If the next several months are going to be as mediocre as the economy suggests they will be, then just 'being in the market' isn't going to cut it. You need to think a little more strategically if you want your returns to be worth the effort you're putting in. We'll pinpoint some of the current investment hotspots below.  Following that, we'll take a look at an updated earnings scoreboard. So far, this earnings season is pretty typical in terms of the number of beats and misses, but even with just one week's worth of updated earnings numbers, Standard & Poor's has upped its earnings outlook for the market.  And as always, we'll look at the best picks and comments from the community this week.   Sector Picks  Not that you wouldn't be able to figure this out soon enough, but I'm not a double-dip theorist. I fully expect tepid economic growth for the foreseeable future, though even weak progress is still progress. And, I suspect the market will ultimately follow in that tepid growth's footsteps with very muted - perhaps sometimes imperceptible - gains for months to come, if not years.  So what? I make that point so I can make another, though it's one I've made before.... if you want to make meaningful, market-beating progress as an investor over the next couple of years, you're absolutely going to need to take advantage of the sector trends and tides as they present opportunities; picking what appears to be a great stock just isn't likely to be good enough.  With that as a backdrop, here's an updated list of sectors or industries that are starting to show (or still showing) investment-worthy leadership. Some of them are new, but a lot of them are important reiterations.  Wireless  While I remain bullish on telecom as a bigger-picture comeback play, I have to concede the bulk of my interest lies in the wireless stocks, for two reasons. One is, they're still well oversold from 2008's implosion. The second is, they've been tested several times over the last few months, but have passed those tests with flying colors (by holding up when the rest of the market didn't).  The nearby monthly (yes, that's right, monthly) chart of the S&P 1500 Wireless Index says it all. These stocks have only recently crossed above their 200-day lines, and only more recently has support been verified there. Unlike many other groups right now, we're at the early stages of this rally - not the latter stages.  Water Utilities  In the same sense that I'm bullish on telecom, but primarily because of wireless, I'm bullish in utilities, but primarily because of water utility stocks. For the first time in a long time we're seeing higher highs and higher lows from the S&P 1500 Water Utilities Index. And for the first time in an even longer time, we're not seeing stunning swings to higher highs and higher lows .... the kind that can't possibly be sustained. Translation: it's now safe to wade in again, as you're not apt to get whipped around. That said, it feels like we're a little overbought in the very short run.  If the two groups ring a bell, it may be because they're not really new ideas. I've posted bullish thoughts on them recently, with the latest sector/industry tips being posted on June 18th. And by the way, none of the outlooks I made on the 18th has changed; I still see the refiners, biotech, hypermarkets, and wireless (plus water utilities) as some of your best bets going forward.  I do have two groups I want to add to the list though.  Fertilizer  Back on July 15th I went into great detail about the paradigm shift the fertilizer industry has just been through (for the better), so I wont' rehash it here - just go to the story itself and you'll see why I'm willing to be a bull here.  In the meantime, the S&P 1500 Fertilizer Index hasn't disappointed. Oh, the tear these equities have been on has left them quite overbought in the short-term, and I fully expect to see a pretty good pullback from current levels. Given how much more upside room there is to go though, on top of the return to profitability for these companies, a fertilizer name in your portfolio may be a good idea.  Coal  This is one I've not yet 100% sold myself on, but I can't deny that the recent rebound from this group's stocks has me curious enough to at least take a swing. I suppose I could wait until the S&P 1500 Coal Index makes a little more technical progress before taking the plunge, but I don't think this upside reversal is errant - it was too slow and methodical to say it was mere volatility.  To state what most of you mat already be thinking, yes, this is largely a recovery play; Peabody forecasted growing demand a few days ago. Yet, it's also a weak-dollar play, as coal is a commodity, and commodity prices should rise again if Bernanke decides to pump some cash into the system (as he wrned he was willing to do when needed). At the same time, it's a China play; China now uses more energy than the U.S., and it uses coal to generate a huge chunk of it.  The bottom line is, there's a lot of upside with coal, but very little downside.  That's all for now, though I'm sure a few new sectors or industries will emerge as leaders soon enough (I see transportation on the radar). You'll hear it here first. Helping you get more out of the market, James Brumley Editor - Small Cap Network    Earnings Scoreboard Hey, whaddaya know.... this earnings season is looking just like all the rest. Surprise surprise. Since Alcoa posted its numbers back on the 12th, we've seen 69% of companies beat estimates, with 23% falling short of analysts' forecasts. Of course, that means about 8% of companies have reported the expected numbers (which sort of makes you wonder why the analysts even bother trying).  Though only about 600 of the 3000 major companies we track have announced last quarter's earnings, that's still a big enough sample to suggest we're basically on track.  At the same time, we have an update on the actual earnings total for the season so far, and a projection about its remainder.  As of the 21st, the S&P 500 is on pace to earn $20.03 in Q2. That's a little more than $0.30 above last week's outlook, and when looking out at the following three quarters as well, the projected (operating) P/E ratio for the S&P 500 is 12.9 (the bar was raised for the next three quarters too). Even on a GAAP basis, the P/E ratio for the next twelve months is a palatable 16.0.  It's reasonably safe to say Q2's early earnings success caught a lot of folks off guard. Expectations were for at least a lack of growth from the first quarter to second quarter, if not an outright sequential decline. Now we're adjusting the broad market outlooks higher, reflective of the raised full-year guidance from some key companies.  It's still a work in progress; let's check the scoreboard next week as well.   From The Community  - Latest Commentary -  Charts Don't Lie - Looks at DSCO, HCBK, and ISRG Is Intuitive Surgical, Inc. (NASDAQ:ISRG) just too deep into the quicksand now to save? James Brumley thinks so, and points out some very specific reasons why it may be all over but the cryin' (and the price tumble) for ISRG.  Green Lights on the Investment Highway: MRGE, WTSLA, CAST  If you think the complicated healthcare overhaul generated an opportunity for healthcare IT firms here in the United States, you're right. That's good news for Merge Healthcare Inc. (NASDAQ:MRGE). As Dennis Askew points out though, the healthcare software market extends well beyond U.S. borders. Check out just how global Merge Healthcare could be.  On and Off the Radar: ZOLT, CTEL, ASGN After a pretty tepid Q2, is Zoltek Companies, Inc. (NASDAQ:ZOLT) finally past the worst? Maybe, if the recent air show in England is any clue. Dennis Askew has the rationale.  The Sky is Falling - Sell Sky, or Not: XNPT, FTLK, MILL Did a little bad news drive XenoPort, Inc. (NASDAQ:XNPT) shares a little lower than it should have? Maybe. Though its migraine treatment ultimately failed to produce the desired results while in trials, the company has a strong pipeline full of drugs/treatments that shouldn't be terribly difficult to win approval for. Here's the bigger-picture perspective most of the market is missing.  Bingo! MSD, PII, and HSNI All Flip the Switch It took a while for the planets to line up for HSN, Inc. (NASDAQ:HSNI), but it was worth the wait. James Brumley says this stock now has the right fundamentals and the right technicals to be a long-term buy.  - Newest Picks -  Annaly Management Inc. (NYSE: NLY) Shaping Up For Downfall (short) Texas Industries Inc. (NYSE: TXI) Is Ready To Make A Move For The Top Buy Universal Electronics (Nasdaq: UEIC) Retail Specialist!! Fred's Inc. (NasdaqGS: FRED)  Make the Connection: Buy PC Connection, Inc. (Nasdaq: PCCC) Long   We Value Your Feedback Got comments, questions or suggestions? 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