Is today the first day of a huge 2006 or are we just getting sucked in before they pull out the carpet again?
Last week we predicted a good day either Friday or today (and it certainly wasn’t Friday) as the lack of Asian market activity left money with few places to go today.
You would think most people got their selling out of their system last week (I know I did), the question is whether today will give us heavy volume position taking or just some bargain hunting.
Painful as it is on a nice looking morning like this, I will be in spectator mode, at least until after the Fed tea leaves are read this afternoon. Remember that any gains today will do nothing to erase last week’s losses and could be nothing more than a dead market bounce. Real buying decisions will not be made until Thursday and I still maintain that a rally that is not led by Microsoft and the Nasdaq will have no legs.
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That being said, let’s see what looks good today.
Longtime pick, YELL announces a China play today and a name change which should get them noticed again. Any notice of this company is good notice as the fundamentals are rock solid. High oil prices cause this stock to over-react to the downside though.
WMT will get whacked by lower than expected growth this quarter, I will be looking at this as a buying opportunity, hopefully back under $45. Last year was so good, I think they are just facing tough comps rather than having an actual problem.
JNJ may be the Trade of Day with a well-deserved upgrade from JP Morgan.
Semiconductor sales are on a tear worldwide, this could give the Nasdaq the push it needs to get back over 2,250. INTC has retraced 1/2 it’s high of $28 and may turn here and TXN has been itching to go back up for a month now. I still like CY and MRVL if the sector gets hot.
SRSL has something going on, I like this stock to $7.50 coming into COMDEX.
N may be the short of the day as there is a potential glut of Nickel. Inco did not really do all that well while the price was rising, with sales up just 10% this year although profits should be up closer to 20%. A decline in the commodity would be very painful to the company in ’06, especially if Nickel heads back below $5/lb.
Speaking of commodities, I like coal in a harsh winter. BTU is always a good stock but I also like unloved ANR (great cash flow), EXOAF (4% dividend), FCL and ACI.
Gold is back with the decline in the Asian markets but copper is still in question. FCX does both very well and is a good buy on a pullback. ABX looks very good here and I still like GG and NEM but ABX has more room to grow. Last week’s pick BVN takes a lot of patience as it is very thinly traded but it is way undervalued.
Piper Jaffrey just gave Google a $600 price target! These guys usually know what they are talking about… Expect a big jump today but don’t get involved until the stock proves it can break $450 (if it does, there will be plenty of upside left!). At $450, the p/e is back to 100 and will pose a significant barrier unless earnings are a large upside surprise.
MOT should get some upgrades on this announcement http://biz.yahoo.com/prnews/060103/cgtu014.html?.v=40 as it will change the way we use phones in the future… Wait for a volume move above $23 to enter this one.
DELL is a huge bargain at $30 with a p/e more than 35% lower than HPQ. If Dell hits their numbers in Q4, they will have 15% sales growth and 20% earnings growth for ’05 vs. HP’s 10% sales growth and 30% earnings DECLINE! Good press has rocketed HP’s stock this year but numbers will win out in the end for Dell. http://finance.yahoo.com/q/bc?s=DELL&t=1y&l=on&z=m&q=l&c=hpq
The CEO and the President of CHK bought another $70M shares of their own company’s stock last month so you probably should buy some too!
Little oil service provider OMNI is buying a private company that will add $5M to the bottom line for net $19M so I really like this one at $3.60 and a p/e that should combine below 15.
If Viacom’s split goes well today, TWX should benefit.
Remember, unless we close well up today on something like record volume – do not read too much into today’s action. The 2pm Fed minutes will be the big item of the day.
Good trading,
– Phil
