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Company name Caterpillar Inc.
Stock ticker CAT
Live stock price [stckqut]CAT[/stckqut]
P/E compared to competitors Good
MANAGEMENT EXECUTION
Employee productivity Fair
Sales growth Good
EPS growth Good
P/E growth Poor
EBIT growth Good
ANALYSIS
Confident Investor Rating Good
Target stock price (TWCA growth scenario) $163.3
Target stock price (averages with growth) $208.99
Target stock price (averages with no growth) $149.23
Target stock price (manual assumptions) $134.13

The following company description is from Google Finance: http://www.google.com/finance?q=cat

Caterpillar Inc. (Caterpillar) is engaged in the manufacturing of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. Caterpillar operates in three principal lines of business: Machinery, Engines and Financial products. Machinery line of business includes the design, manufacture, marketing and sales of construction, mining and forestry machinery. Engines line of business includes designs, manufactures, marketing and sales of engines for Caterpillar machinery; electric power generation systems, and marine, petroleum, construction, industrial, agricultural and other applications and related parts. Financial Products principal line of business consists of Caterpillar Financial Services Corporation (Cat Financial), Caterpillar Insurance Holdings, Inc. (Cat Insurance) and their respective subsidiaries. During the year ended August 31, 2010, Caterpillar acquired Electro-Motive Diesel, Inc. (EMD).

Confident Investor comments: At this price and at this time, I think that a Confident Investor can confidently invest in this stock.

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Company name DineEquity, Inc.
Stock ticker DIN
Live stock price [stckqut]DIN[/stckqut]
Confident Investor Rating Poor

The following company description is from Google Finance: http://www.google.com/finance?q=din

DineEquity, Inc. is engaged in the development, operation and franchising of International House of Pancakes (IHOP) restaurants. The Company owns, operates and franchises two restaurant concepts in the casual dining and family dining categories: Applebee’s Neighborhood Grill and Bar, and IHOP. The franchise operations segment consists of 1,609 restaurants operated by Applebee’s franchisees in the United States, one United States territory and 15 countries outside of the United States. The company restaurant operations segment consists of 398 company-operated restaurants in the United States and one company-operated restaurant in China. The franchise operations segment consists of 1,443 restaurants operated by IHOP franchisees and area licensees in the United States, two United States territories and two countries outside of the United States. The company restaurant operations segment consists of 12 company-operated restaurants in the United States.

Confident Investor comments: At this price and at this time, I do not think that a Confident Investor can confidently invest in this stock. It is not possible to confidently invest in a company that is not currently profitable.

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Company name DG FastChannel Inc.
Stock ticker DGIT
Live stock price [stckqut]DGIT[/stckqut]
P/E compared to competitors Good
MANAGEMENT EXECUTION
Employee productivity Poor
Sales growth Good
EPS growth Good
P/E growth Poor
EBIT growth Good
ANALYSIS
Confident Investor Rating Fair
Target stock price (TWCA growth scenario) $45.83
Target stock price (averages with growth) $81.4
Target stock price (averages with no growth) $73.69
Target stock price (manual assumptions) $45.05

The following company description is from Google Finance: http://www.google.com/finance?q=dgit

DG FastChannel, Inc. (DGF) is a provider of digital technology services, which enables the electronic delivery of advertisements, syndicated programs, and video news releases to broadcasters, online publishers and other media outlets. DGF operates three nationwide digital networks out of the network operation centers (NOCs), located in Irving, Texas (Irving NOC), Atlanta, Georgia (Atlanta NOC) and Jersey City, New Jersey (New Jersey NOC), which link more than 5,000 advertisers, advertising agencies and content owners with more than 23,000 radio, television, cable, network and print publishing destinations and over 5,000 online publishers electronically throughout the United States, Canada, and Europe. Through the NOCs, DGF delivers video, audio, image and data content that comprise transactions among advertisers, content owners, and various media outlets, including those in the broadcast industries.

Confident Investor comments: This stock price may be significantly undervalued. It has not recovered fully from its major decline in August and September of 2010. At this time, I think that a Confident Investor can cautiously invest in this stock as long as the price is correct. Most of the fundamentals of this company are good but there are some concerns.

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Company name Cubist Pharmaceuticals, Inc.
Stock ticker CBST
Live stock price [stckqut]CBST[/stckqut]
P/E compared to competitors Fair
MANAGEMENT EXECUTION
Employee productivity Good
Sales growth Good
EPS growth Poor
P/E growth Fair
EBIT growth Poor
ANALYSIS
Confident Investor Rating Fair
Target stock price (TWCA growth scenario) $47.11
Target stock price (averages with growth) $48.02
Target stock price (averages with no growth) $20.36
Target stock price (manual assumptions) $47.35

The following company description is from Google Finance: http://www.google.com/finance?q=cbst

Cubist Pharmaceuticals, Inc. (Cubist) is a biopharmaceutical company focused on the research, development and commercialization of pharmaceutical products that address unmet medical needs in the acute care environment. The Company?s products are used primarily in hospitals, but also may be used in acute care settings, including home infusion and hospital outpatient clinics. As of December 31, 2010, Cubist?s derived all of its revenues from CUBICIN (daptomycin for injection), which is a once-daily, bactericidal, intravenous (I.V.) antibiotic with activity against certain Gram-positive organisms, including methicillin-resistant Staphylococcus aureus (S. aureus), (MRSA). As of December 31, 2010, CUBICIN had been used in the treatment of more than an estimated 1.1 million patients in the United States.

Confident Investor comments: At this time, I think that a Confident Investor can cautiously invest in this stock as long as the price is correct. Most of the fundamentals of this company are good but there are some concerns.

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The Wall Street Journal had an interesting column on Monday.  The article warned that the technicals of the market imply that a downturn is quite likely.

Investors are desperate for any map to help navigate today’s treacherous stock markets. One that might leave them seasick is relying on technical analysis from charts. First, there is the question of whether stocks are filling out a "head-and-shoulders" pattern, or an "island reversal." If the S&P 500 falls below its June lows, it would complete the head-and-shoulders (a high, a low, a higher high, a low, a lower high). Meanwhile, there are ominous signs of an island reversal. In that case, indexes fall rapidly between sessions, forming a "gap" in the days’ trading ranges, and then quickly "gap" back higher. Should they occur, the two patterns are thought to signal a downturn ahead.

Before these patterns could be completed, the S&P would have to fall under its 200-day moving average, 1277, itself another key chart figure. To complete the head and shoulders, the number is 1265—only 3.1% below Monday’s closing level of 1305.

It is important to understand technical analysis but I honestly do not believe that you can completely rule your investment life by looking at charts. There has to be some understanding of the business of the company that you are choosing for an investment. You need to understand how the company makes money and its historical ability to grow. However, there is momentum in the market and sectors tend to move together so technical analysis does give us insight into the market direction.

It is also important to remember that some companies will still be winners during a market downturn.  Just like there are loser companies during boom times. So while the market may be doing badly, your particular choice for an investment may be doing quite well.

Should you react to this thought process?  Maybe.  You should at least be a bit defensive in your positions.  If you have made a significant gain in a stock, it may be time to take some of that profit off the table. Also, major market moves invariably hit larger cap stocks more heavily, so you may want to be a bit more defensive in your position in large caps. This would surely apply to the DOW 30.

Just as all boats rise and fall with the tide, stocks are influenced by the other companies in their sector and in the market in general. When news of government defaults are constantly in the news, it is simply wise to be extremely cautious with your hard-earned money.

In the next 4-6 weeks, I strongly advise you to watch the technical indicators. I personally watch the 10- and 20-day EMA for my investments. If you think that is too quick, you should at least be watching the 35- or 50-day averages.