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PAUL KANGAS: My market monitor this week is Stan Weinstein, editor and publisher of "Global Trend Alert," an advisory service for institutional investors and Stan, welcome back to NIGHTLY BUSINESS REPORT.
STAN WEINSTEIN, EDITOR & PUBLISHER, "GLOBAL TREND ALERT": A pleasure to be back, Paul.
KANGAS: The Dow hit a new record high four times this week and the broader indices have posted six-year highs in recent days. Is this market overextended and due for a serious setback or is there still more money to be made on the long side here?
WEINSTEIN: We have to separate the short term from the long term. Short term, you summed up beautifully. I think we're going to pull back. The long term I think, we still move higher at least to the end of the year, but we have to be very careful and tiptoe through the minefield. It is not an easy rally.
KANGAS: So it's not the strongest of technical conditions?
WEINSTEIN: No, it's decent, but certainly you have to be careful. It's a very selective market. You see, the stocks that we've recommend, like Caterpillar, Red Hat, Sierra Healthcare, which has gone down while the Dow is hitting all-time highs. You've got to be very careful here.
KANGAS: What indicators are you watching closely?
WEINSTEIN: First of all, as long as the Dow stays above the 11,200 level, I think the market's OK. Last time, I remember, I gave you 10,600.
KANGAS: You got within 80 points of that.
WEINSTEIN: And now we're right above it. Now it's 11,200, so that's important. I want to see all the moving averages, all the averages stay above their respective 200-day moving averages. Those are the important things to watch for.
KANGAS: On your last visit with us eight months ago, eight months now -- too long -- but you were very positive on aerospace, pollution control and telecommunication stocks and they've all done very well. You still like those three groups?
WEINSTEIN: Yes. The first two are downgraded to a "hold." The telecommunication is still a "buy" on a pullback and technology I like very much. Technology is a "buy." In addition, I like some airline stocks look very interesting. Retail looks good and I think biotech is going to come on here. So I think we can get a bit more (INAUDIBLE) to the market.
KANGAS: On the last visit in May, you warned that the home builders looked very dangerous and they have taken a tumble. That was a great call. How about that sector now?
WEINSTEIN: Well, the charts really did their thing at that point. Now I think, even though the fundamentals are terrible, I see bases forming on the charts. So anybody who is short the home builders, I would be covering the homebuilders and they're a little early to buy but I do think bases are starting to form. I think the worst is behind us stock-wise, for the home builders.
KANGAS: What would you avoid here?
WEINSTEIN: I think it's very important to stay away from agricultural products like an Archer Daniels, a lot of the HMOs, like Wellpoint, there's a problem, the truckers are negatives. So those are places you don't want to be in.
KANGAS: OK, now your favorite groups again.
WEINSTEIN: The best ones I think are technology, technology, technology. Like location, location, location in real estate.
KANGAS: What about the bond market here Stan?
WEINSTEIN: I think bonds, we've seen the low for the cycle, last June, July I think we saw the low. And we're starting a moderate bull market in bonds, so it's not my number one place. But I think bonds are going to move higher, so interest rates are going to come down.
KANGAS: OK, fair enough. On your last visit, you said gold was in a long-term bull market, still?
WEINSTEIN: Gold had one heck of a move after that program. Now I downgraded to "neutral" and here's an important goal (ph) line. If gold ever breaks down and closes below $600 - right now it's about $622 - if we close below $600, we turn negative. Right now it's just a neutral "hold."
KANGAS: How about silver? It's had a good run.
WEINSTEIN: Silver is decent. I like it better than gold. Both of them are not A pluses. They're B pluses.
KANGAS: OK. How about uranium stocks?
WEINSTEIN: Uranium has been terrific. I think uranium looks very, very interesting.
KANGAS: Fair enough. OK, so, in other words this market has a little way to go, but start being very careful in the first quarter of next year.
WEINSTEIN: Right and I said last time we were in the ninth inning. Now we're in extra innings.
KANGAS: OK. Any parting thoughts you would like to convey to our viewers? We have almost a minute.
WEINSTEIN: I think that people should learn -- as I wrote in my book, "Secrets for Profiting in Bull and Bear Markets," to use stop losses. If you see the volatility, have things changed so quickly. So I think that if you learn to put stop losses below important support levels, if the stocks start to move against you, you could be working, doing other things and you'll automatically be taken out of position. Learn to use proper stop losses.
KANGAS: The best thing if you don't know what a stop loss is, have a little meeting with your broker and have him explain and earn his commission money.
WEINSTEIN: If he does know what they are.
KANGAS: oh, no! I think most brokers these days do.
WEINSTEIN: They don't all use them right.
KANGAS: OK. Very good, Stan. It's great to have you on the program.
WEINSTEIN: Always my pleasure.
KANGAS: We look forward to your next visit.
WEISTEIN: Thank you.
KANGAS: My guest, Stan Weinstein, of "Global Trend Alert."