1. Transports are strong – transports are an excellent indication of the markets direction since they show the movement of products and active commerce.

2. Rally in the banking index - since available credit is the lifeblood of business, strong financials generally points to a strong market.

3. Positive Reaction to Upgrades - in a bear market, no one cares about analyst upgrades. But yesterday Lincoln National (LNC: 28.76 -1.64%) stock jumped on an analyst upgrade this week which is a bullish sign.

4. Tech Rally - the bellwether tech stocks are climbing higher. Apple (AAPL: 222.2499 -1.07%), Oracle (ORCL: 25.19 -0.75%), Microsoft (MSFT: 29.59 -0.07%) and Intel (INTC: 21.9925 -0.93%) have all posted solid gains in recent weeks, indicating that the long-term tech themes are gaining strength.

5. Cash Is Stashed on the Sidelines – over the last 3 years, a lot of investors got out of stocks completely. With cash on the sidelines, it is only a matter of time before they start pouring it once again into stocks.

6. Acquirers Rally - when the market is flat or down, acquiring companies that announce an acquisition generally see they shares fall. However, Massey Energy (MEE: 49.91 -3.37%) was up nearly 6% yesterday after it announced it is going to buy Cumberland Oil & Gas.

7. Positive Reaction to Secondary Offerings - often investors worry that secondary offerings are going to dilute share value. However, Hartford Financial (HIG: 27.26 -2.08%) rallied 5% on the announcement of its secondary offering.

8. IPOs Rise in Price - in a bear market, few companies are willing to go the IPO route. Even when there is an initial public offering, it starts the day flat or declines. Financial Engines (FNGN: 17.60 +3.23%) saw a big jump in its first day of trading.

9. The Market Has Good Breadth - the number of stocks posting gains are outnumbering the number of stocks on the decline. Before the market crashed, the opposite was true.

10. Pessimism is High - the fact that there are so many pessimists and cynics prevents the market from getting overhyped and is keeping prices in check.

Cramer said that he has been using these 10 factors for over 30 years to judge the health of the stock market and they are almost never wrong.

Mr. Cramer took a look at the 10 underperforming Dow stocks in 2010 that appear to be holding back the Dow Jones index.

American Express (AXP: 40.33 -1.63%) – despite the stock being down 2% for the year, Cramer wouldn’t be surprised to see the financial stock rally 12%. Corporate travel is coming back and Cramer has a $45 price target for AXP.

Exxon Mobil (XOM: 67.04 -0.52%) - has declined 2% this year and has failed to rally despite oil prices climbing to $80 per barrel. Cramer feels than until the deal with XTO Energy (XTO: 47.21 -0.57%) goes through, the energy stock is going to remain range bound. Cramer mentioned that he would be surprised if the stock goes up more than 3 points in the near future.

Chevron (CVX: 74.98 +0.29%) – despite the recent positive statements by Chevron at an analyst meeting, Cramer recommends that investors sell the stock.

IBM (IBM: 127.71 -0.52%) - while Cramer expects that IBM is having a good quarter and will likely report great earnings next month, the stock is likely stuck in neutral until then.   

Coca Cola (KO: 54.75 +1.48%) - Cramer believes that Coke won’t be moving up from its 5% decline any time soon.

Pfizer (PFE: 16.91 -1.86%) – Cramer labeled Pfizer as the “Lusitania of the Dow” and predicts that the stock will lose another $1.

Microsoft (MSFT: 29.59 -0.07%) - Windows 7 appears to be selling very well and Cramer doesn’t expect Microsoft to stay low much longer. Cramer set a $32 price target for Microsoft.

AT&T (T: 26.24 +0.69%) and Verizon (VZ: 30.41 +0.36%) – the price war between these two telecom giants has resulted in both declining over 10% this year. However, Cramer predicts a recovery for both companies in the near future and expects that both will raise their dividends this year. His price target for AT&T is $28; while his price target for Verizon is $33.

Alcoa (AA: 14.26 -0.28%) - has been the Dow’s biggest loser in 2010 with a 15% decline. Cramer still doesn’t recommend the stock despite their strong cash flows.

However, there are a few shining stars among the Dow components as well. Cramer pointed to Cisco Systems (CSCO: 26.15 -0.72%), McDonald’s (MCD: 66.53 -0.22%) and Bank of America (BAC: 16.82 -1.52%).

Before the great recession hit in 2007, financial stocks offered dividend investors some of the most attractive yields in the market. Of course as Wall Street crumbled and age-old firms vanished, so did the dividend yields that these financial firms offered.

JP Morgan Chase (JPM: 43.45 -0.44%) offered investors a 4.8% dividend yield at the end of 2008 before slashing their dividend payment by 87% in 2009. Now they offer a paltry 0.5%.

Citigroup (C: 3.90 -2.99%) had consistently paid dividends since its inception in 1998. During 2006 – 2007, Citi offered a healthy dividend yield between 3% – 4% and as their stock price crashed in 2008 their yield jumped to over 7%. However, in early January 2009 as their stock price was headed below $1, the financial giant completely eliminated their dividend is a massive cost cutting move.

Bank of America (BAC: 16.82 -1.52%) offered a respectable 4% dividend yield before the market crash sent their dividend yield above double-digits. In October 2008, Bank of America cut their dividend in half after the financial firm saw earnings fall 68% in the third quarter. Just three months later, under pressure from the federal government, Bank of America slashed their dividend by 97% to a meager $.01 per share each quarter.

With the flood of dividend increases that we have seen in 2010, many have been anticipating similar increases from these financial stocks. However, the Financial Times reported yesterday that U.S. regulators have advised these firms to not increase their dividends nor engage in stock buyback programs “until political and economic uncertainty surrounding the industry dissipates”.

JP Morgan Chase, which is arguably in the best shape of any financial firm, has indicated that they would like to increase their dividend payment from its current nominal level. However, dividend investors shouldn’t bet against the influence of the Fed. We likely will not see any dividend increases from these financial stocks until at least the second half of this year and probably not until 2011.

Of course there is much more to evaluating a dividend stock than just looking at its yield. Intelligent investors will look not only at a stock’s yield, but also at their payout ratio or the ratio of dividend payments to net earnings. A high dividend payout ratio is typically a warning sign that the current dividend level is unsustainable. However, eDividendStocks.com has taken a look at 5 dividend stocks that have dangerously high, but also very deceiving payout ratios. These 5 dividend stocks offer investors impressively high dividend yields, and they have sufficient free cash flow to maintain their dividend payments.

Qwest Communications

Qwest (Q: 5.02 +1.01%) offers dividend investors an impressive 6.9% dividend yield. Wall Street expects that net earnings will decline by 10% this year, pushing the stock’s dividend payout ratio to 94%. However, the company generated nearly $2 billion in free cash flow in 2009 and has very impressive EBITDA margins (36% in the fourth quarter). With a manageable dividend/free cash flow ratio, Qwest should be able to maintain their dividend payout despite Wall Street’s expectations of further revenue declines in 2010 and 2011.

Frontier Communications

Frontier Communications (FTR: 7.49 -0.27%) is the highest yielding stock in the S&P 500 with an amazing 13.7% dividend yield. The telecom stock is in the midst of acquiring assets from Verizon (VZ: 30.41 +0.36%) in an $8.6 billion deal. Once the transaction is completed the company will reduce their dividend to $.75 per year. The dividend reduction along with the Verizon transaction will significantly improve their dividend payout ratio from their current 175% level, but will still offer investors an amazing 10% dividend yield.

Windstream

Windstream (WIN: 10.98 -2.66%) is the second highest yielding dividend stock in the S&P 500 with a 9.6% dividend yield. While the company’s annual dividend payout of $1.00 per share exceeds their anticipated net earnings of $.85 per share, the telecom stock is only expected to pay out 55% of their free cash flow in 2010. Wall Street also expects the stock to grow earnings in both 2010 and 2011.

Paychex

Paychex (PAYX: 32.17 -0.92%) currently offers investors a respectable 4% dividend yield, but at the same time they are using 93% of their net earnings to fund their dividend payment. However, Wall Street is expects the company’s earnings to grow by 8% in 2011. Though the labor markets are still a long way from full recovery, investors are recognizing that Paychex outlook is much brighter than it was just a few quarters ago.   

Verizon

While Verizon (VZ: 30.41 +0.36%) may be the second highest yielding dividend stock in the Dow Jones index, declining earnings in 2010 could put pressure on the company’s high dividend. However, given the company’s strong dividend history we believe a dividend cut is unlikely from Verizon - despite a dividend payout ratio that is now above 80%. A costly marketing battle with AT&T (T: 26.24 +0.69%) could prevent Verizon from increasing their dividend this year, but the chances of a dividend cut are slim.

When evaluating dividend stocks, free cash flow is often a much better measure to look at than net earnings. Without looking at a company’s cash flow, you can often be ignoring great dividend stocks. A high dividend payout ratio certainly shouldn’t preclude you from doing further analysis on a great dividend opportunity.

No company has received more negative press since the beginning of the year than Toyota (TM: 79.56 +0.95%). Yet their stock price is down only 9% since the beginning of 2010. Major Dow components like Alcoa (AA: 14.26 -0.28%), AT&T (T: 26.24 +0.69%) and Verizon (VZ: 30.41 +0.36%) have all performed much worse during the same time period.

Toyota’s stock opened trading today at $76.72 which is still above the midpoint of their 52-week trading range of $56.79 - $91.97. How can a stock with as many challenges as Toyota is currently facing, not be trading at a 52-week low?

The answer is simply because investors believe in Toyota. Not only are they not even trading near their 52-week low, but the stock price appears to be stabilizing.

And its not just investors that are sticking by Toyota in this dark hour – their customers are as well. A recent poll by Consumer Reports found that an amazing 60% of current Toyota owners are likely to purchase another Toyota. While that number is down from 70% last year, it certainly reflects the high degree of loyalty that Toyota owners have.

February’s auto sales figures should also be considered a win for Toyota. Sure, sales were down 8.7% for the month, but that was really a very modest decline. Not to mention any names, but if other auto manufacturers were facing this great of a challenge there sales would likely be down 40-50% or more.

Toyota also still had 2 of the top 5 selling vehicles in February (Corolla and Camry).

Sure, Toyota’s brand has been tarnished over the events of the last few weeks. Last year, a study by Interbrand ranked Toyota as the 8^th most valuable brand in the world. Undoubtedly Toyota will see a drop in their ranking in 2010, but they still remain among the elite brands in the world.

Toyota’s competition also seems to be trying to help the struggling auto manufacturer.

3 weeks ago – Honda announced problems with their air-bag systems and is recalling 826,000 vehicles.

Yesterday – General Motors announced that they were recalling 1.3 million vehicles due to power-steering problems.

Today – Nissan is recalling 540,000 vehicles due to brake-pin and fuel-gauge problems.

In conclusion, while it is surprising that Toyota’s sales and stock price have held up so well during this crisis, it also is a reflection of the true power of the Toyota brand. Toyota is facing a serious near-term challenge, but the consensus seems to point to a strong recovery on the horizon.

Of the 38 internet stocks that we follow, 22 stocks posted gains for the month versus only 15 losers (eBay (EBAY: 27.1925 -0.97%) was unchanged for the month).

Here is a look at the performances of the top internet stocks in February.

Open Table

Open Table shares soared 37% in February and were by far the top internet stock of the month. The stock jumped 23% following better than expected earnings results on February 9^th and has been trending higher ever since.

Shutterfly

Shutterfly (SFLY: 22.99 -0.69%) stock gained 21.3% for the month. The company handily beat fourth quarter consensus earnings estimates and provided 2010 guidance that was above Wall Street’s expectations.

zipRealty

zipRealty’s 20.2% increase last month is positive news for real estate investors. ZIPR’s big gain can’t be attributed to company specific events, but rather in increasing optimism that the housing market is beginning to recover.

Drugstore.com

Solid earnings results on February 9^th sent Drugstore.com’s (DSCM: 3.72 0.00%) shares up 16% the next day and drove the stocks impressive monthly performance.

Priceline

Over the past few months, few stocks have been hotter than Priceline (PCLN: 239.01 -1.57%). So it’s probably no surprise that the internet travel stock was one of February’s top performers. Priceline’s stock jumped 16% for the month following tremendous quarterly results that saw their gross bookings accelerate to 53% y/y growth.

Over the last 6 months since Mr. Cramer unveiled his mobile internet index, the Dow Jones Industrial average has gained 1,000 points or 11%. The technology-focused Nasdaq index is up 12% in the same time frame. So how has the Mobile Internet Index performed?

Unfortunately, the last 6 months has to be considered a mild disappointment for the mobile internet index. The index as a whole is up 9.6% during that time, but has underperformed the 12% gain in the Nasdaq.

The Mobile Internet indexes performance has been weighed down by a couple of extremely poor performances. The worst performer in the index, Palm (PALM: 4.0025 -29.16%), has lost over half its value in the last 6 months. Tessera Technologies (TSRA: 19.99 -1.43%) stock has fallen over 30%.

While the overall index performance has been disappointing, there have been some stellar individual stock performances. Sandisk (SNDK: 32.2525 -2.41%) is up an amazing 65% over the last six months. Starent Networks (STAR: 0.00 0.00%) shares have soared over 56% since last August. In fact, 14 out of the 21 stocks have posted 6 months gains with 12 of those 14 stocks delivering double digit gains.  

The big names of the index, like Apple (AAPL: 222.2499 -1.07%), Google (GOOG: 560.00 -1.13%) and Cisco Systems (CSCO: 26.15 -0.72%) have also outperformed the broader market indexes with Apple leading the way with a 21% gain.

While the dividend aristocrat stocks performed well overall, simply investing in only one single dividend stock (even a dividend aristocrat) could have hurt your returns. A recent eDividendStocks.com report shows the importance of portfolio diversification by identifying six dividend aristocrat losers from the last decade:

Century Tel (CTL: 34.86 -0.49%)

This telecom stock currently offers investors an impressive 8% dividend yield and is the highest yielding member of the dividend aristocrats. However, their stock price languished over the last decade. Even taking into account dividend payments, investors who bought this stock at the beginning of 2000 would have had a total 10-year return of -7%.  

Cintas (CTAS: 28.13 +1.22%)

Cintas shares took a roller-coaster ride during 2000-2003, but have been trending downwards ever since. The uniform manufacturer does offer investors a 2% dividend yield and has a solid dividend track record going back to 1983. However, investors received a total return of -19% over the last decade.

Eli Lilly (LLY: 36.17 -0.52%)

Investors who have owned Eli Lilly stock over the last decade have lost nearly a third of their portfolio value even when accounting for dividend payments. The stock delivered a -29% return during the last decade that even underperformed the 24% decline in the S&P 500. Eli Lilly still offers investors a 5.8% dividend yield, but concerns persist about the company’s product pipeline.

Pitney Bowes (PBI: 24.52 +0.66%)

With an impressive 6.5% dividend yield and solid earnings growth expect over the next few years, you would think that Pitney Bowes was the perfect buy-and-hold stock. However, investors that bought at the beginning of 2000 saw a forgettable -34% as the company’s stock price has been in decline since early 2007.

Supervalu (SVU: 16.73 -2.39%)

From May 2007 – November 2008, Supervalu stock price fell 75% and absolutely destroyed the returns for long-term investors. The grocery retailer still offers a 2.3% dividend yield and a solid dividend history, but investors remain wary of the continued revenue declines.

Walmart (WMT: 55.34 -1.07%)

Probably the most surprising dividend aristocrat loser of the last decade is Walmart. The world’s largest retailer currently offers investors a 2% dividend yield, but long-term investors experienced a -13% total return over the last 10 years. Of course to be fair, investors that owned Walmart shares in the previous decade of the 1990’s earned a whopping 1203% return.

However, as we enter a new decade, many on Wall Street believe that the tide is now turning in favor of Pepsi. Coca Cola’s market cap is currently 33% higher than Pepsi’s. eChristianInvesting.com has performed the following analysis of the business fundamentals of the two consumer stocks.

Revenue Analysis

Pepsi currently generates over 40% more revenues than Coca Cola. This gap will widen further in 2010, when Wall Street expects Pepsi sales grow to more than double Coca Cola’s revenue growth. It’s also important to note that there is less risk to Pepsi’s revenues given their more diversified product portfolio.

Advantage: Pepsi

Dividend Analysis

Pepsi and Coke both offer similar dividend yields of 3%. Although Pepsi’s dividend payout ratio is slightly lower than Coca Cola’s, the difference is marginal.

Advantage: Neither

Valuation Analysis

Coca Cola’s currently trades at 16x consensus 2010 earnings estimates. However, Pepsi’s shares trade at less than 15x 2010 EPS consensus. While Wall Street is expecting both consumer giants to grow earnings at a similar 12% rate in 2010, Pepsi’s stronger revenue growth provides more opportunity for upside surprises.

Advantage: Pepsi

While both Pepsi and Coke stand to benefit from a recovery in consumer spending, it appears that Pepsi has stronger fundamentals. For investors looking for a safe dividend stock with strong growth potential, Pepsi looks like the better choice.

At eDividendStocks.com, we have uncovered five small cap stocks offering very attractive dividend yields. These small cap stocks all have market caps of under $1 billion, but they are all profitable companies with reasonable dividend payout ratios.

EarthLink (ELNK: 8.72 -0.11%)

The dial-up internet service provider offers investors an impressive 6.7% dividend yield. This cash cow delivered a 27% return to investors in 2009 and holds over $6 per share in cash.

Dividend Yield: 6.7%

Market Cap: 901M

P/E (ttm): 7.5

2010 Revenue Growth: -18.7%

Northwestern Corporation (NWE: 27.18 +0.89%)

This small cap utility stock delivers a 5.2% dividend yield which is considerably higher than many of its large cap peers.

Dividend Yield: 5.2%

Market Cap: 936M

P/E (ttm): 13.6

2010 Revenue Growth: 3.3%

Deluxe Corporation (DLX: 19.50 -2.06%)

This small cap printing firm provides services to small businesses and financial institutions, but offers dividend stock investors an awesome 6.5% dividend yield and trades at a compelling valuation.

Dividend Yield: 6.5%

Market Cap: 803M

P/E (ttm): 7.9

2010 Revenue Growth: -2.4%

CKE Restaurants (CKR: 11.41 +0.09%)

While CKR’s 3% dividend yield may seem modest compared to some of the other dividend stocks profiled here, the operator of Hardee’s restaurants only pays out 30% of their net earnings and trades well below their 52-week high set back in September.

Dividend Yield: 3.0%

Market Cap: 446M

P/E (ttm): 12.5

2010 Revenue Growth: 2.0%

Navios Maritime Holdings (NM: 6.23 -1.11%)

This small cap shipping company not only provides a solid 3.5% dividend yield, but Wall Street is expecting Navios to deliver 13% sales growth this year. Their stock chart looks very impressive, after more than doubling their stock price in 2009.

Dividend Yield: 3.5%

Market Cap: 707M

P/E (ttm): 14.5

2010 Revenue Growth: 13.2%

We always encourage investors to perform their own research before investing in stocks. However, as you can see in this article there are attractive stock picks for dividend investors among even small cap stocks.