Brenda Buttner was joined by: Gary B. Smith, TheStreet.com columnist, Pat Dorsey, Morningstar.com columnist; Scott Bleier, chief investment strategist at Prime Charter; Brian Finnerty, head of trading at C.E. Unterberg Towbin; and Gretchen Morgenson, business editor for the New York Times.
Trading Pit
What ever happened to the famed annual summer rally this year? Since Memorial Day, the Dow is down 4.5%, and the Nasdaq is down 8.2%. Brian Finnerty believes that the summer rally started on July 25 when Taiwan Semiconductor (TSM) reported earnings with news that business increased during July, and should continue to do so. Since that news, the Nasdaq has been up six out of eight days. Gretchen thinks that markets are in a "show me state," and want to see positive earnings from more than just a few areas of the economy. Gary B. still believes that the Dow and Nasdaq are in downtrends. But, Scott thinks that we are in a summer rally, it is just that there has not been one big news event that brought it on. However, Pat thinks for the economy is down and needs corporate spending to pick it up, because the only support it has right now is consumer spending.
Chartman
Gary B. and Pat remained in their seats and each picked their perfect stock. Gary B. picked his stock based on technical analysis (how the company's chart looks), and Pat chose his stock based on analysis of the fundamentals (the story behind the company). Gary B. chose Wal-Mart (WMT) because its chart had moved sideways for the past 18 months and now has burst out of that sideways movement. He said the stock could be going to $100 in a year. Pat likes Gary B's choice because Wal-Mart usually beats its competitors' price, it has great inventory management to maximize profits, and it pounces on growth opportunities. For his stock, Pat chose Warren Buffett's Berkshire Hathaway "B" (BRK.B), because of Buffett's incredible track record. Gary B. also agreed with Pat's pick because the chart is poised for a breakout, if it can close over 2,350.
Scoreboard
No free rides on this show! It was time to track the Bulls & Bears predictions.
On last week's show, Gary B. said that Planet of the Apes would flop, and Dole (DOL) would drop 20% while the movie is out. BUT the movie made $70 million on its opening weekend, and Dole's stock gained about 20 cents last week.
On May 26 Brian said that fiberoptic stocks would rally in early June. BUT since early June, fiberoptic stocks are down:
Ciena (CIEN) down 36%
JDS Uniphase (JDSU) down 47%
Corning (GLW) down 13%
On March 24 Gretchen said that there are more layoffs ahead, and consumer spending slows. AND there have been massive layoffs, BUT consumers are still spending.
On July 7 Scott said that video gaming & gambling machine stocks sink 30%. AND a little less than a month later, those stocks are down:
WMS (WMS) down 21%
International Gaming (IGT) down 15%
THQ Inc. (THQI) down 19%
On May 19 Pat said Tellabs (TLAB) hits $50 by year-end. BUT since his prediction, the company has been down 57% and closed on Friday at $16.56.
Predictions
Pat: SAP (SAP) buys Commerce One (CMRC); Ariba (ARBA) hurt
Scott: Buying opportunities in cable telecom stocks
Brian: Cisco's (CSCO) comments ignite Nasdaq rally
Gary B: Intel (INTC) is back! Hits $50 within a year
Gretchen: European investors bail out of U.S. stock market
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