The Dow Falls To Its November Lows

After the Dow Jones Industrial Average (^DJI) tested the Nov 21 intraday low of 7,449, we ended the day with a small bounce.

This was not surprising. November’s intraday low should serve as a support level. Furthermore, the blue-chip average is oversold. These 2 factors caused some brave traders to buy. Hopefully, we’ll see some follow-through buying tomorrow.

Of course, this is all based on technical analysis. And technical analysis only works until it doesn’t.

The fundamentals remain horrible. Earnings estimates continue to be cut, the recession is worsening and the credit crisis is continuing. Yes, Washington is trying to help, but both the stimulus package and the new housing program could have been better.

Despite all of this gloom, I added a stock today to the Focus List. Why? Because there are still companies that are doing just find despite the economic backdrop. It’s just a question of where to look.

Investors looking to zig while the market zags should look at companies likely to do well despite the economic environment. Examples include McDonald’s (MCD), Johnson & Johnson (JNJ) and Energy Transfer Partners (ETP).

For today’s Focus List addition, I went with a biotech stock. Out of fairness to Zacks Elite subscribers, I can’t tell you what the stock was. But I will give you an alternative name - Myriad Genetics, Inc. (MYGN). Earnings estimates have recently been raised on MYGN and our biotech analyst, Grant Zeng, has a buy recommendation on it.

No stock will be completely immune to the broad market’s volatility, but since the timing of a recovery is unknown - and will occur without any foreshadowing - it makes sense to maintain some exposure to stocks. The key is to remain selective.

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