Stocks in the Spolitght Stocks to watch

The markets are still up to the same old tricks, up one day and down the next. There is a positive on this past week. Earlier in the week we had as many as five indices in correction territory but ended the week with the same old two indices.

It's always a positive when we have major down days then followed by strong up days. This tells us the investor is not gone but trading in the market, which is a bullish sign.

October is a strange month and anything can happen but I believe the worst of it is behind us, of course the markets are falling on just about any kind of news. China is holding the front page, but rumor has it talks with China are going pretty good and we just may have a deal with them which was the main reason for Friday's strong market and I believe the main reason for continued strengths until the end of the year.

Last week's jobs report is quite strong showing economy is still growing due to jobs tax cuts corporations are still investing. Also this past week Michigan's consumer sentiment index came out at around 90% which is quite high in telling us that consumers will leave the economy is going to continue to get better.

The bottom line is the indices are holding their own with the Dow Jones Industrial average only -1.98% away from a record high. Not quite in bear market territory. I can't see any reason for the markets to Turn bearish anytime in the near term, which means if I am correct we should continue to buy on weakness.

This is certainly not the market you want to be a seller. We either hold are big winners and research for a better value and either get in, or stay in, this current market. Thought of any recession is only on the minds of those that know nothing about what it is truly happened with the economy. We are so far away from a recession it'll be hard to get one next year.

We still have problems with Iran but Iran has not been able to have much effect on the daily trading of the markets. We still have problems in the UK over the Brexit, but this is something that's probably going to drag on for some time and it also doesn't have the same effect on a day to day market.

We do have two indices in correction territory, the DJT and the RUT, with the real concern having to do with the RUT as it has a couple of thousand big OTC stocks in it, while the DJT only has 20 stocks. It's a lot easier to figure out what the markets are going to do when we have a couple of thousand companies, as opposed to a small basket of them.

Another thing to keep in mind is several of the indices are only a little under -3% from record highs, this means we could see those go to new highs with just a few strong days. I'm not saying the markets are going to new highs this coming week, but I am saying they're not going to new lows either.

As far as how high we are for the year, the lowest is the DJT, up 12.23% on year, while the leader is the DJU, up 21.56%,but with only 15 stocks it doesn't count. This is followed by the the NASDAQ, up 21.43 %. The good part is we still have the whole last quarter in front of us.

The metals have been bouncing around, just like the market, but much of that is because of the unrest with Iran and the threat of lower interest rates, which can make institutions lean toward the safety of holding the metals but a favorable deal with China would make the dollar rally and in turn put the metals back down.

I believe the near-term playing the metals is quite risky and holding off for much lower ground may be a better bet right now. Also, we still have the same problem, and that is all the top stocks have reached the point where they're just to high to buy forcing some investors to buy the metals.

We will have to look for bargains in the secondary stocks in order to have a better chance on this final quarter, as the rally could last all the way through the end of this year.

Look at the secondaries like Intel Corp., because it has a low PE, and Fonar Corp., because it has a ridiculously low PE and a top selection, if you want to buy and hold.

I have a rule: As long as corporate earnings are strong and interest rates are low the markets cannot
become bearish. This only happens with poor corporate earnings and climbing interest rates.

I would use this current market strength as a reason to pick up a quality company with a low PE, of which I recommended Fonar Corp. FONR $19.88 (PE is 8.82), down over the past 2 weeks or Intel Corp. INTC $52.09 (PE is 11.71), up slightly since last week. I believe having an opportunity to own stocks like these may not come again for quite some time and I also feel there's little downside.

I'm betting that the OTC stocks will outperform the blue and green chips once the OTC indices reaching new highs for the year. I believe we are just starting to see major benefits from corporate tax breaks and this should continue throughout the year and into the next.

Looking at the chart above we can see that the current discount to the 52-week high is at -11.19%. On 12/3/18 the discount was setting at -8.81% and 2 weeks later, 12/24/18, it had fallen to -22.46% but it climbed back to -11.07% on 2/26/19, two months after hitting the bottom, then turned back up reaching -8.81% again and has been bouncing around since. Remember this is the average of all 30 Dow Industrial stock's.

The DOW 30 up 3489.13 (+14.96%) on the year and off -542.57 (-1.98%) from the 52 week high and is no longer in correction territory for the 37th week.

Another stock I like his Walmart (WMT) $120.24, because it has become much more aggressive and it seems to be attacking Amazon. No matter how big Amazon is, Walmart is in a position to not only catch Amazon, but if they're smart they can overtake it. This is because each and every store is a warehouse making it possible to deliver things to you in just a few hours from the time you order, either online or on the phone. My only negative is a PE of 27.19 but this is near to the average of the S&P 500. Although stock has been setting new 52-week highs each week, possibly a best entry would be on any pullback.

Also, another best bet would be the lower-priced arena and you certainly need to use caution there, but there are some excellent opportunities if you just do the homework.

Wishing you the best! JR