Recap of Nov. 3:War Rally Over?

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Brenda Buttner was joined by: Gary B. Smith, columnist, Scott Bleier, chief investment strategist at Prime Charter; Tobin Smith, portfolio manager of ChangeWave Capital Partners; and Bob Olstein, president of the Olstein funds.

Trading Pit

A dramatic sell-off started last week, and the Dow just never recovered, and fell 222 points for the week. Was this sell-off a sign that the market went up too fast or something even more bearish?

Bob thinks that the market went too far too fast. But he also said that the worst is over, and the economy is ready to turnaround. He advises being in right stocks with excess cash flow.

Tobin also agrees that the worst is over because this quarter and next quarter will be horrible, and that is as bad as news has gotten in the past 20 years. Also, companies have cut jobs, cut expenses, and have their cash flow ready to go next year. So if you to get those benefits, you have to get in now.

Gary B. is a bear. He demonstrated his point by charting the Nasdaq 100 (QQQ), and showed that the current downtrend line has not been broken. Until that happens, he said buyers should be wary.

Scott thinks that the Dow will probably break 9,000 in the near future. He said that rates are now at a level that cash is at a negative rate of return so money is being put in the market.


Gary B. came back for a segment of "Ask the Chartman." This is a segment in which he charts the stocks that viewer's send him via e-mail.

1. Krispy Kreme (KKD). Chartman: Bull. It continues to defy the doomsayers. A buy if with a close above $38, but sell if it closes below $34.

2. Lockheed Martin (LMT). Chartman: Bear. The recent downward movement may have spelled the end of the runup. Sell quickly if its upward trendline is broken.

3. General Dynamics (GD). Chartman: Bull/Bear. It has a broken uptrend, but hang in there unless it breaks its current level of support below $80.

4. Anheuser-Busch (BUD). Chartman: Bull. Usually after a runup, like BUD's current one, there is an upside breakout. But it if that happens.

5. Sun Microsystems (SUNW). Chartman: Bear. It's recovered since 9/11, but is still in a downtrend.

Stock X-Change

Bob, Tobin, and Scott all returned with a stock pick that each bought when the market was falling.

Bob chose CIGNA (CI) because it is a big insurance company with only 20% of its assets at risk in HMO's insurance.

Tobin picked Comverse Technology (CMVT). It is a unified messaging leader that got beat up, and once people start consolidating their communication devices, this company is in, "the sweet spot."

Scott's firm recommends Sun Microsystems (SUNW) because it is currently at the right price; but he said sell the stock once it hits $14.


Scott: Refinancing boom; Indymac Bancorp (NDE) up 40%

Bob: Better times ahead; major averages gain

Tobin: Microsoft (MSFT) runs up to $70 then stalls

Gary B: Biotech gets hot; Amgen (AMGN) rises 50%