BLUE CHIPPING

Early morning futures find the major indexes down about 90 on the DJIA and 10 on the SPX.

Checking the last major market drop, May of last year, the drop at its worse was about 1,000 points on the DJIA and 110 SPX points from top to bottom over the early May / mid June trashing.

This morning's numbers will get us about 800 off the recent highs on the DJIA and 90 on the SPX. Don't know if that will be the extent of the damage but in my view stocks are getting cheap. Also, from experience, stocks go up and down more than one thinks possible or justified, just check the March 2003 low on the SPX; under 800. FWIW.

One big cap stock that wasn't mentioned in my previous post that looks attractive in light of its own recent sell off is JNJ. The chart, with the PE and dividend yield included, does seem to indicate a decent entry point.

According to Value Line's estimates, JNJ is trading at a P/E of 15.6 on 07 estimated EPS ($3.95); and a P/E of 14.6 on 08 estimated EPS ($4.25). The yield of 2.5% is historically high and JNJ has a pristine balance sheet and should be a top defensive play if the economy does indeed roll over. Oh, and BRK owns more than 21 Million shares of JNJ as at December 31.