This week, investors have been experiencing an eye opening pullback at the heels of more drama in the Eurozone over Greece and its fellow PIIGS countries, Portugal, Italy, Ireland, and Spain. But when can we expect the slide to stop? Here’s a peek at what the S&P 500 looks like right now:

The index hit a top at 1220 back at the end of April, and it coming back down quickly toward a potential support level at 1150. Watch that level very closely today — if shares don’t finish at or above that rough level (the horizontal blue line above), we can expect to see the pullback continue perhaps as low as 1050 before it gets another good chance to hit the brakes. That said, with momentum veering down toward oversold right now, I think it’s likely we’ll see stocks cool their downward pressure today and tomorrow.

But the technical charts are hardly the only factor that’s moving stocks right now…

Fundamental data are going to be the real drivers for any sort of market movement we get in the next couple of weeks. Earnings are making a big impact on the numbers. Economic updates — like tomorrow’s jobs report — will have a huge effect on the numbers. And, of course, the situation over in Europe will continue to push the market to its whims.

For the past couple of weeks, investors have been concerned that the rally we’ve been enjoying for the last year and change was coming to an end and we’d be headed back for a second dip of recessionary price action.

While those fears are certainly warranted, I don’t believe that we’re seeing any strong signs of serious correction as of yet. That said, I’ll be watching the market closely over the next few days, keeping you informed if I believe it’s time to start positioning our stock portfolio for downside risk.

Like I said before, I’d hoped that today would be a buy alert. A week or two ago, I sent out a Watchlist with five potential Rhino Stock plays. Since then, I’ve narrowed it down to one stock that I’m bullish on this month, Applied Materials (NASDAQ:AMAT).

Obviously, we won’t be adding any positions to our portfolio until we have some notion of where the market’s headed in the short-term. Like I’ve said time and again, even the best fundamental plays can get shellacked in the face of an outwardly bearish market.

I’ll send you detailed analysis on the company when we’re finally ready to pull the trigger.

Until then, keep a close eye on where the S&P ends the day. A closing level below 1150 doesn’t mean you should liquidate your 401(k), but it does mean that I’ll be sending you a new alert with more details on the implications of that moment.

We’ve added two new positions to the Rhino Stock Report’s model portfolio in 2010 – both are currently up on the year with an average of 8.6% gains. But the S&P’s next stumbling block could keep us from adding a third position until March. Here’s why:

A colossal breakdown in the S&P 500 in mid-January caused the index to fall below the 50-day moving average, a key technical support level. And although the market has staged a serious comeback in the last couple of weeks, that 50-day moving average could prove to be too tough of a resistance level right now.

With emphasis on economic numbers – like interest rates and jobs – this week, the fundamentals are driving the market. Since our economic fundamentals have been anything but bullish this year, the chances of seeing a break above the thin blue line are diminished.

That’s not to say that the S&P won’t move above the 1109 level next week – only that it’s going to take more bullish power than we’ve currently got on tap. For us, that means that we’re not going to make any new moves until we see a bounce off the 50-day or a breakout above it. (To learn why that’s significant, watch Planning Your Entries and Exits With Technical Analysis)

The Fed Fouls the Markets

Stocks are trading lower today thanks to the Federal Reserve’s decision to increase a peripheral interest rate after yesterday’s market close. To be clear, the rate (which dictates how much interest banks must pay out in emergency loans) doesn’t have much of an effect on monetary policy – but the change still has investors shaken.

That’s because a rate increase of any sort was so unexpected. The Fed slashed interest rates following 2008’s financial meltdown in order to lower the cost of capital and add liquidity to the seized-up credit market. An increase suggests that economic fundamentals are improved enough to increase the cost of borrowing – something that investors don’t see right now.

Although it’s unlikely the Fed will hike more significant rates, expect investors to continue to be anxious until the next bout of economic numbers comes out and they forget about rates once again…

Our Big Earnings Week

Next week is a significant week for a few of the companies in our Rhino Stock Report model portfolio. Three companies – NRG Energy (NYSE:NRG), J.M. Smucker (NYSE:SJM), and SPX Corporation (NYSE:SPW) – will announce their quarterly numbers to the public. I’m optimistic about all three stocks, so don’t expect a significant change-up in our portfolio positions next week. I’ll fill you in on the results in next week’s Market Recap…

Excellent Artitcle. I am seriously considering your advice to purchase a share before the split takes place. It would replace all of my current holdings in my Roth IRA stock trading account.

Normally, an investor trying to replace an entire portfolio with one stock is the biggest red flag imaginable. After all, diversification is the name of the game when it comes to retirement accounts like IRAs and 401(k)s. But what about a conglomerate like Berkshire… Do the same rules apply?

Ultimately, while Berkshire Hathaway is a great stock with a well-diversified portfolio of subsidiaries, I’d strongly urge investors not to liquidate all of their other holdings to buy shares of the company. That’s because while Berkshire does have some good diversification, Buffett’s self-avowed strategy is to avoid stocks he doesn’t understand. That’s translated into an underrepresentation of tech names, incidentally one of the sectors that led us out of 2008’s mess the fastest.

Now that Berkshire’s B shares have split, you can pick up a position without wiping out your exposure to areas that the company doesn’t play with.

For a more in-depth explanation of diversification and asset allocation, check out this article I wrote back in 2007 for TheStreet.com.

Investors’ obsession with Warren Buffett should come as no surprise. After all, the Oracle of Omaha – as he’s known to the investing world – is the wealthiest professional investor in the world, with a $39 billion net worth according to Forbes.

And around 98% of that wealth has come from his holdings in Berkshire Hathaway (NYSE: BRK.A, BRK.B), the textile firm turned conglomerate that he took over back in 1965. But why am I writing to you today about Berkshire Hathaway, a company that all the investing experts have been talking about forever? How does this play fit into the Rhino Stock mold?

Best of all, Steven’s making his report completely free of charge for you. Just right click the link below to save a copy to your hard drive.

Click here to download the entire 100-page report right now…

Last year, the stocks and funds selected for the report returned 35.7% year-to-date, versus just 19% from the market. And the report made the #1 spot on Gainers Today’s performance ranking of 120 research firms.

I suspect that BDX, my pick for the report, will see solid growth in 2010 for the reasons detailed in the January 8, 2010 alert sent out to Rhino Stock Report subscribers. If you’re not yet a member, just enter your email address below to sign-up free.

J.M. Smucker (NYSE:SJM): The J. M. Smucker company has been one of our best-performing holdings to date — currently up 58% since it was recommended in April. Smucker has been getting new analyst and investor attention lately following yet another solid quarter of earnings released on November 20. And while those new shareholders have been late to the party, with the stock currently at a 52-week high, I see this one traveling higher still.

SPX Corp. (NYSE:SPW): While SPX Corp has had some trouble delivering the numbers we’ve been looking for in its last couple of quarters, a late November dividend and current 20% gain on the stock serve as a good reminder of why this “boring” stock was worth investing in. Recently, SPX’s CFO noted that the current economy made for a “realistic merger and acquisition environment.” That’s good news for a company that’s made considerable growth through acquisitions… the latest of which was completed on December 10.

Computer Sciences Corp. (NYSE:CSC): While CSC’s latest quarter release seemed comparatively tough at first glance, a closer look revealed that one-time income from the second quarter of fiscal 2009 accounted for a lot of the “decline.” All told, it’s business as usual at CSC, with a seemingly constant stream of new contracts flowing in. At present, the company is our biggest open gain up 65.11% since March.

Molson Coors (NYSE:TAP): This beer maker has been making good on our bets since we doubled down back in March. We’re currently up an average of 21% on the double-sized stake. The brewer’s third quarter was solid, with increased cost savings from its joint venture with competitor SABMiller (OTC:SBMRY). And right now, it looks like the currency conversion issues that plagued us in the first quarter of the year could work in our benefit coming into the fourth quarter — a catalyst that could push shares higher yet in early 2010.

NRG Energy (NYSE:NRG): While NRG is currently our newest position, the stock is performing strongly, currently up more than 8% in the last month. That has been thanks in part to increased analyst interest in the stock on our coattails and strong call option interest that’s stacked in our favor. The company’s pursuit of profitable green initiatives should continue to bode well for us going forward.

Taking New Stakes in Rhino Stocks

I know that new subscribers are looking for guidance on whether it still makes sense to take positions in our open Rhino Stocks, particularly when so many of them are up so much. Right now, the only stock that is still a reasonable buy is NRG Energy. Disciplined investors never chase the market, and our other plays have already had too much time to run ahead.

That said, we’ll be taking new positions in December and January, so there will still be plenty of chances to get into stocks that remain within buying range. Watch your inbox this month and next for my next Rhino play as well as your Technical Analysis webinar.

One look at the chart below should bring back some memories…

Enter the return of the “Failure Zone.” In the Friday Market Recap before Thanksgiving, I talked about the Failure Zone and why it was such a crucial area for the way stocks would move in the short term. We touched on two scenarios: a break above those two red lines, and a break below. What I didn’t mention was what the implications were if the market decided to bounce in between them for an extended period.

But that’s exactly what’s happening right now.

Often, sideways consolidation points to a continuation of trend, which means that we’d expected the rally to restart after charging its batteries for a bit. But over a shorter period, that sideways movement has been volatile — volatile enough to expect the previous recap’s rules to still apply.

So, did anything change since last week? Yes indeed. The market may be granting itself a reprieve from a move down to support — at least from now. If consolidation continues long enough to cool the overextended momentum of the market, it’s quite foreseeable for the rally to move on unscathed.

Until we’re tipped off either way, I’m inclined to stick with the status quo as far as our Rhino Stock Report positions are concerned. That means we’ll be adding another new position this month.

Now Onto Some Market Fundamentals…

Dubai has been in the news lately because the country asked for a break on some of its $60 billion debt. To be clear, we’re not talking about sovereign debt, but rather loans made to Dubai World, an independent financial arm of the emirate.

But that doesn’t mean the effects of the debt standstill won’t be painful for investors. The group controls some of Dubai’s most famous real estate, including the Palm Islands, and the under-construction Nakheel Tower, the world’s tallest building.

While much of Dubai World’s debt is owned by banks in the West, U.S. financials don’t bear the brunt of the financial burden for a change. Instead, U.K. and European-based banks are holding the bag until the United Arab Emirates decides to step in with yet another bailout.

Independent agencies are currently rating Dubai World’s risk of default at under 40%. That at least a good sign for now…

Don’t Miss This Exclusive Webinar

Right now, I’m hard at work on a webinar called “Timing Your Entries and Exits With Tecnicals.” As the name implies, it focuses on pairing technical analysis with fundamentals to get the most out of your entry and exit prices. I’m expecting the webinar to be completed around the end of the month — it’ll be a free exclusive for Rhino Stock Report subscribers (you).

You’ll get an email when it’s available.

I’ve just gotten word that the Rhino Stock Report was added to financial ratings website Investimonials, but unfortunately no one has given it a rating yet. Please take a second to let other investors know what you think, good or bad. Click here to post your review now…

Among them are regulated utilities.

Investors have long favored utilities for a few very good reasons… predictable, recession-resistant revenues; steady streams of dividends; and government-sanctioned monopolies. They’re a safe haven for stressed investors in the midst of a recession. But while much of the retail stock buying focuses its attention on the predictable utility stocks, one deeply related and highly profitable niche is being left to the wayside.

I’m talking about wholesale power generation…

Many people don’t realize the fact that power companies — like PG&E, ConEd, and my local friends at Baltimore Gas & Electric — don’t own all of this country’s power generation facilities. A different class of utility stocks, known as wholesale power generators, engages in turning commodities like coal, oil, and natural gas into a very different commodity – energy.

While most investors don’t think of energy as an investable commodity, it is. Utilities (and a number of other players) trade power just like retail investors trade stocks and options. And behind it all are the wholesale generation companies that power the grid.

NRG Energy (NYSE:NRG) is one such company. This generation firm operates 48 power generating facilities internationally using coal, oil, natural gas, nuclear, and alternative fuels. In the aggregate, the company is controls facilities that generate a total of more than 24,000 MW – enough to power between 4 and 8 million U.S. households according to Wolfram Alpha. And unlike most of its peers NRG is actually in the process of constructing additional generation capacity right now.

In the highly leveraged power generation industry, NRG is a best-in-breed stock with phenomenal operating metrics and a strong balance sheet, all at a relatively cheap price.

NRG’s Operational Prowess

In spite of difficult economic conditions and a decrease in power demand, the company closed a record year in 2008 with net income of $1.2 billion. That huge income number was thanks in part to prescient hedging amid rising commodity costs, something that the company has proved itself very capable of since it emerged from bankruptcy proceedings in 2003 in the wake of an Enron-induced collapse of the unregulated utility space.

Since then, with a management team headed by energy industry veteran David Crane, the company is preparing to enter a new decade with a markedly different financial footprint.

And NRG is stepping up to the demands of that new decade by embracing alternative energy sources like solar thermal, and wind power – and keeping them monetized. In June, NRG penned its latest deal with Pacific Gas & Electric to provide 92 MW of clean solar thermal energy from its Lancaster, California generation center.

With the Golden State’s serious peak energy needs in the summer months, the deal is more than green-energy PR for PG&E – it’s a cost effective means of helping to quench California’s power shortage.

But California isn’t the only strategically smart locale in NRG’s portfolio. NRG owns 1,400 MW of in-city generation capacity in New York City, as well as generation assets centered on metro areas in Texas, the greater Northeast, Europe, and Australia.

From a financial perspective, NRG is an attractive buyout candidate – and the company knows it. The company turned away a $7.5 billion takeover offer from Exelon (NYSE:EXC) in October of 2008, as well as a $7.9 billion pre-crash offer back in 2006 from Mirant (NYSE:MIR).

Both of those unrequited merger opportunities are telling about NRG’s management – while C-level stock options would have appreciated nicely under either offer, Crane and his team clearly believe that the company is on the path to be worth considerably more on its own in the intermediate term. I’m inclined to agree.

These Are Some Powerful Financials

NRG’s profitability isn’t the only thing that makes this stock attractive right now. The company is also making a very enticing value case for investors who aren’t afraid of going long in this market.

With a price-to-earnings ratio of 5.96, NRG investors are paying 88% less for this company’s earnings than for those of its industry peers. That’s thanks in large part to a nearly 20% slide that shares have taken since an analyst downgrade to “Hold” in early October.

That 20% discount in price has lead to some interesting valuation metrics – like a price-to-book ratio of 0.8. A P/B that low is nearly unheard of for asset-centric industries like power generation, and with the costs of building power plants 40% higher in the last three years according to analysts at Morningstar, chances are good that the market value of NRG’s generation assets exceeds what’s on the books… especially in hard-to-penetrate markets like NYC.

On a per-share basis, NRG sports $31.46 in net assets, of which nearly $6 per share is quick, liquid assets. All told, the company has $4 billion of liquidity, and enough hedging in place to ensure that its cash needs are more than adequately covered through 2010.

Technically Timely

Shares of NRG look attractive from a technical standpoint as well…

The company hit a seemingly impenetrable resistance level just below $29.50 for the third time back in October just as the stock’s downgrade sent it sliding. But that freefall stopped just a few days ago when shares collided with support at the 200-day moving average.

That’s significant because it tells us that while investors overcompensated in selling down to the $23 mark, the stock is still obedient to the technicals… It also means that with most indicators showing the stock as oversold right now, and shares sitting right above support, now should turn out to be a great time to pick up a stake in NRG.

Dealing With the Market’s Malaise

Like most stocks, NRG is highly susceptible to the market’s recent mood swings. And with investor confidence waning at the prospect of another tumble into 2010, that means that going long on this otherwise amazing power generation play leaves some risk on the table. That’s something that we’ll deal with by monitoring this play very closely in the coming days and weeks.

With shares otherwise perfectly aligned fundamentally and technically, this Rhino play looks ready to dive into right now. We’re taking our position at NRG’s current price of $23.59 for the Rhino Stock Report’s model portfolio.

But not so fast… let’s take a look at the charts:

On Monday, the stock market took a big dive on investor fears about financial industry earnings and jobs numbers. That drop signaled a big change in the way the market’s been going for quite some time now; it was the largest single-day drop since late February.

Taking a look at the chart above, it’s clear how Monday curbed the uptrend. What’s also starting to unfold are the technical reasons to worry about more of a drop in May – right now, a descending triangle is starting to form, a bearish signal that the market’s due to break out to the downside.

But those who see the patterns alone pushing the markets down in the next week will probably be sorely mistaken. While a bearish chart would normally be a dark cloud, the fact is that fundamentals are carrying the markets right now. Chart patterns are going to be secondary for a while.

Now, that doesn’t mean that things are going to be great for the rest of 2009 – the are a lot of fundamental reasons to forecast another pullback in the markets, but I think that the biggest takeaway from this trading week is the fact that once again we’re seeing a market that’s yet to make up its mind. When it does, we’ll see a decisive move one way or another, but until then, there’s still a lot more information for investors to digest.

Regardless of what anyone says, suggesting that the market will rise next week or fall next month is pure speculation. Let’s just stick to picking Rhino Stocks and leave the guessing games to the gamblers.

Harmful Headlines

As usual, the headlines in the financial media have been anything but helpful in cutting through the clutter of market “news” that’s been going around. On Thursday, news outlets grimaced at an increase in new jobless claims for the week, pushing aside the fact that the four-week average of jobless claim initiations – a more trustworthy number actually dropped slightly. That’s good.

Earnings announcements continue to be a big deal this week – companies reporting tomorrow include 3M Corp (NYSE:MMM), Ford Motors (NYSE:F), and Schlumberger (NYSE: SLB).

3 Reasons to Watch the Market Next Week

From an earnings perspective, next week should be an interesting one. On April 28, EMCOR Group (NYSE: EME) reports their first quarter earnings. We’re up 22% right now on the stock. Also reporting next week is SPX Corporation (NYSE:SPW). The company reports their Q1 earnings on April 29. SPX Corp has been a wild ride of late – we’re currently up 2.5% on the stock.

With one of our watchlisted stocks also reporting earnings on April 28, this should make for an interesting week indeed.

Disclosure: EME and SPW are positions in the Rhino Stock Report’s model portfolio.

There’s more than one way to deal with almost any problem – take the disposal of toxic chemicals, for example: If a chemical company needs to rid itself of toxic chemicals, they’re going to have to choose between treating those chemicals to reduce their toxicity, or something more creative… like bury them!

But burying toxic chemicals brings with it its own set of risks and drawbacks. For starters, chances are those buries 55 gallon drums of dioxin are going to seep back to the surface eventually, just as they did in the Love Canal Disaster of the 1970s in Niagra Falls. In that particular instance, 21,000 tons of toxic waste buried beneath a residential area had horrific effects on the residents who lived there.

Indeed, just throwing a tarp over a problem can certainly disguise it; at the very least it’ll keep it out of sight and out of mind for a while… but ultimately, that problem’s still there.

That’s what’s so funny about the Troubled Assets Relief Program (TARP). We’re throwing a TARP over trillions of dollars worth of toxic assets to “get rid” of it. Apparently the irony was lost on whoever’s responsible for naming the program.

In turn, millions of Americans are becoming increasingly concerned about the future of our economy. Not only are we facing a serious “toxic spill” financially, lawmakers have been content to throw money at the problem since October 2008.

Eventually, that toxicity is going to seep into our financial back yards and basements.

Elizabeth Warren is the chair of the Congressional Oversight Panel assigned to be the watchdog over TARP and other recovery initiatives. I first saw her in MaxedOut, a documentary aimed at informing Americans about the mountains of debt that we’re amassing at breakneck speed. In the film, she warned about the dangers of subprime debt long before most Americans knew what it was.

According to Warren, despite Goldman Sachs CEO cum-Treasury Secretary Paulson’s assuranced that taxpayers would be making an investment through TARP that would be repayed dollar-for-dollar, the Congressional Oversight Committee determined that Americans were only getting $66 of value for every $100 check written in our names. Yikes…

Warren appeared on the Daily Show with Jon Stewart on April 15 to discuss what the bailouts really mean for Americans. The interview can be watched below: