"Market Monitor"-Eugene Peroni, Portfolio Manager for Advisors Asset Management
Friday, October 30, 2009PAUL KANGAS: My guest "Market Monitor" this week is Eugene Peroni, portfolio manager for Advisors Asset Management. Gene, welcome back to NIGHTLY BUSINESS REPORT. Good to see you.
EUGENE PERONI, JR., PORTFOLIO MANAGER, ADVISORS ASSET MGMT. Great to be here, Paul, thank you.
KANGAS: Wall Street certainly didn't give investors any Halloween treat today. What was behind the sell-off?
PERONI: I think Monday's reversal date (ph) kind of spooked investors, especially traders. Since then, we have seen a volatile index move up very sharply. So there's a bit more fear in the market. But still, when you look at the overall context of the losses that we've seen this week, especially today, it's pretty normal in technical terms.
KANGAS: You are a market technician mainly and did we see any key support levels broken today?
PERONI: No key support levels. We've seen some very short-term levels breached in individual stocks and in some of the indices. But these really I don't think are terribly significant for the longer term. I think they simply mean over the short run we'll probably remain lodged at trading range, some very expansive trading swings over the next several weeks.
KANGAS: Give us your thoughts on the U.S. dollar. Did the recent bouts of strength like we had today suggest the Federal Reserve may soon boost interest rates?
PERONI: I don't think so. I think the dollar is rallying because of conjecture about the Fed raising rates. But when you look at the dollar's rally here to date, it really is simply a correction. That is, a rally correction in the context of still what seems to be a pretty significant downtrend.
KANGAS: Where do you see oil prices heading?
PERONI: Over the short run, I think we could see a little bit of weakness. But the recent breakout that we saw in oil around the $73-a- barrel level will probably now prove to be the support area. On the upside though, I think oil could move to the 90-plus level over the next six to 12 months.
KANGAS: Does all this recent volatility in the stock market suggest the bull is not so healthy?
PERONI: I don't think so. This is a real shake out, but you see these shake outs along the way in most market advances, especially ones of this magnitude where you do have these sudden shakers that get the week hands out but then I think you'll see some of the strong hands come in. As we hit 10,000, the market I don't think is over bought. We didn't have capitulation so I really don't see the ingredients for a major top at 10,000. I think this is simply a reaction to that level.
KANGAS: So the bull still lives.
PERONI: I believe the bull still lives longer term.
KANGAS: On your last visit in June, you gave our viewers four stock recommendations. Let's see how they've done since then. Alliant Tech Systems (ATK) down 14 percent but Freeport-McMoran (FCX) did very well, up 25.4. Are you still with those two? Would you buy them here?
PERONI: I like them both here, yes.
KANGAS: OK and the two others that you gave us back then, Noble Energy (NBL) down less than 2 percent, Powell Energy (POWL) 11 percent drop. You still like those two, buy them here?
PERONI: I like them both on this weakness, yes.
KANGAS: OK. How about some new recommendations, Gene?
PERONI: After a day like today, I think Apple Computer (AAPL) is very attractive. It sold off pretty sharply from the recent highs above $200. We think that it could move considerably above $200. So this weakness I think is an opportunity.
KANGAS: AAPL on the NASDAQ. OK. Number two.
PERONI: Allergan (AGN), symbol AGN, the company that makes Botox. Good earnings recently. This stock is holding up quite nicely. A little bit of flight to quality or flight to safety right now that we're seeing, but longer term outlook for Allergan I think is very attractive.
KANGAS: A third choice?
PERONI: Core Labs (CLB), an oil and gas service company. Symbol is CLB. This stock, too, I find attractive because it has been a momentum driven stock lately in a strong energy category. The weakness that we saw today and recently I think provides another buying opportunity in the stock.
KANGAS: we have just enough time for a fourth selection.
PERONI: We think there's going to be more M&A activity during the course of this next year. So one of the companies that we like there is Evercore, EVR, a boutique investment bank-related company. So we think this presents an opportunity. The stock recently made a new 52-week high, but we still like it near these high levels.
KANGAS: OK. Interesting selection of four stocks. Do you personally own any of these stocks that we talked about?
PERONI: No, I don't.
KANGAS: OK. But does it make you more objective if you don't own them?
PERONI: Well, actually, I own them through our unit investment trust.
KANGAS: So indirectly.
PERONI: Yes.
KANGAS: OK, very good. Gene, I want to thank you for being with us once again.
PERONI: My pleasure, Paul, it's great to be with you.
KANGAS: My guest Eugene Peroni of Advisors Asset Management.
