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Will Cisco, Google Save the Dow?


Large-cap tech names may move to big index.


Here's what I'm thinking as we fight to form a durable low - or the much-sought-after rounded bottom.

Doug Kass used the words "generational lows" last night on CNBC. If the SEC follows through and reinstates the uptick and FAS 157 fixes, we're at generational lows. In fact, I would go a huge step further and say we were at generational lows 1000 or even 2000 points higher on the Dow - had the changes been implemented anytime last year.

  • Was oil staying higher the real key that we were getting very oversold? Dow 6500 should equate to oil in the $20s or teens.

  • The financials look real here, if the powers that be come through. I'm watching many top tier banks. I want to own another name or 2, something like: Wells Fargo (WFC), Zions Bancorp (ZION), BB&T Corp (BBT) or U.S. Bancorp (USB) - and add them to my core positions in Morgan Stanley (MS) and the exchanges.

  • I'm going to keep building VMWare (VMW), even though EMC (EMC) said it wants to retain ownership. After all, what do you expect EMC to say? Of course the company is keeping VMW, unless someone gives an offer it can't refuse. Does this make EMC a stealth must-own tech name?

  • It's highly logical that either Cisco (CSCO) or Google (GOOG) could be added to the Dow to replace the downtrodden. Given this, CSCO is my next large-cap tech name to leg into. Additionally, CSCO has most likely been trading at a discount due to speculation that it was on the buyout warpath in relation to VMW. At just barely above 3 times net cash and investments, CSCO is priced for a 5-year recession/ depression.

  • Yesterday, the leaders finally acted like leaders again. However, one bullish aspect I would like to see come back into the market is sector leadership differentiation. One size fits all rallies are less desirable, and I would like to see Tech, Retail, the Financials, and high-cash-flow healthcare names perform better than the averages to confirm the generational low theme.

  • Does the Schering-Plough (SGP) deal make Intuitive Surgical (ISRG) more valuable? How about Varian Medical (VAR), Zimmer Holdings (ZMH) or Stryker (SYK)? I think it does.

  • Nucor (NUE) was up $5 yesterday - rebar, anyone?

  • Encore Wire Corp (WIRE) is not trading like this is the worst recession of all time - and it's still trading well above November lows.
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Positions in MS VMW ISRG VAR

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