How to Invest Your Money When Stocks Are Neither Up Nor Down

Stocks still are in no-mans-land after Wednesdays monster rally and Thursdays
119-point pullback on the Dow. In the short term, the market could go either
way, up or down, because the fundamental news is decidedly mixed. On the plus
side, its encouraging that Italys senate bit the bullet and passed a significant
fiscal-reform package yesterday by a comfortable margin of 165-141. A German
court also blocked a constitutional challenge to the countrys participation in
the EU bailouts. These developments lessen, if only to a modest degree, the
chances that Europes sovereign debt woes will explode into another global
financial crisis. Back at home, Thursday mornings weekly report on initial
jobless claims, while by no means a beacon of hope, at least didnt add to
investors anxieties. New claims for unemployment insurance a sensitive and
usually reliable forward-looking economic gauge edged up by 2,000 in the week
ended Sept. 3 to a seasonally adjusted total of 414,000. I certainly would be
happier if weekly claims slipped below 400,000, as they did for a brief period
in early spring 2011. But at least we arent witnessing a spike to 450,000 or
higher, which might signal an oncoming double-dip recession. As for President
Barack Obamas jobs speech Thursday night? Ho-hum. Nothing much new, and very
little market impact likely. So how do we play it when stocks, like the grand
old Duke of Yorks soldiers, are neither up nor down? Take your time making new
commitments. Dont rush. Ive said in previous blogs that I see the S&P 500 in a
trading range, for now, between approximately 1,100 and 1,250. Near the top of
that range, you should do some tactical selling. As the market approaches the
bottom of the range, step up your buying. As noted on Wednesday , Ill buy
recovering energy titan BP (NYSE: BP ) at $36 or less. The stock hasnt dipped to
that level yet, but be patient. It will! BP provides a mix of generous current
income and bountiful appreciation potential exactly what were looking for in
this growth-challenged market (and economy). Another name you might keep an eye
on is Nestle (PINK: NSRGY ). The worlds strongest and best-managed food
processor by far, NSRGY has had everything going for it recently except the
runaway Swiss franc. As a Swiss company, Nestle reports its sales and profits in
francs. Because most of the firms business is conducted outside Switzerland,
however, those foreign results tend to shrink when translated into a rising
franc. On Sept. 6, the Swiss central bank decided to drive down the franc and
keep it at 1.2 francs to the euro or more. This step will immediately enhance
NSRGYs earnings for the balance of 2011 and probably into 2012 as well. Nestle
pays dividends once a year, typically in April. (The payout has been sweetened
15 years in a row.) Current yield: 3.7%. Officially, Ive got a buy on the stock
at $59 or less. But I think youll be able to snag NSRGY a bit cheaper if you
wait for the S&P to go back down to 1,150 or below. You cant hurry love, and you
cant hurry the market into doing what it needs to do.