WHY YOU SHOULD REMAIN BULLISH IN THIS HORRIBLE MARKET

1/19/2008 5:08 pm CT Saturday

By Dave Harris

Stocks took another hit last week, with the major market indexes well into negative territory for 2008, so far. It's been a horrible market. For 2008 the Dow Jones Industrials and broader S&P 500 shed roughly 9 percent, and the tech-heavy NASDAQ gave back about 12 percent. Earnings will flood in from some big market movers this week. I believe the economic stimulus plan from Bush and solid earnings from bellwether General Electric (GE) and International Business Machines (IBM) are enough reasons to stay bullish. I have some bargain hunting suggestions for you in the area of finance, healthcare, retail and tech, if you can take a little pain in the short term.

Recessionary fears persist, even as President Bush and Fed Chairman Ben Bernanke highlight efforts to jump-start the economy with an economic stimulus package. Bernanke confirmed the central bank would take action, in other words cut rates, to support economic growth. The stimulus package, he said, would be "significant" and not just "window dressing". As for Bush, he announced $50 billion in tax relief Friday. Unfortunately, the market continued its bearish trend as investors questioned the plan's effectiveness. In my view, giving cash to consumers will provide a nice boost to the economy. Perhaps this week investors will get a change to digest this injection further. I think the stimulus plan is a good reason to be bullish, and I have confidence the American public will use the money wisely by settling their debts.

If you are a long term investor and willing to take a little pain, I believe it's time for some bargain hunting. In 3-5 years from now, you'll be glad you stepped up to the plate and bought some of the beaten down sectors such as financial, healthcare, retailers, and especially tech sectors.

Yes they aren't popular now, but in the years going forward these financials will show profitability. I'm talking about Citigroup (C), Wells Fargo (WFC) and J.P. Morgan Chase (JPM).

For healthcare I like Johnson and Johnson (JNJ). The drug maker reports Tuesday and I would wait until after earnings to pick up some shares. I see additional upside since the FDA just approved Ortho Biotech's (a division of Johnson and Johnson) HIV drug. With an earnings multiple of only 18, the stock is still pretty cheap.

A good retailer is Target (TGT). The discount store reports earnings later next month, but I would pick up some shares because they may surprise to the upside. If not, there may be a little downside risk but when the economy turns around you'll be glad you bought this stock. Especially with an earnings multiple of only 14 when the industry average is at 21!

In tech, pick up some Apple (AAPL) or Google (GOOG) at these low prices. Apple closed Friday up .47 at 161.36. Google lost .54 at $600.25. I believe low expectations for business spending in tech is partially why the NASDAQ is suffering. But International Business machines (IBM) is encouraging. Overseas sales have been great and the company just hiked their outlook.

It's a shortened-trading week ahead in recognition of Martin Luther King Jr., and a pretty insignificant week for economic data with the exception of existing home sales and initial jobless claims Thursday. But earnings flood in from the likes of Apple (AAPL), electrical equipment maker Eaton (ETN), and Johnson and Johnson (JNJ) on Tuesday. Abbott labs (ABT) the pharmaceutical, utility company Exelon (EXC), and drug maker Pfizer (PFE) release earnings Wednesday. AT&T (T), paper products maker Kimberly Clark (KMB), Microsoft (MSFT) and Xerox (XRX) all report Thursday. Then Friday Honeywell (HON) releases fourth quarter results.