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Bulls & Bears
This past week's Bulls & Bears: Gary B. Smith, Exemplar Capital managing partner; Pat Dorsey, Morningstar.com director of stock research; Scott Bleier, HybridInvestors.com president; Tobin Smith, ChangeWave Research editor; Patricia Powell, Powell Financial Group president; Cheryl Casone, FOX Business correspondent and host of 'FOX Business Now' on Yahoo! Finance.
Trading Pit: Fed Moves to Help Banks; Stocks Rally on Friday
In comes the Fed -- up goes the DOW, surging over 200 points Friday after the Fed stepped in to help banks borrow money at a cheaper rate from the government. But that was after a rough and tumble week. On Thursday it looked like the bottom was about to drop out. Those losses were erased that same day. Have we seen the bottom?
Tobin Smith: On Monday people will find that we did in fact have a bottom. But that will be retested. If you look at the number of new lows vs. new highs, it's usually a good indicator. On Friday, we had eight new highs and over one thousand new lows! We clearly had a double bottom here, and we will probably reach it one more time. As the Federal Reserve begins to make a difference, you want to become a buyer certainly not a seller!
Gary B. Smith.: We need to retest the bottom. Thursday looked like that kind of blow- off bottom. We were down almost 350 points and then we bounced almost all the way up to close essentially flat. If we were really at a bottom, the market would have reacted a little better than it did on Friday. Yes we were up 200+ points. If people really took the Federal Reserve cutting discount rate to heart, and it was going to have that big of an impact, we would have seen maybe more like a 500 point up day. It was a limited reaction, which suggests that we need to go back a little, and test that bottom that we hopefully put in on Thursday.
Cheryl Casone: We did hit the bottom. On Thursday we saw that dramatic point drop and then it came back up, it because everyone said, "OK that's it"! All the hedge funds and institutional investors were out there bargain hunting, cause they though ok this is it!
Scott Bleier: We made a bottom, but not the bottom! We have been destroyed over the last month. There has been tremendous technical damage. That doesn't just end because we "whooshed up". The only people who made money in financials over the past couple weeks are the people who bought in the abyss on Thursday when we were down 350. We're back to where we were last week for a lot of these stocks, and they have a lot more work to do. We're going to bounce around here because we are really oversold, and there is more damage coming.
Patricia Powell: It probably was a bottom, and we will probably be tested. That doesn't mean it will be easy for the next 45 days; we could be bouncing all over the place. But we have seen if not the bottom, very close to the bottom. It's a great opportunity for people to get their portfolios in shape and a great opportunity to be out there nibbling away at things that you wanted to buy. This market has thrown out the baby out with the bathwater…there are a lot of good stocks out there!
Pat Dorsey: We currently have 250 stocks on our buy list, and we had 100 stocks on our buy list about three weeks ago. That tells me there are a lot more cheap stocks out there than there were, and it's time to go shopping. Bottom line is we had a very nasty credit crunch. But the underlying fundamentals of the economy have not been affected. If we got the same kind of credit crunch in the context of a weaker United States and global economy, all of this would be much different.
America and Our Markets: 'Stronger' Than Ever?
Tobin Smith: This is America! When the going gets tough the tough gets going! We've had corrections, and we will continue to have corrections. But the weather nor the correction is going to stop us!
Gary B. Smith: We've been through worse than this! However, if we remembered all the bad things, we would not be where we are today. We have short-term memories and we generally as a country tend to be optimistic. These are the two things that make you successful in this market.
Cheryl Casone: We do have a lot of things going on. Look at how fearful people have been about the markets. What if they stop spending; it could lead to a recession, and we've got hurricanes coming. We are dealing with a lot of things right now. Sometimes we aren't as resilient as we say we are going to be, at least in the short term. But we do always come back!
Patricia Powell: It makes us stronger. It's not the things we know about that hurt us. It's the bus you don't see coming that's going to kill you!
Pat Dorsey: When the market is fearful, that's when you want to be greedy. When the market is greedy, that's when you want to be fearful and start selling. Right now the market is fearful.
Scott Bleier: Throughout all of this fear, there has been no real panic. We are strong, and we are getting stronger.
Stock X-Change: Best Stock for Any Time Frame