The stock market acted OK last week with lots of stocks testing their former lows successfully. We forecast the bottom weeks ago and still say it’s a wonderful time to buy – that it, household name stocks with good prospects, selling at a fraction of their former prices and especially where insiders are buying. There is still a lot of fear, which soon may become panic if the financial markets don’t straighten out – people are afraid to buy.
A great strategy is to buy 1/2 of your stock allocation at these incredibly low prices and put in a Good Till Cancelled order for the balance at 50% below the current price and be happy (if you are a buyer) if the market sells off further. We would be buying lightly because there is still a chance for a huge panic sell off when it finally sinks in that stock prices fall when earnings fall … and earnings are going to keep falling.
If we were an oil speculator, we would have bought last week at 60 and would buy twice as much at 50 and three times as much at 40 and call it a day. We think Cel Sci (AMEX: CVM, Stock Forum) ** at 27 cents is very cheap. They have agreements with two major drug makers, great prospects, and Multikine is approved for third-phase trials.
We have buy ratings on the following stocks (prices are as of Friday’s close): Google (GOOG) 310.02; Research In Motion (RIMM) 40.00; VMware (VMW) 20.00; Herbalife (HLF) 17.56; Discovery Comm-unications (DISCA) 13.92; Hartford Financial Serv. (HIG) 12.65; Ebay (EBAY)*12.36; Hercules Offshore (HERO) 5.41; and Morgans Hotel Group (MHGC) 3.79. There is large insider buying in DISCA, MHGC, HLF, and HERO. Our normal buying strategy is: Buy 40% NOW and 30% more on each 20% decline from the original buy price.
Our Option Picks are as of Friday’s closing prices: Canadian Solar (CSIQ) .GQAAA JAN 5 CALL- Friday Asking Price 2.40- a Buy up to 3.00; ReneSola (SOL) .SOLAA JAN 5 CALL-Friday Asking Price 1.35- a Buy up to 2.00. You can easily lose 100% of your money trading options.
* Cotton’s “Stock of the Week”
** We hold a position in the stock or option
Please go to stockcharts.com to view the above stock picks