Solar stocks continue to show strength.
Market summary
As predicted, the solars moved up strongly last week…and we expect them to continue upward for a long time – Suntech Power (NYSE: STP, Stock Forum), our “Stock of the Week” closed Friday at 46.75 – up 23%. We think crude oil has made a bottom (temporary, at least), and our Wednesday, August 20, 2008, Market Alert had buy ratings on Peabody Energy Corp. (NYSE: BTU, Stock Forum) – 61.45; Massey Energy Co. (NYSE: MEE, Stock Forum) – 63.97; James River Coal Company (NASDAQ: JRCC, Stock Forum) – 39.67; Continental Resources (NYSE: CLR, Stock Forum) – 47.65, and Pyramid Oil (AMEX: PDO, Stock Forum) – 13.80….We expect them to rise further. Unfortunately the spectre that oil could rally and make a new high is hovering over the market.
A real problem
Everyone is holding their breath, hoping it isn’t possible, but it is! And even though we believe the market is headed to all-time highs, we would still be selling high PE–low-yielding stocks.
We have immediate sell @ market ratings on the following stocks (insider selling and pricey): Burger King (NYSE: BKC, Stock Forum) 26.16; Autozone (NYSE: AZO, Stock Forum) 136.72; True Religion (NASDAQ: TRLG, Stock Forum) 26.14; Qualcomm (NASDAQ: QCOM, Stock Forum) 55.41 – again; Illinois Tool (NYSE: ITW, Stock Forum) 48.95 – again; Becton Dickinson (NYSE: BDX, Stock Forum) 88.49; Warnaco (NYSE: WRC, Stock Forum) 49.98; Pepsico (NYSE: PEP, Stock Forum) 69.90; CF Industries (NYSE: CF, Stock Forum) 144.47 – again; and Fuel Systems (NASDAQ: FSYS, Stock Forum) 56.81.
The below stocks are, for the most part, high-quality and down substantially from their highs, and with good charts. Our buying strategy is buy 40% of a stock now and 30% more on each 20% decline in price to ensure good entry prices.

*Cotton’s “Stock of the Week.”
**We hold a position in the stock or option.
Go to StockCharts.com to view the above stock picks.
You can easily lose 100% of your money trading options.
The author, Joe Cotton, in many cases has purchased or purchases the stocks or options featured, at prices equal to, lower than, or higher than the recommended price herein. A double asterisk (**) indicates the author either holds an option or stock position in that company as of publishing date. Past performance is no guarantee of future results. This market letter is based on the technical analysis of stock trends by the author and is in no way to be construed as investment advice. For investment advice, consult an investment advisor or Certified Financial Planner. It is imperative that you use stop-loss orders in order to protect yourself against substantial losses in any particular stock-or in the event of a terrorist attack on U.S. soil.
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