Stocks in the Spolitght Stocks to watch

The markets gave us 5 new all-time highs this past week with one of them being the NASDAQ, which is a very powerful sign as I feel the markets can never continue to rally without the big OTC stocks. The Dow 30, S&P 100 and S&P 500 are all blue-chip indices. Although they are narrow markets, meaning they have a small amount of stocks included in them, they are still followed by almost every fund and institution.

The bottom performers were the Dow Transports (only 20 stocks) & the Russell 2000 (2000 stocks) were both down a little over -6% from the record highs. We don't expect much of the transport but the negative here is with the RUT, because it has 2000 stocks and it is this index could catch up to the others it would be a very bullish sign.

It seems like the market is moving on any kind of news we here about the trade talks with China. Every time the trade talks stall markets go down every time you get back on track the markets come back up. So far, it seems as though they're coming up a little bit further than they're going down and that is a very good sign for the near-term.

Last year in December we had a major fall and lasted right up until Christmas Eve. I just don't see anything in front of us to cause the markets to take a big fall. There is just too much good economic news this year to offer big surprises on the downside. If anything, the surprise would be that the bull has been going on for a long time and might need to take a break because everything is getting too expensive to.

There's nothing wrong with using caution, meaning don't chase anything, and search for the values because this is one way of limiting the downside if we do get a big correction. If we don't then your choice might very well go up a bit.

So far the ridiculous impeachment hearing,s have had little effect on the market other than possibly a few hours and then it becomes old news.

We have to remember that nothing goes up forever and the time will come when the bull becomes tired and the bear takes over. I just don't believe that time is here yet and I'm not real sure that it is very close.

This brings me to this current bull market rally and what we should do. I believe that if we have a winner still acting good we stay with it but if we are entering the market with new money we need caution as we don't have profits on our new stock to fall back on, if we get a major drop.

This is where I say we find something in the secondary stocks that have not yet moved and this is where we park our new money. If we don't get a big fall in the first part of next year are secondary stock could take off and if we do get a big drop are secondary stock probably won't go down much at all.

The world economy is so complex and so confused that I still don't feel metals are a safe place to go. A lot of people, and a lot of nations, tend to move into the precious metals when things get hard to predict, but if the economy continues to grow you will find much new money coming into the market's and much of that money will come out of the metals.

Plus metals are trading near their higher end of the trading range meaning it would be a lot easier to fall then to continue climbing, therefore avoid the metal stocks at this point in time.

I still like the real estate industry right now, mostly because of such low interest rates, and I also like the bank stocks because of the growing economy loans are becoming more frequent, which in turn increases revenues for the banks. This could be a great area to be for a while.

Since I am a technician first, the fundamentals will always take a backseat while the trend will stay in the front. Due to the recent strong attempts to take the market lower and the resistance that it has run into it only makes me more bullish for the near-term.

The bottom line is the indices are setting new highs with the Dow Jones Industrial average reaching a new high on almost every up day over the past few weeks. If I am correct we should continue to buy on weakness.

As far as how high we are for the year, the lowest is the XMI, up 17.5% on year, while the leader is the NASDAQ, up 30.06%. The good part is we still have the final month of the last quarter in front of us.

Look at the secondaries like Intel Corp., because it has a low PE (has been climbing lately), 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 $19.87 (PE is 8.95), up over the last week, but I would hold off on Intel Corp. INTC $58.05 (PE is 13.59), due to up strong recently, making the stock to high to buy. 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 -8.52%. 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 up 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 4723.95 (+20.25%) on the year and off -112.59 (-0.40%) from the 52 week high.

Another stock I like his Walmart (WMT) $119.09, 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 23.82 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