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 Dave Nelson, CEO of DC Nelson Asset Management (and former guitarist of rock group The Turtles)
Trading Pit
Hollywood celebrated the Oscars last week, but what about the drama on Wall Street? After five straight weeks of gains in which the Dow picked up 863 points from February 11 through March 15, the Blue Chips sold off 180 points last week. So what will it be in 2002 Raging Bull or The Bad News Bears?
Tobin says the market looks more like Groundhog Day, where the main character lives the same day over and over again. He notes that while there is good news on the economy, investors are still focusing on the fact that corporate earnings remain weak and those opposing indicators are churning the market.
Gary B. points out that the Dow has been in a steady downtrend for more than 2 years, and the recent rebound is par for the course. He says he believes the Dow could reach as high as 11,000 this year but he thinks that once it does, it will meet resistance at the downtrend line and turn right around and head south again.
Pat says the market ran up in anticipation of a rebound and it's not at all clear that the rebound is going to be that fast. He says that the economic recovery is fairly muted right now and that the employment picture hasn't improved markedly and he doesn't see many really attractive stocks out there.
"Dave still believes in stocks, but not the "legacy stocks," the ones we bought year after year. He says if you own stocks like General Electric (GE) and Microsoft (MSFT) you should think about reducing those positions. (His company reduced its Microsoft holdings recently, and he is not all that comfortable with the stock right now).
Scott says that the internals on the New York Stock Exchange have been positive, with more stocks going up than down, and he's bullish on the stocks that trade there. But, he says, the Nasdaq internals have seen more stocks going down than up, and he's bearish on Nasdaq traded stocks. He says focus on the companies that post real earnings.
Stock X-Change: The Stock Oscars
Four major media players were represented in this year's Oscar race for best picture. We put it to Tobin, Scott and Dave to decide whether these stocks are worthy of their own best performing Oscar.
AOL Time Warner (AOL) Lord of the Rings: The Fellowship of the Ring
Dave thinks this stock has no chance of winning a "Stock Oscar." Scott agrees. Tobin says that fantasy films never win the Oscar, and he says AOL's earnings are pure fantasy.
Disney (DIS) In The Bedroom
Scott says he's not happy with the way the company is managed and the many public mistakes the company has made in recent years. He doesn't like the stock. Neither does Dave, and Tobin says that this is a "Mickey Mouse" company, and that disrespects Mickey!
News Corp (NWS) Moulin Rouge!
Tobin notes that ad revenues are coming back, and that will help News Corp (the parent company of Fox News).
Vivendi Universal (V) A Beautiful Mind and Gosford Park
Dave says he's a real fan of Ron Howard the director of A Beautiful Mind, but not a fan of this stock. Tobin says: "A Beautiful Mind, but an ugly balance sheet!" No one likes the stock.
Chartman
On the March 16 edition of Bulls & Bears, The Chartman and Pat had a disagreement over growth and value stocks (Chartman was for growth, Pat was for value). This week they squared off with a stock from their preferred category.
The Chartman's growth play was Adobe Systems (ADBE). In January, the stock broke out of a "sideways" pattern and moved above the resistance line. He thinks it could be a $50 stock in six months. Pat thinks Adobe has a lot going for it (including a new version of PhotoShop) and likes the company's management. He doesn't think the shares are cheap enough yet.
Pat's value play is Washington Mutual (WM). He calls it the "Wal-Mart" of consumer banking, and thinks it could be a $45 stock. (He does have a position in WM). Gary says it has a promising chart, although the stock is a little dull. He would wait to see if it picks up some strength, and would consider buying it over $35.50.
Predictions
Gary B.: Say yes to drugs! Schering-Plough (SGP) and Abbott Labs (ABT) move up 10%
Pat: Bristol Meyers Squibb (BMY) will drop a great buying opportunity
Tobin: Don't make drugs, sell 'em! McKesson (MCK) up 20% by July
Scott: Utilities on fire! Southern (SO) up 20% in six months
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