Brenda Buttner was joined by: Gary B. Smith, RealMoney.com columnist; Tobin Smith, founder and chairman of ChangeWave Research; Scott Bleier, president of HybridInvestors.com; and Gretchen Morgenson, New York Times business editor.
After a spike in the beginning of January, the Dow, Nasdaq and S&P made quite a U-turn. April was the Dow's worst point loss for a month in market history. And as for the Nasdaq, it's down 22% from its 2002 high.
And yet there is no clear sign that the market is at or near the bottom. Will it get worse before it gets better? And if it does, will that be the perfect time to buy?
Gretchen thinks things will get worse before turning better because the dollar is weaker and the economic recovery is "iffy".
Tobin said some companies are going up in value, but tech companies that rely on other companies to buy their products are in trouble.
Gary B's a bear on the Nasdaq because it has multiple downtrends and is showing no signs of strength. He thinks that tech might be a good buy later this year, but stay away from it right now.
Scott also thinks that the market's performance will worsen before it improves. He reiterated his prediction that the Nasdaq will hit 1500 by Memorial Day, and said it will probably happen even before that.
Gary B. then chimed in that the Nasdaq is dragging down some good stocks like General Electric (GE) and IBM (IBM), and there will be a buying opportunity for stocks like these. He also thinks the Dow could finish up for the year. Gretchen said consumers are creating some new vulnerabilities because they are spending less and if this trend continues, stocks will really take a tumble. Scott added that these consumer stocks have made tremendous gains lately and are due to give some of it back. He told investors to look for safety and protect their assets.
On that note, Gary B. said when looking for safety, look to stocks that have been profitable for the last five years and pay a dividend. He said some stocks like Hewlett-Packard (HPQ), Schering-Plough (SGP), and GE have been beaten down. These stocks will be sold off on pure emotion, and then can be picked up for a bargain price.
The Bulls & Bears love to preface things they say by saying, "If you've never listened to anything I've said before, listen to this!" It started awhile ago with Pat Dorsey, and although he wasn't on the show this week, his words inspired Tobin, Scott, and Gretchen to do a segment based his words.
Gretchen's best idea is to buy Treasury Inflation Protection Securities or TIPS. (You can find more information at www.treasurydirect.gov or call 1-800-722-2678.) She said they are very cheap and also give inflation protection. Tobin and Scott both agreed with her idea.
Scott advised investors to buy stocks with safe yields. He especially likes Con Edison (ED) because it has a great chart, is a safe stock, and has a 5% yield. Tobin and Gretchen also are in agreement with Scott.
Tobin said to stay away from the Nasdaq 100 (QQQ) because the companies are not valued to what they can earn. Gretchen and Scott also think it is a good idea to stay away from the QQQ.
Ask the Chartman
Can the stocks making headlines right now make you money Monday morning? We asked the Chartman.
Gary B. came armed with the charts of stocks in the news right now. Some of which were chosen for good news, and some for not so good news.
First up WorldCom (WCOM), or better yet world-bomb. He knows that it's tempting to bottom-fish with this one, but advises that it is always best to wait for a stock to show some strength, because the stock can easily go to zero.
Next, Dynegy (DYN). Like Enron, it's another Texas Energy Company that's being investigated by the Securities and Exchange Commission. Chartman says stay away for now, but watch it closely, because if it moves sideways and then heads higher, it might become a buy.
Tyco (TYC). This company has a lot going against it right now, and it just bounced off a 52-week low. But the Chartman likes that it has attempted to climb, and does show some signs of life. He cautioned that it is still risky, but he thinks you could buy it now, with a stop at $15.
The one thing that's not too tarnished in this market lately: gold stocks. So, Gary B. took a look at Newmont Mining (NEM). He likes that gold has performed impressively all year and is now at a multi-year high. He advised to buy this stock once it can close over $30. (It closed Friday at $29.95.)
AOL Time Warner. Two weeks ago the company posted the largest quarterly loss in history of $54 billion and is near a 52-week low. He showed the company's multiple downtrends, dating back to 1999. He thinks it's best to avoid the stock for right now because any gain AOL makes will come with a ton of struggle.