Off on the Wrong Foot in a Historically Tough September

Not a very auspicious start to September historically, the toughest month of
the year for the Dow. Stocks spiked in the early going, after the monthly
purchasing managers number hit the wires at 10 a.m. At 50.6, the ISM (one of the
more telling economic releases in the cycle) implies that the nations factory
floors were a little busier in August than the consensus had feared. But the
euphoria lasted about 60 seconds, then down we went. Its now obvious that the
S&P 500 faces some pretty serious overhead resistance at 1,230. Thats where
sellers swooped in to cut off the rally Wednesday and Thursday. Im glad I sold
Philips (NYSE: PHG ) on Wednesday. The shares fell an ugly 2.8% in yesterdays
trading. The bulls have one last chance to mount a comeback today, depending on
how the market chooses to interpret the governments August jobs report. However,
I expect any bounce to be short-lived. Hedgers, you can buy the double-bear
ProShares UltraShort S&P 500 ETF (NYSE: SDS ) if the price dips to $22.50 or
less today. Set a stop at $20.80, which roughly corresponds to 1,250 on the S&P
500 index. For the rest of us, its a time to be patient and wait for lower
prices before feeding more money into equities. Many stocks look cheap at
current levels. Theyre likely to become cheaper, though, as the month wears on.
Among the companies were following, AT&T (NYSE: T ) received a jolt Wednesday
when the Justice Department filed an antitrust suit to block Ts proposed
acquisition of T-Mobiles U.S. properties. In the end, I suspect that Ma Bell and
the government will work out some kind of accommodation that allows the deal to
go forward. Otherwise, Verizons (NYSE: VZ ) grip on the wireless market will
only grow stronger something the Obama administration presumably wants to
avoid. But the negotiations will probably be drawn out over three to six months,
at least. So theres no hurry to buy T, even though the stock is below my
official buy price of $30.60. Once the S&P dips back to 1150 or less, you might
take a bite. Ditto for Bank of New York Mellon (NYSE: BK ), a member of our main
model portfolio. On Wednesday, the banks directors sacked CEO Bob Kelly,
apparently because of his irksome management style. Kelly is said to have had a
habit of blaming the banks shortcomings on his subordinates a real morale
killer in a big organization. Kellys successor, Gerald Hassell, has 38 years of
experience with the bank, most recently as president. So the transition should
prove seamless. Again, I think the stock is undervalued here, but I would rather
buy it on a deeper market pullback. My official buy limit is $27. P.S. On
Wednesday , I stated that Weitz Short-Intermediate Income Fund (MUTF: WEFIX )
had a $2,500 minimum to open an account. In August, the fund began offering two
classes of shares. The Institutional Class, which carries the original WEFIX
ticker, features an initial minimum of $25,000. The Investor Class shares, with
a ticker symbol of (NASDAQ: WSHNX ), retain the $2,500 minimum. As is usually
the case with such two-tiered funds, however, the shares with the lower minimum
incur higher annual operating costs: 84 cents per $100 invested for WSHNX,
versus 65 cents for WEFIX. WSHNX continues to be available on a fee-free basis
through leading discount brokers. If you already have a WEFIX account, you can
add to it without meeting the higher minimum for new accounts.