Brenda Buttner and 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 Jordan Kimmel, president of Magnet Investment Group.

Trading Pit

Are we ready for a summer rally?

Stocks were way up in April, May and June-major markets making their best quarterly gains (search) in years.

Gary B. thinks this trend will continue. He believes the market will make a small gain in the summer months, but it will finish even higher by the end of the year. He showed a chart of the S&P 500 over the past several years, and said it has broken through a downtrend it had been in since 2000. He advised investors to buy stocks on dips.

Jordan said the economy is a lot better than people think, and even though there are pockets of weakness, he is very bullish. He thinks small and mid cap stocks will lead the way.

Pat is not as bullish as Gary B. or Jordan. He said stocks are not as cheaply priced as they were a few months ago. Also, what worries him is that the market is so liquidity driven because the Fed is pumping so much money into it. He believes people are buying stocks because they have no better place to put their money due to the low interest rates. He reminded viewers that the last liquidity rally lasted from 1998-2000, and it ended in tears.

Tobin’s bullish and he said investors are buying stocks because they’re betting the economy will be better in 2004. He added that the bond market has caved in last 2 weeks and the guys who really know where the business cycle is going-the bond guys-are now betting that stocks are the place to be. He would like things cool off a bit and see the Nasdaq pull back to 1500, but believes it’s better to be a bull now.

Scott said the market has had a very powerful rally. In fact, he thinks it is one of the most powerful rallies in last 20 years. Due to this, Scott believes it will be very hard to make a significant move up, but he also said the downside risk will be minimal for the next six months.

Stock X-Change

Scott, Tobin and Jordan stayed on to pick the stocks that will light up your bottom line.

Jordan chose McDATA (MCDT), a leader in the data storage industry. He said the company has had an increase in revenue and analysts have big numbers projected for it next year. He called McDATA a new leader in the new bull market. Both Toby and Scott think the stock is too expensive. (McDATA closed on Thursday at $14.36.)

Scott likes China Petroleum & Chemical (SNP) because production costs are so low in China. He said the stock is priced to buy and pays a 5 percent yield. He added that it is a great way for the individual investor to play China and it will be at $50 in the next couple of years. (China Petroleum & Chemical closed on Thursday at $23.85.) Toby and Jordan both like the stock.
 
Tobin chose Templeton Russia and East European Fund (TRF). He said Russia has a flat tax rate and its economy has the greatest growth rate. Scott likes the fund, but Jordan is a little skeptical. (Templeton Russia and East European Fund closed on Thursday at $28.25.)

Chartman

In celebration of the Fourth of July, Gary B. and Pat looked at several companies that are as American as they come.

First the pair looked at McDonald's (MCD). Gary said the chart had a tremendous run, but it ran up too fast. He thinks now is the time to sell the stock, not buy it. (McDonald’s closed on Thursday at $22.62.) Pat said McDonald’s is focusing more on profitability, which is exactly what it should be doing. He pointed out the new salads are a huge hit, but the stock is too expensive right now.

Next up, Ford Motor Company (F). Gary’s chart showed that the stock has gone from a bearish downtrend to a bullish uptrend. He likes it and advised to buy on dips because Ford is going to $18. (Ford closed on Thursday at $10.87.) But Pat is bearish on the stock because the Japanese automakers are outselling Ford. Also, the company has big pension problems and he thinks there are thousands of better stocks to buy.

Lastly, the two looked at Disney (DIS). Gary likes this chart and said that once the stock broke a downtrend it was in since 2000, it was heading up. He said to buy it on any pull back. (Disney closed on Thursday at $20.07.) Pat thinks that Disney’s stock is more of a fairy tale than the real deal because Disney is underutilizing its popular brands and is losing its “monopoly” on kids. Also, Pat said the company has incredibly bad executive behavior.

Predictions

Jordan's Prediction
The new bull market has arrived! Small & mid caps lead the way

Pat's Prediction
First Data (FDC) should be the first thing you buy Monday

Gary B's Prediction
AT&T Wireless (AWE) up 50 percent by year end

Tobin's Prediction
Time to watch Comcast (CMCSA); going up 30 percent by end of year

Scott's Prediction
I'm turning Japanese! Japan iShares (EWJ) up 25 percent by fall