We believe this is a meltdown, not a pullback and consolidation for another upward move. On Thursday, January 21, at 1:08 pm we issued the following market alert to our subscribers: “We believe this is the start of a large correction…..we sold all positions –DANGER.” Obama’s decision to attack the big banks as the cause of all our economic woes, just when the market was overbought and due for a correction anyway, was, we believe, just done to take the spotlight off of the repudiation of his Health Care bill, and rampant government spending, in the recent Massachusetts election for Edward Kennedy’s Senate seat.
The stock market should open up this morning, but unless it recovers and can close above 10,600 in the next few days, we believe we are headed for an extended downturn. We would be selling and raising cash and protecting profits. Our stock picks below are mostly speculative, but with good charts and reasonably priced. We would be buying lightly because we believe the market is headed lower!! Our normal buying strategy is to buy 40% of a particular stock now and buy 30% more on each 20% decline from our original buy price…for good entry prices.
Our stock picks (Based on Friday, January 22, 2010, closing prices - solid stocks we like): NRG Energy (NYSE: NRG) 24.73; RNO Int. (NASDAQ: RINO) 23.59; Huntington Bank** (NASDAQ: HBAN) * 4.69. Risky stocks we like:SkyPeople Fruit Juice (AMEX: SPU) 6.96; Aldila(NASDAQ: ALDA) 3.91; Spine Pain Management (OTC:BB: SPIN) 1.70 and Oragenics (OTC:BB: ORNI) .66. This Market Letter was published on Monday January 25, 2010, at 8:30 am. It has been edited for brevity.
* Cotton’s “Stock the Week”
** We hold a position in the stock or option
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