Brenda Buttner was joined by: Gary B. Smith, RealMoney.com columnist; Pat Dorsey, director of stock research at Morningstar.com; Tobin Smith, CEO of ChangeWave Capital Partners; Scott Bleier, Fox Business News contributor; and Tom Dorsey, president of Dorsey Wright & Associates.
Trading Pit
The Nasdaq fell harder and faster than the Dow, S&P 500, and Russell 2000. On top of that, it's coming back a lot slower than those three. The Nasdaq closed last week at 1,868.30, dropping more than 4% in 2002. (And just for the record it's down a whopping 63% or 3,180 points since its all-time high set back on March 10, 2000.) However the Dow, S&P 500, and Russell 2000 are all up solidly for the year.
And get ready for more bad times for the Nasdaq, says Scott, who thinks that the tech heavy index will finish the year with an even greater loss than it has right now. He said the reason behind the big disparity between the Dow and the Nasdaq is that the top 5 Dow stocks are up an average of 18%, while the top 5 Nasdaq stocks are down an average of 9%.
Tobin said that value is the "new religion", and if you go against that, you are going to get burned. He added that the recovery is going to be stronger than was originally anticipated.
Tom said that the Nasdaq is down because one half of one percent of the Nasdaq stocks account for 40% of its movement. But, he pointed out that there has been a major bull market in small cap stocks within the Nasdaq.
Two weeks ago Gary B. warned that the Nasdaq might pull back…and that's just what it did last week. Now he's bearish on the Nasdaq, but he doesn't think it should fall below the mid 1700's.
Pat began by bantering Toby saying that he's glad to see Toby say that earnings are the "new religion" because he thought that they never went away. Pat echoed the point that the big tech companies are going to have a tough time growing, and if investors want to find value in the Nasdaq they're going to have to dig deeper down to companies like Kemet (KEM) and AVX (AVX).
Stock X-Change
Even if the Nasdaq is a loser so far this year, not all of its stocks will suffer the same fate. So Toby, Scott, and Tom each selected one stock to buy in the Nasdaq 100.
Tom started things off with his pick of Apollo Group (APOL). He likes the higher education provider because it has strong fundamentals and its chart has a nice uptrend. Toby and Scott agreed.
Tobin picked computer and telecommunications maker, Comverse Technology (CMVT). He said this stock has been hammered by bad news, and now that that news has been figured into its price, the stock should head higher. The stock closed Friday at $13.93, and Scott thinks Comverse is a $10 stock. Tom said it is a bottom fishing play.
Scott selected USA Networks (USAI). He knows that this media company has had a good run, but thinks that it still has legs due to changing FCC regulations and all the good businesses the company owns. Tom said the stock's chart looks fantastic. Toby said he likes the company, but he questions whether it can pull everything under one tent.
Chartman
Gary B. and Pat returned and both picked a "March Madness" stock. The NCAA men's college basketball tournament goes to the end of this month, so the guys each selected a stock they felt was set to make the biggest run in that time. But a first a warning! These stocks are for people ready to do a short-term trade. The one who picks the stock that make the biggest percentage gains gets a souvenir from the other's college alma mater. (Just for the record, Gary B. attended Duke and Pat went to Weslyen.)
The Chartman likes Accenture (ACN) because it recently broke above congestion near the $28 level, but is now pulling back. He thinks it has a great chance of moving to the high $30's. Pat said the fundamentals disagree. He's bearish on the stock because 40% of Accenture's revenues come from Europe and the stock is already above its fair value.
Pat chose one of the largest pharmaceutical services companies in the United States, Caremark Rx (CMX). He's bullish on this company because spending on drugs is growing fast, it has the best profit margins in the industry, and it is at a good price. And although he freely admits he is no Chartman, Pat said this stock also has a great chart. (One quick note, on the show Pat said this stock was fairly value at $35. He meant to say it was fairly valued at $25.) The Chartman said he's bullish on this stock, and he's worried about losing one of his Duke souvenirs because this chart also has had a great breakout. But he feels that Caremark is a bit more extended than Accenture, and is in need of a pullback.
Predictions
Gary B: S&P 500 runs up 10% by Memorial Day
Tobin: Biotech bounce! Amgen (AMGN) heads higher!
Pat: No deal! Hewlett (HWP) up, Compaq (CPQ) down
Scott: Chesapeake Energy (CHK) up 50% within a year
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