Two Strong Stocks In A Down Market

The US markets were on the defensive from early morning hours and more negative news did not help the situation. However several rally attempts throughout the day took the Dow (^DJI) 300 points off the lows before once again dropping in the final hour. The Dow finished the day down 223 points or 2.6% and is now 1% above the October closing low. The S&P 500 (^GSPC) also fell 2.6% or 22 points to close at 850, 2 points above the October closing low. The NASDAQ (^IXIC), which has been weaker, closed at the lowest level in years today, falling 2.3%. Oil also fell after an early morning rise and gold closed with a modest loss.

Like clockwork, the markets began their late day plunge as the 3 o’clock hour began. From 2:58 to 3:04 the Dow moved from a negative 40 points to a negative 114 point. Over the next 56 minutes a few rally attempts were thwarted and the last 15 minutes were a selling barrage. Typically when a trend becomes apparent to most on the Street it does not tend to work much longer, therefore the last hour selling should begin to subside in the near future. Then again it is tough to fight the late-day selling.

The cause behind the selling in the last hour could be explained a number of ways, but all is pure speculation. My thought for the last two days has been the pure fact there is a lack of buyers in this market and next to zero during the last hour of trading. With no buyers to balance out the sellers, the bottom falls out. My theory can be backed by analyzing the lack of volume the last two trading sessions, both consisted of light volume, suggesting the buyers are on strike.

SEARCHING FOR STRENGTH

Every Monday I make an appearance on Fox Business Network’s “Happy Hour” show in which we discuss the current market and stocks that look attractive. Today I was asked to bring two strong stocks that I have on my watchlist.

The three stocks I discussed on the show were:

Aqua America (WTR) - The largest water utility in the US based in the Northeast has been outperforming the market all year, especially the last month. During the recent rally the stock broke through resistance at $18 and has broken a longer term downtrend. The dividend yield of 3.1% and the exposure to one of the next great commodities (water) are two more reasons to like the stock.

New Jersey Resources (NJR) - The stock trades in a fairly narrow range, but during 2008 the stock is up 10% and pays a 3.1% dividend yield. Today’s 2% gain has the stock within $2 of a new all-time high. The utilities are a sector that could be the next big winners as they are on the verge of breaking out of a two-month trading range.

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