well the DJIA has gone sideways, so it's not diverging that much from the bonds. You have to wonder if
this situation of the bull market in some stock sectors could give way to a broad decline where 85-90 of
US equities go down.
That's one possibility, another is that tech bases this spring or summer and sectors like cyclicals, energy,
etc do no have pronounced declines.
Cramer is probably right on his DJIA view, not that it's going to 11,000 immediately, but that the composition
of stocks in it, should continue to buffer it from Hard core selling.
JP:
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Jim Walks Through the Dow Garden and Likes the Produce
By James J. Cramer
3/8/01 4:05 PM ET
URL: thestreet.com
With the right unemployment number, one that shows the economy is still slowing and needs a little more help but that it is not going into a nasty recession, we could see Dow 11,000 next week, as we head into option expiration.
The Dow has just enough 3M(MMM:NYSE) and United Technologies(UTX:NYSE) and Cat Tractor(CAT:NYSE) to make it happen.
It has just enough oil to keep us rolling. It's got two cyclicals that are on fire: Alcoa(AA:NYSE) and International Paper(IP:NYSE), both of which seem to be breaking out, and should go to new highs into the next rate cut.
It's got the cheapest drug stock, Merck(MRK:NYSE), and the best acting stock in the market: Philip Morris(MO:NYSE). I think the latter has $60 written all over it. I wish it had Ford(F:NYSE), but there are no flies at all on General Motors(GM:NYSE) here. Gotta like retailers, even Home Depot(HD:NYSE) and Wal-Mart(WMT:NYSE), at this stage of the cycle.
General Electric(GE:NYSE), what's not to like? And it has three fairly washed-out tech stocks, Microsoft(MSFT:Nasdaq), Hewlett-Packard(HWP:NYSE) and Intel(INTC:Nasdaq) as the only real danger spots. I don't think IBM(IBM:NYSE) is a down stock here; it could rally nicely still and be very cheap on 2001 numbers. SBC Communications(SBC:NYSE) has already blown up and is probably done going down.
In fact, if you asked me which is the most vulnerable stock in the Dow, it is McDonald's(MCD:NYSE), and I don't think it goes below $25 on a short fall. Coke's(KO:NYSE) broken already on that COO resignation; I don't think it breaks again.
The financials are the wild card. With the right number tomorrow I think J.P. Morgan(JPM:NYSE) and Citigroup(C:NYSE) go back to much higher levels. They hold the key to piercing 11,000.
I know it seems a little old-fashioned to be talking about the Dow Jones Averages. But in the New Old World, the world where values abound and bull markets run rampant, the Dow is still the average to beat. It has been a star in this downturn, and when the upturn comes, it will lead us in a very big way. When it rallies, the public will get turned on, and there will be another wave of buying to take it even higher into quarter's end. |
