all of you got out when the reversal effort failed. Ironically, it looks like today may have been "the" capitulation. We'll see. With all of that being said, there's a third point that's already been made somewhat, but needs to be underscored - small cap stocks can and often do pay off, but the best ones usually offer a combination of great fundamentals and great technicals. That's something we make a point of preaching here in the newsletter with most of our picks, like Fred's and Silicon Image (SIMG), but it's something the guys over at the SmallCap Network Elite Opportunity have absolutely mastered! And, their effort pays off. Take their CytRx (CYTR) trade as an example. It's up 56% since December 20th on a combination of corporate progress and the right technical setup. And if I recall correctly, BioTelemetry (BEAT) was up more than 100% for SCN EO subscribers at one point last year when John Monroe and his team picked it the first time. It's still going strong following their re-entry. It's not just small caps though. The SmallCap Network Elite Opportunity will trade anything it sees an opportunity in, including large caps, small caps, and even options, with each of those trades being defined as a short-term or a long-term position from their onset. It's that flexibility that makes the SCN EO such a potent trading service. See, most newsletters have one "shtick" or one approach to trading, which would be fine if the market only worked in one mode. Problem is, what works and what doesn't work in the stock market is always changing. Most newsletters can't adapt. The SCN EO can. If you're reading another newsletter and not getting consistent results, I'd venture to say it's because you're only getting picks based on one approach. If you want to experience a multi-faceted, holistic way of getting more out of the stock market, take a free two-week test drive of the SmallCap Network Elite Opportunity service. There's nothing else out there like it. Go here and get signed up for your free two-week trial now, while you can, or cut and paste this link: https://www.smallcapnetwork.com/pages/SCNEO/v1/ Yes, No, Maybe Whether Tuesday was a good day or a bad day for the market is largely a matter of opinion. From where I sit though, it was neither. Instead, what I saw was a market that confirmed it doesn't know what to do right now. The key clue behind my conclusion is how the S&P 500 was at one point well above Friday's highs, and then well below Friday's lows, and then basically closed right in the middle of today's trading range. The modest gain compared to Friday's close also suggested a lack of conviction, as did the tepid volume. Take a look. What's it all mean? On the surface it means nothing. Looking beyond the superficial clues, however, what today's star-shaped bar indicates is a combination of (1) indecision and (2) a willingness to test the waters that didn't exist before. Though that willingness to test the waters didn't actually carry the market in either direction, this increase in intraday volatility leads me to think we're going to start seeing some more prolonged moves. It's about time too, as I was getting a little bored with the S&P 500 stuck right around the 1840 area. For what it's worth, the NASDAQ closed out the day by pressing into a key technical ceiling, and the Dow finished Tuesday's trading by pressing into a key support line... the 20-day moving average. One or the other has got to give soon. The S&P 500 has its own support and resistance lines that jive with the NASDAQ's ceiling and the Dow's floor, so it should be pretty clear once the breakdown or the breakout materializes. Stay tuned, as we plan on being the first ones to point it out.