Recap of Feb. 16: bin Laden v$ the Bull

Brenda Buttner was joined by: Gary B. Smith, columnist; Pat Dorsey, director of stock research at; Tobin Smith, CEO of ChangeWave Capital Partners; Scott Bleier, Fox Business News contributor; and Jordan Kimmel, President Magnet Investment Group

Trading Pit

The last time we've seen or heard from Usama Bin Laden was in a video released shortly after Christmas. Since then: not a word. Only rumors. But if he turns up dead there will no doubt be a market reaction, and likely a big one. But what if he makes another tape saying he's alive with threats of more terror?

If that happens most think we can forget Dow 10,000 for a while. A Friday sell-off sent the Dow below that magic number, though it did trade above 10,000 part of last week.

Pat Dorsey was asked if the market is so fragile it would seriously tank if bin Laden showed up unharmed and at large. He thinks it depends on when news like that got released. If it happens during a week where there are accounting and business concerns like what we've seen with Enron, then a healthy bin Laden could hurt the markets. But if it's at a time where we've had a positive few weeks then Pat thinks it wouldn't have much impact.

Tobin Smith says there's a bigger issue: Iraq. Tobin says we are surely going to bomb that country. He thinks if we do that "the market will slip for a little bit out of uncertainty."

Time for the charts. Gary B. Smith looked at a Nasdaq chart and says bin Laden dead brings us to Nasdaq 2000 but Saddam Hussein dead would rally us all the way to 2200 or 2300.

Jordan Kimmel takes a very optimistic point of view. He thinks people have been nervous, but now there is no question the United States will win and eventually take care of Usama and Saddam. Jordan says it could bring on a lasting peace which will lead to a major rally.

Scott Bleier thinks the Dow and S&P will do better than the Nasdaq if bin Laden is killed. Gary B. disagreed, pointing out the Nasdaq is the most emotional of all markets and would rally more. Scott countered it might, but would fall back just as quickly. Also the Nasdaq would drop bigger if bin Laden shows up alive.

Stock X-Change

In a bold move Pat decided to talk about three Telecom stocks he felt were beaten down too far and are now cheap enough to buy. Tobin, Scott and Jordan were there to give their opinions.

The three he likes are SBC Communications (SBC), Sprint (FON) and Qwest (Q).

Pat says SBC is a conservative play. It's a cheap baby bell and is a great long term core holding.

Scott: Verizon (VZ) is a better choice.

Tobin: if you are going to own one, this is the one to own. But Tobin adds he would not own any of them.

Jordan: it's a down trend stock. Avoid it.

Pat moved on to Sprint and said it is a value play. It has a great local phone line business and the value of those phone lines alone are more than the stock is trading at now. So this is like getting Sprint's long distance business for nothing.

Tobin: no one is going to buy this stock.

Scott: there is some value there, but we have not bottomed out yet. It could be interesting a little cheaper.

Jordan: doesn't have the time frame to wait for this stock to come back.

Pat's last stock was Qwest (Q). A controversial call because the stock was hit hard last week on accounting issues, debt worries and questionable dealings with Global Crossing (GBLXQ.OB). He thinks people are forgetting they own the old U.S. West which was a baby bell. Pat says this is not going bankrupt. It's too cheap right now trading near its 52-week low.

Tobin: too much debt in the company and doesn't have enough customers. Would not buy it until it hit $5.

Jordan: too much negativity. Big money pulling out of this stock.

Scott: you can not confidently say this company will not go bankrupt. It could happen.

Ask The Chartman

Time for Gary B. to answer emails and chart the stocks you at home are asking most about.

Bob asked about (AMZN). Gary B. says it broke up so now is the time to buy. But put a stop in at $11.

Merck (MRK) is on Steve's mind. Gary B. thinks Merck is in a great situation. After getting hammered late last year it has gained some strength. You can buy now or certainly on any pullback.

Gloria wants to see the chart on Dupont (DD). Gary B. wants to wait and see on this one. If it closes solidly above $45 it could be a great stock for the year. Right now it's just below $5.

Charles wrote in and asked about medical device maker Thoratec (THOR). Gary B. sees this chart similar to Dupont in that you don't know which way it will go next. It's in a range right now and could burst down or up. Don't touch it now until you see which it is.

Finally Barbara wanted the lowdown on energy trader Dynegy (DYN). Gary B. thinks Enron unfairly tainted this stock. Because of that he thinks it is a buy right now at $23. But he would put a stop in at $20 to protect the investment.


Tobin: General Motors (GM) runs out of gas; sell!

Scott: Nvidia's (NVDA) loss is ATI Tech's (ATYT) gain!

Gary B: Rubbermaid (NWL) rises 50% this year!

Pat: Best is over for Amazon (AMZN); sell now!