Brenda Buttner and was joined by: Gary B. Smith, RealMoney.com columnist; Tobin Smith, founder and chairman of ChangeWave Research; Scott Bleier, president of HybridInvestors.com; and Joe Battipaglia, chief investment officer of Ryan, Beck & Co.
President Bush flexed some major muscle around the world as he took a risky trip to Arab countries trying to make peace in the Mideast.
And investors haven’t forgotten about his tax cut (search) package…plus a big win in Iraq. The Dow’s up well over 700 points in the two months since the major battles ended in Iraq.
Joe thinks the market will continue to head higher because stocks are the place for people to put their money now. He thinks investors will rotate their money out of speculative telecom stocks and into cyclical stocks like aluminum and food companies. He also likes small bank stocks.
Gary B. charted the Dow’s movement since April. He noticed that investors have been buying the dips, which is the opposite of what they have been doing the past few years. He thinks this trend will continue.
Scott said if investors missed this latest rally, they should let things settle down before buying stocks. And if you bought before the rally, take some profits.
Tobin believes we are at the end of an era. He said every era ends with a monumental event, and this era’s event was the indictment of Martha Stewart. He thinks the market will head higher for the next 12-18 months. He especially likes storage companies like Western Digital (WDC) and JDS Uniphase (JDSU)
Scott, Tobin and Joe all picked stocks that could soar from peace in the Middle East.
Scott chose First Israel Fund (ISL), which is a closed-end fund-meaning it trades like a stock-on the NYSE. The biggest component of this fund is Teva Pharmaceuticals (TEVA), which has been a big generic drug winner. Scott added that this is a diversified fund, which makes it a great way to play peace in the Middle East. Both Toby and Joe like First Israel Fund. (First Israel Fund closed on Friday at $10.49.)
Tobin likes Comverse Technology (CMVT) because it is cheap and has a big piece of bundling technology, which will allow us to communicate more efficiently. Tobin thinks the stock will hit $20 by the end of the year. (Comverse Technology closed on Friday at $14.90.) Joe was concerned about politics with other countries affecting the stock, but Scott likes the stock.
Joe picked Teva Pharmaceuticals (TEVA), a multi-national company, a driver behind the First Israel Fund, and a stock that will certainly benefit from peace in the Middle East. Scott and Toby both like this stock. (Teva Pharmaceuticals closed on Friday at $51.21.)
Time again for another edition of “Ask the Chartman”. Gary B. returned to determine if stocks surrounded by controversy could make you money.
First, he looked at Martha Stewart (MSO). She’s in trouble and according to the Chartman, so is her stock. He does not like this stock and would certainly not buy it now. In fact, he would short this stock if it got back to $11, explaining that it would have come too far too fast. (Martha Stewart closed on Friday at $10.24)
The next stock he looked at was Tyco (TYC). Too many scandals to mention, but the stock is hanging in there. Even though Tyco is looking very strong, he’s not ready to buy it just yet because it’s right at a resistance. However, once Tyco closes at $18.50, which would be above that resistance, he would definitely be a buyer. (Tyco closed on Friday at $17.94.)
Onto Merrill Lynch (MER), whose stock recommendations weren't always on the up and up. But Gary B. said the chart is on the up now that it broke above resistance at $45. He thinks the stock may pull back a dollar or two because it has moved up so quickly, but it’s likely to go to $50 and beyond. (Merrill Lynch closed on Friday at $46.39.)
Next: AOL Time Warner (AOL). All sorts of problems here: a possible spin-off, Ted Turner selling his shares, the board battle with Steve Case. But Gary B. only cares about its chart! He said this stock just barely broke above a resistance line at $14. He likes the stock, but said if you buy it, make sure you put in a stop around $15. (AOL Time Warner closed on Friday at $15.15.)
Lastly, he looked at New York Times (NYT). The paper's top two editors resigned last week because their reporter lied, but Gary B. always says the charts never lie. This stock broke above a long-term downtrend it was in since October, but then retreated. He would only buy this stock if it closed above $48. (New York Times closed on Friday at $46.35.)
Gary B's Prediction
Martha mess halves her stock; Martha Stewart (MSO) $5 by year end
People love Martha! Not guilty; Her stock (MSO) goes up 40 percent
Bulls keep running! Dow 10,000 and Nasdaq 1,900 by year end
Verizon (VZ) heading up 25 percent this year