WESTON, Fla., March 2, 2005 (PRIMEZONE) -- StockPickReport.Com (IARD #119079, http://www.stockpickreport.com -- the web's only non-mainstream stock rating service), rates MCI Inc., Symantec Corp., Tyco International Ltd. /BER/, American International Group Inc.
STOCKPICKREPORT RATINGS:
MCI Inc. (AMEX:MCIP) -- STRONG SELL
http://www.stockpickreport.com/abrating.php?sym=
Symantec Corp. (Nasdaq:SYMC) -- BUY
http://www.stockpickreport.com/abrating.php?sym=SYMC
Tyco International Ltd /BER/ (NYSE:TYC) -- BUY
http://www.stockpickreport.com/abrating.php?sym=TYC
American International Group Inc. (NYSE:AIG) -- SELL
http://www.stockpickreport.com/abrating.php?sym=AIG
Wednesday, March 2, 2005 StockPickReport Commentary Wal Mart and Microsoft
The market, at large, may be overbought right now. But, among the general overbought stocks are two big ones we think deserve a look. Microsoft and Wal Mart both show signs that their respective downward moves are closer to the end than the beginning. We have "Strong Buy" ratings on both of these huge stocks.
"Contrarian Play"
Well, here were go again... "Falling oil prices and a broker upgrade of the semiconductor sector pushed stocks higher Tuesday, enticing buyers back into the market after the previous session's losses." That was from the headlines today. So, market goes up, market goes down... someone always has an answer about WHY something's happening. It sure would be nice for a change if someone told you what to do because of what WAS GOING to happen. Then we'd be able to actually make some money in the markets.
I often find that the technicals give the picture first and the headlines come out later. For instance, I liked NANO, a semiconductor stocks a few weeks ago that went up 10% and now I like CREE, just as its bouncing off its trendline.
Most "advisors" will tell you diversification is key. They will say that it's OK your portfolio is flat this year because we're "doing the right thing." Nonsense. Being right is key. Being in favored sectors is key. Staying out of unfavored sectors is key. Total diversification is an excuse for your broker to put your file on a shelf and call you once a year after your performance is flat -- that is, after you're charged a 2% management fee.
Did you know that in 2003 semiconductors were the best performing sector and in 2004 they were the worst? In 2004 non-ferrous metal stocks were the best performer and you would have done better in the WORST performing non-ferrous metals stock than you would have been in the BEST performing semiconductor stock (AMD).
The entire semiconductor sector can be difficult to trade. Last year semiconductor companies couldn't even fill their orders and the factories were going round the clock while the stocks were plummeting. BUT... over the past few weeks, many semiconductor stocks have come down to hit their trendlines... CREE coming down from $42, all the way down to $23. Many semiconductors have followed suit as well dropping very far in price in the past year and the past few months as well. On a weekly distribution, semi stocks overall are 2.64% overbought, which is basically neutral, but they are the cheapest sector as far as the percent of stocks on a buy signal, otherwise called the bullish percent. 35.58% of semi stocks are on buy signals (compared to 85% of oil stocks). When this is at a low number, typically below 30%, then reverses up by 6%, demand is said to be in control. So, demand is gaining steady control of the semi stocks -- from a low level. The easiest way to play this is the SMH, or, Semiconductor Holders Trust. Why the market is so counter-intuitive is that the average investor would NEVER thing of buying semis right now. They are thinking... well maybe this market is headed lower, oil is going up, interest rates are going up... the deficit is going up... why would I want technology... especially semiconductors?????? Ask your neighbor. Ask your friends. Ask if now is a good time to buy semiconductor stocks. They'll probably give you a funny look. They'll probably ask if you're crazy. They'll say, "Sure... if you want to lose your money." Hmmmmm sounds like a good Contrarian bet to me. I bet if you said you wanted to buy gold in 2000 everyone would have said you're crazy too.
So, often the best way to make money in the markets is to boldly step in and stare danger in the face. Remember, it's not like semiconductors are on a straight path downhill. We've got a rebound happening here. We are looking at a turnaround. This is a Contrarian play, and it is always the Contrarians that get in to a trend at the beginning, and the beginning is where you make your money. We'll get out when our neighbors start asking us which semiconductor stocks to buy. That will be the top.
If you have questions or comments, please email don@stockpickreport.com.
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All commentary written by Don Harrold, Senior Analyst.
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If the links to our ratings above do not work, please use these:
MCI Inc. (AMEX:MCIP) -- STRONG SELL
http://www.bigtimenews.com/russell1000/-Stock-Quotes-News-and-Research.php
Symantec Corp. (Nasdaq:SYMC) -- BUY
http://www.bigtimenews.com/russell1000/SYMC-Stock-Quotes-News-and-Research.php
Tyco International Ltd /BER/ (NYSE:TYC) -- BUY
http://www.bigtimenews.com/russell1000/TYC-Stock-Quotes-News-and-Research.php
American International Group Inc. (NYSE:AIG) -- SELL
http://www.bigtimenews.com/russell1000/AIG-Stock-Quotes-News-and-Research.php