The Dow had it's best day in over 4 months, with a plus 164 performance. This was somewhat marred by a pullback of some 60 points from the high, as traders began to have misgivings about whether the Japanese will actually take the measures they must, to straighten out their economy. As you may know, the U.S. joined with Japan to intervene massively today to prop up the yen, after getting the same old assurances from them that they would bite the bullet.

Based on their past performance, the Japanese are likely to do nothing much different than before; there will be a lot of talk with little to show for it. As this realization sets in, it could spell a lot of trouble for the market. I wouldn't be surprised if today's sell-off from the high continues into tomorrow, and it could be severe.

Avoiding new positions is a must in here. A Dow that's down 207 on Monday, and then is up 164 on Wednesday is a market where you can get whip-sawed to death. We're still hunkering down until earnings season kicks in next month, and until then we're just keeping our shopping list current. We'll be interested primarily in stocks with good fundamentals and good relative strength such as Medtronic (MDT). They are one of the world's leading medical technology companies specializing in implantable and interventional therapies. On the 3rd of this month, the FDA cleared their new stent system for supporting the heart's arteries in tough spots.

Also on the 3rd, a company spokesman said they were comfortable with analysts' consensus earnings estimates of $1.50 per share for fiscal 1999 and $1.77 for fiscal 2000. They earned an adjusted $1.25 for fiscal 1998, ending April 30, 1998. The stock closed today at an all-time high of 59 11/16, up 3 1/4. This is a nasty price to pay, but if you're patient and lucky, you might be able to get in 4-6 points lower. Even good stocks have their bouts of profit taking, and occasional negative news. Even if you overpay, a good stock will eventually get your money back and then some; that's the big advantage of buying quality. If you overpay buying garbage, you may never see your buying price again. Stay tuned.

The Market Pro - June 17, 1998