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 Fred Barnes, co-host of The Beltway Boys.
Trading Pit
Bulls & Bears: DC Style! That's right, Bulls & Bears visited our nation's capital, Washington, D.C., last weekend. After the terrorist attacks of September 11th, President Bush took control and united the nation, marking the making of a great war time leader. But is he doing enough to rally Wall Street these days? The Dow is down 3%, and the Nasdaq has tumbled 35% since he took office in January of last year.
Fred thinks that under the current situation, the president is the man for the market because he is making America a more secure and safe place.
Tobin said the market will go no where until the U.S. starts bombing Iraq. Once this happens, he predicts that investors will be afraid, and you'll be able to buy some great stocks at cheap prices.
Gary B. charted the Advance/Decline Line (a chart used to determine the general direction of the market) during the president's time in office. He noticed that from the time that Al Gore conceded the election to September 10, 2000, the market was flat. However, from September 17, 2000 (the day the market reopened after the attacks) to the present, the market has taken off.
Scott said that President Bush inherited a tough market, but the best thing he can do is pass tax cuts and leave the market alone.
Pat's research shows that long-term signs are positive. But, he thinks that stocks are too expensive right now to be buying aggressively. He said if the market sells off sharply due to military action in the Mideast, go shopping for stocks!
Stock X-Change
Fred, Tobin, Pat, and Scott all returned to look at stocks that Fred owns, and you probably do too.
First up, Harley-Davidson (HDI). Fred said he likes the stock because there is a waiting list to buy the company's products. Toby said the stock has had a great run, but doesn't think it can go higher than $70 or $80. Scott thinks the stock is expensive, but going higher. Pat believes that the stock is too expensive.
Next, Fred asked the guys for their opinion on Cisco (CSCO). He got in early, and even with its Friday close of $15.26, he's still ahead. Tobin said the stock can hit $25 over the next 2-3 years, but other stocks present better buying opportunities. Pat thinks the stock is mildly undervalued, probably will hit $20-25, and should be held. Scott believes too many investors own the stock, but will probably head higher before dipping lower.
Fred also owns Microsoft (MSFT) because he thinks it is the most exciting company in America. Scott believes the stock will head lower before going higher, and should be bought when it falls below $50. Pat said he would hold the stock if he owned it, but he wouldn't buy it until it fell to the high $40s. He also added that the future will not be as bright as the past because the company made a lot of money in the PC business, but that business is now maturing. Toby advised to sell the next time the company rises to $60-65.
Chartman
The Chartman encountered a new foe this week, Fred Barnes. Fred knows Washington and Gary B. knows charts, so the two got together to look at how what happens in Washington, D.C. affects stocks.
There will be no extra oil drilling in Alaska. Fred said the Senate voted the proposal down, even though the state could produce more oil than Iraq. But how will this affect oil stocks? The Chartman looked at ExxonMobil (XOM), which hasn't moved too much in the last 2 years, but he advised to get long if it closes above $45.
Also on the political agenda is trade treaties. Fred thinks this will pass because it already has passed in the House and looks like it will in the Senate as well. What this will do is allow the president to send up a trade treaty that cannot be amended, it must be voted up or down. If it passes, there are a couple of Latin American treaties that could benefit. That being said, Gary B. charted the iShares S&P Latin America (ILF). (This is a group of 40 Latin American companies.) He likes that it has been in a steady uptrend, and if the bill passes, the Chartman thinks it's time to get long. However, he warned that this is very thinly traded, meaning it doesn't trade a lot of shares everyday.
Another item on the Washington radar screen is terror insurance. Fred thinks that the government will put a cap on the amount that insurance companies have to pay out. Because of this, Fred said that some big construction jobs have been scrapped or put on hold. But if terror insurance is available, companies will be building those skyscrapers again and will need heavy equipment provided by a company like Caterpillar (CAT). The Chartman is mixed on the company's chart. He noticed that it had a great run earlier in the year, but has cooled off. He advised to wait until it closed above its current resistance around $60.
Predictions
Scott: Glaze gone from Krispy Kreme (KKD); sell!
Tobin: Spiderman a hero for Activision (ATVI) stock
Gary B: AMEX (AXP) on fire; up 20% by Memorial Day
First Health (FHCC) very healthy; up 30% in a year
Fred: Market heads higher despite coming Iraq invasion
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