What sectors are headed back up?
Brenda Buttner was joined by: Gary B. Smith, columnist from TheStreet.com; Scott Bleier, chief investment strategist at Prime Charter; Tobin Smith, portfolio manager of Changewave Mutual Fund and Pat Dorsey, director of stock research at Morningstar.com
Gary, Pat, Scott, Toby jumped into the 'Trading Pit' with host Brenda Buttner. The question: how much longer will the Dow be caught in the crossfire of a volatile market and where the blue chips are headed next. The index has been having some serious mood swings. It closed the week with a rally above 10 thousand.. but on March 22nd it nearly touched 9 thousand and on February 22nd it shot all the way up to 11 thousand.
Gary says, "Look I think we are still in a bear market for mostly technical reasons.. but this is how bear market feels, they go up fast and furious and everyone gets lured in thinking it's a bottom."
And Scott says, 'We're not going to make it to 11,000.. there is going to be a brick wall.. we got destroyed so we bounced.. so we get up to 10,500 maybe and work our way below 10,000.'
Pat Dorsey was worried.. he says that CEO's have been telling their investors that their companies are looking for a second half economic rebound which will save their company. He adds that nothing fundamentally has changed and he sees the Dow falling more towards 9,000.
Toby says, 'To have a bottom you need to first have a psychology bottom.. On March 22nd, that massive meltdown on the Dow just shook loose a lot of people to think about Lucent , the home of microchips going south..' He has been buying semiconductor equipment stocks.
Also in this segment we concentrated on bad earnings. There are some big news coming from the blue chips this week. We asked the experts if it's wise to buy early:
Intel Corp. (INTC) earnings due out on Tuesday:
Pat Dorsey: He says stock is too expensive given the risk. They are going to report a steep decline in revenues and they are losing market share to Advanced Micro Devices.
Philip Morris (MO) earnings due on Tuesday:
Scott Bleier: He wouldn't buy it right now. He thinks an investor should buy stocks on weakness.
Merck (MRK) earnings reports on Friday:
Tobin Smith: He says pharmaceutical is the way to play it. He wouldn't sell it before the earnings because it's the lowest valued.
Gary B. Smith answers stock questions our viewers want to know about and boy was he bearish. Take a look:
The Trend is still down. He says if MSFT closed above 62 ½, it would break the downtrend.. but for now, Hands Off!!
Philadelphia Semiconductor Index (SOXX):
Gary says SOXX is still in a downtrend. It could still dip to new lows!
Adobe Systems (ADBE):
This stock made a great move midweek, but failed to break the downtrend line.
He would NOT look to buy until it breaks.
When stocks rally hard on no news, odds are the rally fails. Chances are it sees new lows again.
Long term, the trend on CORV is down. Short term, CORV could rally to the top of the downtrend line. You just need to decide what your timeframe is.
We don't make predictions.. we track them too.. Last month Scott Bleier turned his back on AOL/Time Warner (AOL) and predicted the stock would fall in the 30's when it was then trading at 42. Well it dipped to 34 earlier this month and hasn't been back there since. Scott says it's got tremendous cash flow, it's an institutional favorite, and the stock could rally to 50 here.
Meanwhile, Toby Smith predicted a gain for a stock.. and a pretty big one try 15 percent. The company is Healthcare Realty (HR) and Toby says not to sell it - it's in a good place at a good time. Scott Bleier says to buy it, but Gary B. Smith says it's dead money.
Back in November, Pat Dorsey said that retail stocks were close to a bottom.. and he was right until March. But since then it's been falling back down. The only place to play are discounters like: Costco (COST), Dollar General (DG), Office Depot (ODP) and Radio Shack (RSH).
And Gary B. Smith was picking on Cisco when it was trading in the 20 dollar range but he said it would dip to 10. It slipped to 14 bucks for a bit but is back up around 18.
He still sees a 10 dollar price tag on it. He wouldn't buy it right now.. it still has resistance it has to overcome. Pat Dorsey agrees that it's a dangerous play to be in right now.
Finally, the group got back together and looked into their crystal balls. Take a look to see who predicted what.
Pat Dorsey's Prediction: Pat says Liberty Media (LMG.A) rises 40% within year.
Tobin Smith's Prediction: Toby says Big Blue IBM misses big on earnings and hurts the rest of its sector.
Gary B. Smith's Prediction: Gary says that Nokia (NOK) is big winner and he bets it jumps 50% by year end.
Scott's Bleier's Prediction: Scott says that Motorola (MOT) disappoints the street again; he sees a shakeup at the top.
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