We Got Our Pull Back

The correction may not yet be over but bears were in covering shorts today after a two day 400 point decline. Best to buy on down days and sell on up days until the market shows signs of life again. We've yet to get one 10% correction but this one should come close. Frankly I'd love to see a pull back to 9,500 but 9,800 may be it (for now).

This video calls attention to Exxon as hitting a double bottom. Integrated oil stocks often do poorly in the first year of a market bounce. As the market climbed in 2003 most oil names like Exxon, BP and Marathon were flat in 2003 and didn't start climbing until 2004. They tend to lag the market and refiners have been hurt by the high cost of crude oil and relatively low pump prices. Oil stocks not impacted by refining with bounce potential are DVN and service stocks like SLB.

For those who like safe plays with great dividends time to buy Exxon, Lilly, Verizon and Intel. Other low risk plays at current prices are: DELL, PFE, BAC, HIG. For those who want international safe plays with very fat dividends consider VOD, DT or SKM at current price levels. For those looking for long term growth plays in China consider investing in RINO and YONG at these price levels after a major correction in price to both. The China telecom stocks (CHL and CHA) look very interesting at these prices too. Every since China announced they were tighting up on Bank lending the China market has been falling. The inverse ETF FXP hit a record low this fall but has been climbing upward for eight weeks.

All commodities connected stocks have had a major correction. So if you believe in an improving world economy then it's time to buy stocks like US Steel or Alcoa. US Steel below $43. Natural gas in the USA should hold strong after a two year decline. The ETF UNG has issues but more and more people have been buying into it expecting the USA cold winter to increase demand for NG. Lots of oil service plays look like big values e.g. MRO, HLX and ESV at current prices. The worlds largest deepwater driller RIG is always a great buy on pull backs (below $80 is ideal). For those who want a high risk high reward and high octane possible play, consider AIG right now. It was the talk of the town when it went from $10 to $50 last summer (after a major reverse stock split). It's been falling back all fall and winter. AIG is now back down to $22. Insurance companies have all turned in good earnings reports and if Yahoo's earnings forecast for AIG in 2010 are even close with a current market cap of under five billion I'd expect AIG to have lots of upside potential. Citi at these current prices below $3.50 is another low risk wild card play.

Note: I do a lot of USA TAX work during tax season so my post will be fewer from January through March.