Brenda Buttner was joined by: Gary B. Smith, RealMoney.com columnist; Pat Dorsey, director of stock research at Morningstar.com; Tobin Smith, founder and chairman of ChangeWave Research; Scott Bleier, president of HybridInvestors.com; and Charles Payne, founder and CEO of Wall Street Strategies.
 
Trading Pit

Usually this time of year, the stock market is gearing up for a summer rally.  But there's nothing usual now, and the market is trading on terror.

Monday:  The Vice President and the FBI director say it's not if, but when, for a terror hit, and investors sell!

Tuesday:  Wall Street hears Lady Liberty could be a target, and there's another big-time slide for stocks.

Wednesday:  Usama bin Laden is believed to be found, and the market celebrates by heading higher.

Thursday:  Some scares proved to be false alarms, and after spending most of the day lower, stocks gain again.

Friday:  Everyone's on edge.  Terror warnings abound from subways to planes, and in the afternoon a suspicious explosion at an apartment complex in California amounts to a triple digit loss for the Dow.

Charles advised investors to stick to their investment plans, and do not make any knee jerk reactions. 

Tobin said that the market is basically doing what it should do, and is telling investors to stay out of risky stocks.

Gary B. brought in a chart of the Nasdaq, and showed its volatility in the past month.  On his chart, he showed the Nasdaq's spike on Cisco's earnings, when it took a dive after terrorist warnings, and another spike when bin Laden was believed to be found.  Gary B. said he thinks that the market is trading totally on terror, and to stay away from the Nasdaq right now.

Scott said that the market is in transition away from Nasdaq stocks.  Some stocks, like yield stocks, in particular, Con Edison (ED) just made a new 52-week high.  He thinks that the Nasdaq is going down lower and needs to hit 1500 to break its downward trend.

Pat cannot understand why investors are buying tech on such little good news.  He said investors should not expect any type of rebound from stocks like Sun Microsystems (SUNW) or Siebel Systems (SEBL) until 2003.

Stock X-Change

Terror threats hurt some stocks more than others.  But if you're betting America will come out on top, Charles, Toby, and Scott each picked a stock they say will bounce back higher and faster.

Scott picked Hospitality Properties Trust (HPT) because it is very well run, has good earnings, and it has a safe dividend.  Toby and Charles both like the stock.

Toby's always saying "bet on America", so he put his money where his mouth is, and said buy JetBlue Airways (JBLU).  He likes the company because it is innovative and is reinventing the airline business.  He admitted it is a little expensive right now, and that investors should wait for it to drop under $40.  Charles and Scott weren't totally sold on the stock. 

Charles likes Southwest Airlines (LUV) because he doesn't know any other airline that has had a longer or better return on capital.  He thinks it has a great reward/risk ratio.  Toby was not in love with the stock.  And Scott thinks that airline stocks are just too risky right now.  However, he added that the two airlines that Toby and Charles picked are the best of the group.

Chartman

Gary and Pat came back to take a look at stocks people were putting money into when most of the market was selling off last week due to terror threats. 

First up Raytheon (RTN).  It's the 4th largest defense contractor in the US and makes Patriot and Tomahawk missiles among other things.  The Chartman likes this stock because it has been in an uptrend ever since 9/11.  But, before he would buy the stock, he'd wait until it made a new high just to make sure it still has strength.  Pat does not like the company because it has a rocky financial history and currently has questionable financial health. He said a better play on defense is General Dynamics (GD).

Next the duo looked at EDO Corporation (EDO). It's a lot smaller than Raytheon, but it makes really high-tech "James Bond stuff" for the military.  The Chartman does not like this stock because the uptrend it was in since 9/11 has been broken in the past few weeks, and that means the stock is weak now, so he'd avoid it.  Pat didn't like this stock either.  But he said it does have a solid business and a good plan.  However, it will get hurt if some of the government's programs are scaled back.  Pat advised investors to watch this company, but not to buy it just yet.