WHAT OBAMA RALLY?  The Obama Rally hasn’t proven to be have much substance, at least not yet.  If we track stock prices back to Election Day, November 4^th, the stock market hasn’t done much, in fact the S&P 500, the pro’s benchmark, is down -13.43%.  Then, since Inauguration Day, January 20^th, again the stock market hasn’t gone anywhere either, the S&P is down -1.59%.  But I still have hope.  At look at my wall charts, or anywhere access charts, shows the stock market in general is down near the bottom end of its last three month trading range.  But not broken below!  So for aggressive traders the odds say now or soon is a good time to buy, to go long, for a bounce at least to the top end.  Of course, only for those traders who can pull the trigger on losses if the bottom end of this range suddenly falls out.  (Many say they are traders but can’t get themselves to sell when they are supposed to, can’t stand taking losses.) 

A Target Date For Traders.  We also now have a target date to shoot at which is always helpful.  Remember the original target date to unload after the year end Santa Claus rally was the first couple of days of 2009, which looking back proved a perfect strategy with the Dow topping out on the first trading day of the year, Friday, January 2^nd and giving us a second chance to sell above Dow 9000 on the following Tuesday, January 6^th.  Since then, nada.  Stocks have fallen sharply the rest of January, closing below 8000 last Tuesday & kicking off trading today at Dow 8116.03.  Past history, not to be forgotten, let’s move on.

Stimulus Plan Passing.  Now we have passing the very important, about $800 billion dollar, economic stimulus plan to shoot at as a “selling on the fact” date.  In other words, an opportunity to buy stocks here, the stocks which should benefit from the government money going towards specific industry niches and sectors.  So I’ve been compiling a list of potential beneficiaries which I want to unveil this morning.  My suggestion is to buy a couple of even a package of the below stocks with the plan to sell them when a bill passes Congress.  Right now I hear the target date to get a plan passed is mid-February.  The backup plan, in the stock market we always need an exit plan and a backup plan when we get involved, is to sell half on bill passage and keep half if the stock market has convinced us that the last three months was indeed base building and we’ve started off on a new short term or cyclical, mini bull market, encompassed in our larger secular bear market.

SMART GRID TECHNOLOGIES.  This is the area where we need to modernize America’s electricity/power transmission system.  As Michael Morris, CEO of American Electric Power detailed recently our power grid was originally built piecemeal by local utilities and designed to serve only local  regions.  Thus it’s “far from being an efficient national-delivery system” and “hasn’t seen significant investment for more than 30 years.”  The concept is we need a more powerful nationwide transmission system to get power from one part of the country to another, where needed.  Especially now that we’re also going to bring online new renewable energy sources like wind and solar.  If we could shoot the solar power generated in the desert to population centers with the flick of a switch, consider the efficiencies.

So first off, here’s some choices by Seeking Alpha, a boutique research firm:

                                                Price       Mkt Cap                 Wall Street Ranking            Business Line

COMV    Comverge                $4.16       91m                         7 buys, 6 holds                       Demand response provider

ENOC     EnerNOC                                9.11         184m                       8 buys, 6 holds, 1 sell             Demand response provider

ITRI        Itron                        60.01       2068m                     9 buys, 8 sells                         Smart meter reader

Schwartz View:  The concept is for grants to utilities for projects which allow utilities and their customers “… to track and manage the flow of energy more effectively, curb peak demand, reduce blackouts and integrate renewable energy and storage (including electric and plug-in hybrid vehicle batteries) into the grid.”  I’m big on this as it makes good sense to me.  We need a modern, cutting edge transmission system.  Disclaimer!  I own small pieces of all three companies above, either in my own IRA or in my trading accounts.  And can and do change positions quickly and without notice.

RENEWABLE ENERGY.  This is the part of the plan which provides money and tax credits for renewable energy providers and research and development in energy conservation and energy efficiency.  Two companies poised to benefit from clean, green renewable energy companies, according to a Bloomberg article authored by Thomas Black on December 17^th are:

AKNS     Akeena Solar           2.00         58m                         1 buy, 6 holds                         Solar energy

CREE      Cree, Inc                  19.80       1752m                     7 buys, 5 holds, 4 holds          Energy efficient lighting

Schwartz View:  I don’t know why the only solar stock on Mr. Black’s list was a penny stock.  So beware!  But there are lots and lots of solar stocks which could benefit led by market leader First Solar (FSLR), so let me expand this list.

FSLR       First Solar, Inc.       139.05     11,275m                  27 buys, 8 holds, 2 sells         Thin-film tech solar modules

ENER      Energy Conversion 24.79       1133m                     7 buys, 10 holds, 3 sells         Thin-film solar laminates

SPWRA  SunPower Corp      28.80       2153m                     21 buys, 11 holds, 3 sells       Integrated solar products

INFRASTRUCTURE.  Besides our electric power transmission grid another part of America’s infrastructure which needs rebuilding and modernizing is our transportation system originally built by President Eisenhower in the 1950s.  It’s in dire need now and President Obama plans to spend the largest sum of money since it was built on updating it.  Again, this is pointed not only to creating jobs now and in forthcoming years but will put us where we want to end up, with a modern system capable of helping America stay globally competitive in shipping our goods around the country and overseas.  Some companies I’ve read about, and common sense tells us will benefit, are:

CAT        Caterpillar               32.67       19,707m                  7 buys, 13 holds, 3 sells         Earth moving equipment

CX          Cemex SAB             8.33         6768m                     3 buys, 9 holds, 3 sells           Big cement provider

CRH        CRH plc                  24.08       12,818m                  1 buy, 1 hold                           Irish cement co covers US

MTW      Manitowoc Co        6.21         809m                       3 buys, 8 holds, 2 sells           Maker of assorted cranes

QUIX      Quixote                   4.03         37m                         1 buy, 2 holds                         Highway safety products

TEX        Terex Corp              13.94       1322m                     8 buys, 8 holds                       Heavy duty trucks/cranes

ENGINEERING.  There are numerous other sectors which should benefit in rebuilding our roads, bridges, national parks.  Some engineering firms are:

JEC         Jacobs Engineering  40.56       4986m                     9 buys, 5 holds, 2 sells           Construction management

FLR         Fluor Corp              41.04       7449m                     11 buys, 4 holds, 3 sells         Construction services

ABB        ABB Limited          12.20       28,338m                  9 buys, 0 holds, 1 sell             Power technologies.

Disclaimer!  I don’t own any of the remaining 14 stocks above. But I’m watching them and may buy some and/or change positions quickly and without notice at any time.

SCHWARTZ SUMMING UP.  There are lots more companies which should benefit.  So I plan on providing more names all this week in this space, stay tuned.  But generally, this trading and possible investment idea is based on “Trader Vic” Sperandeo’s view (read his two books) that government intervention changes the ground rules of the game and thus provides eagle-eyed traders with money making opportunities.  Opportunities for those investors who understand the underlying economic principle involved and then time their moves properly.  I agree.  Money should flow to some companies for years, buttressing their businesses while other parts of our economy suffer.  By the way, big China advocate is basically doing the same for himself, but over in China.  China has a major stimulus plan in place also and in fact is implementing it much  faster than here in the US because of their command style of capitalism.  Rogers sees agricultural, water and infrastructure in China as not even knowing a global recession is on.  The play here is similar. 

Good trading, speculating and investing!