Brenda Buttner was joined by: Gary B. Smith, RealMoney.com columnist, Pat Dorsey, director of stock research at Morningstar.com; Tobin Smith, portfolio manager of ChangeWave Capital Partners; Scott Bleier, chief investment strategist at Prime Charter; and Mike Norman, The Economic Contrarian Update publisher.
Trading Pit
The Dow and Nasdaq are up, and up big since their post-attack lows. The Dow has climbed 20%, and the Nasdaq has added 36%. But are these increases in each respective market enough to qualify for a bull market?
Tobin believes that we are in a bull market, and if investors wait much longer before buying stocks, they are going to miss 50-60% of the gains of the coming bull market.
Mike disagrees; stating that the market has only been this overvalued twice in history. He continued that stocks are still very expensive, and that the current rally is just a bull rally in a bear market.
Scott said that the bear market is over, but the bull market has not yet started.
Gary B. also said that the bull market has not yet come because the Dow needs to close above 10,000 and break its current downtrend line.
Pat thinks that the current rally is unsustainable. He is seeing a lot less stocks at bargain prices than he was a month or two ago. But he does not think that the market will hit its post-attack lows.
Stock X-Change
Some stocks have dropped to prices that are just too cheap to pass up! Mike, Scott, and Tobin each picked a stock that he thinks is headed one wayup!
Mike picked Bank of Montreal (BMO). It's down 18% since September 11th, but Mike likes it because Canadian banks are still making money, despite poor worldwide economies.
Scott selected Methanex (MEOH). Although the stock is down 14% since the terrorist attacks, he thinks that it is headed higher because last Wednesday President Bush stated that methanol is the future of fuel in the U.S.
Toby chose Entegris (ENTG), down only 3% since the attacks, because it has a high profit margin and will do well when the economy expands.
Chartman
Gary B. and Pat returned and went shopping for bargains at Wal-Mart and Costco (COST).
The Chartman likes Wal-Mart because it is bucking up against its high of $56 it hit earlier in the year. He said buy the stock if it closes above $56. Pat did not like the stock because of its price. He believes that at its current level of about $55, Wal-Mart is too expensive.
The duo then examined Costco (COST). The Chartman also likes this stock, even though it is in a slight downtrend. He thinks it looks good to break up and said to buy it if Costco can close above $43. Pat also likes this stock because the company has smart inventory management and has very consistent financial results.
Predictions
Tobin: Dynegy heads back to $50 after Enron storm
Scott: Enron (ENE) erased; DJ Utilities up 20% in 6 months
Gary B: Gold stocks sink; drop 20% by spring
Mike: Stimulus package passes; Stocks sell off!
Pat: Home Depot (HD) goes nowhere for next year
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