Stocks in the Spolitght Stocks to watch

The markets, to say the least, are quite confusing as they seem to be reacting more to the China trade deal than they are to the economy. This helps keep me on the bullish side of the fence simply because the economy is what's going to make the market continued decline, not China, although a deal with China would certainly help the market.

It seems like the other part of the market has to do with lower interest rates. There is much talk about the rates going to a minus in the real benefactor this move would be the housing market. The current low rates, if anything, will push a lot of people on the fence over to the side of buyers.

We will be coming out of the summer season, which is normally the part where we have lower volume, easier markets and in many cases lower earnings, but the fall season tends to turn everything around.

The Dow 30 is actually more than 1000 points off of the 52 week high set on July 13. Looking at the graph above we can see where the Dell 30 is off 1071.22 point from that high, but only a discount of 3.92%. Also, we see the Dow transports in correction territory with a -1363.63, or, -11.79% loss from the 52-week. Any loss over 10% is one way of measuring a correction.

Expecting the markets to turn back up again very soon would be the normal thing to do in this market because that's exactly what it's been doing. The Dow 30 can drop 700 points in one day turn around and get 500 back the next day, which is telling us there are lot of buyers sitting on the side waiting for the good deals they can pick up near the low end of this down cycle.

The feds met last Tuesday and Wednesday and and ended the meeting with the one quarter-point drop in interest rate, the first drop in many years. Trump has been beating on the Federal Reserve to lower rates but the markets would like to have seen something more than a quarter point. I say take what we can get and hope for more later.

I believe the tariffs against China are working. I believe their economic problems are growing daily. I believe that we will win in the end and hopefully that'll be in the next couple of month's.

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 selloff as a reason to pick up more of a favorite or at least climb into the market so you can join the ride. Pick up a quality company with the low PE of which I I've already recommended Fonar Corp. FONR $23.53 (PE is 7.79), up about a 1 1/2 dollars from this past week or Intel Corp. INTC $45.98 (PE is 10.68), up around four dollars just 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 climb into positive territory for the year. I believe we are just starting to see major benefits from corporate tax breaks and this should continue throughout the year.

Looking at the chart above we can see that the current discount to the 52-week high is at -12.58%. 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, but turned back up reaching -8.81% again. Remember this is the average of all 30 Dow industrial stock's.

The DOW 30 up 2959.98 (+12.69%) on the year and off -1071.72 (-3.92%) from the 52 week high and is no longer in correction territory for the 28th week.

Another stock I like his Walmart (WMT) $107.28 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 36.76 but the stock off more than $10 economy. Possibly a best entry on any deeper 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