DISCLAIMER: THE FOLLOWING "Bulls & Bears Recap" CONTAINS STRONG OPINIONS WHICH ARE NOT A REFLECTION OF THE OPINIONS OF FOX NEWS AND SHOULD NOT BE RELIED UPON AS INVESTMENT ADVICE WHEN MAKING PERSONAL INVESTMENT DECISIONS. IT IS FOX NEWS' POLICY THAT CONTRIBUTORS DISCLOSE POSITIONS THEY HOLD IN STOCKS THEY DISCUSS, THOUGH POSITIONS MAY CHANGE. READERS OF "Bulls & Bears Recap" MUST TAKE RESPONSIBILITY FOR THEIR OWN INVESTMENT DECISIONS.
Trading Pit
Dow 10,000? It’s not there yet, but Friday's close puts the index just 326 points below that magic number.
It's been nearly a year and a half since the Dow closed above 10K, a level first reached way back in March of 1999.
Toby thinks the Dow will hit the mark because companies are posting their largest profits since 1999. He also believes the news for stocks is going to be much better than what most people are predicting. Plus, manufacturing (search) is picking up and more jobs are being created.
Mike said the time to buy stocks was last year when the market was down and earnings were bad. He believes the Dow might hit 10K, but he is much more cautious then he’s ever been. Also, with the protectionism in Congress and policy makers possibly repealing tax cuts, we don’t have a policy environment that is conducive for a rally, like we did in the beginning of the year. He advised investors to take some money off the table.
Gary B. charted the Dow’s movements over the past 4 years. He said it’s going to be tough for the Dow to get to 10,000 because it has been in a downtrend during that time, and has already made a big gain this year. However, he does believe it will get there by December, go up to 10,500, and then fall back.
Scott thinks the Dow will get to 10,000, but it is not going to head straight to the mark. Instead, it will pullback and confuse the masses. During this pullback, investors should find the right stocks to buy.
Pat said the Dow stocks are not that representative of the economy anymore. It is very weighted towards industrials as its name, Dow Jones Industrials suggests. This means it is not a great indicator of the market’s overall health. He believes the positive manufacturing news that Toby mentioned, is already baked into the market. He then advised investors to be patient, because they will have a time buy stocks at cheaper prices.
Stock X-Change
It’s earnings season! So Scott, Tobin, and Mike each picked stocks to buy before they report their earnings.
Mike chose Coventry Health Care (CVH), a managed healthcare company. He said there is a prescription drug bill that will get passed by Congress and will be great for health care companies. These companies will be collecting premiums and not handing out as many claims. Even though it’s at a high price right now, Mike thinks it has potential to move a lot higher. Tobin and Scott agree and both think this is a great stock. (Coventry Health Care closed on Friday at $54.18 and reports its earnings on October 30.)
Scott picked Instinet (INET), an electronic stock-trading system operator. Reuters (RTRSY) owns 65 percent of this company. Even though Scott admitted Instinet has some problems, he believes it has a lot of opportunity. He thinks it is going to have a break-even quarter, and buying the stock is a bet on the bull market. Tobin said it was a stock to buy for a trade. Mike would have liked it a year ago, but now since he’s cautious on the market, he wouldn’t buy it. (Instinet closed on Friday at $5.17 and reports its earnings on October 22.)
Tobin selected Magnum Hunter Resources (MHR), an oil and gas exploration and production company. He thinks its third quarter profits will be good and the stock has a 20 percent upside. Mike doesn’t like this stock, but Scott does, and said it will hit $12 in less than a year. (Magnum Hunter Resources closed on Friday at $8.64 and reports its earnings on November 4.)
Chartman
Last week Gary and Pat named their all-time best calls. This week, the tables turned, and the pair chose their all-time worst calls.
Gary’s charts most betrayed him in March, when he said homebuilder Toll Brothers (TOL) would lead home stocks lower. But, the stock has nearly doubled! (On March 15 Toll Brothers closed at $18.98 and on Friday it closed at $34.40.) Gary said when he made this call, he should have seen that Toll Brothers had just put in a double-bottom, a bullish sign, on its chart. Now since it is past its old highs, he would buy the stock on any pullback to the low $30s. Pat admitted he also did not see this one coming. He said Toll Brothers is the ‘Tiffany’ of homebuilders and it is not going to get hurt as much as its competitors if mortgage rates rise. It also has very smart business practices and could be a buy if it dips a bit.
The call Pat chose to take back was his call on Concord EFS (CE). In August of last year, he said it would be up 60 percent in a couple of years. Back then, the stock was at $18.53. But the stock dipped below $8, and is still lower than when he liked it. (On Friday it closed at $14.21.) Pat said this was a call he never should have made. The company was forced to cut prices and he should have looked at its books closer. However he does think the stock could go up a couple bucks if it gets bought out. Gary said Pat wasn’t wrong, just a little early. Concord EFS bottomed in March. So if it can close above $16, Pat’s prediction will come true, and the stock will head higher.
Predictions
Tobin: Unova (UNA) on the cutting edge of tech; stock will double (Scott said he thinks Unitrin-UTR is a better stock to buy.)
Gary B.: Black gold! Exxon Mobil (XOM) up 25 percent to a new high by April
Mike: Gary B. is not "slick" about oil; oil price war hurts those stocks! (Mike specifically does not like Halliburton-HAL & Apache-APA)
Pat: Gets a lot worse for Computer Associates (CA); down another $10
Scott: Disney's (DIS) DVD sales shoot stock up 20 percent
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