Real rallies on unreal solutions

That doesn't mean we couldn't get a rally somewhere in there when eurozone politicians put together one of their joint "solution events." These so far have shown the power to inspire momentary jolts of confidence.

This time around, the "solution event" is likely to be a June conference and agreement to add a growth compact to the existing austerity compact. An addendum to the existing austerity package would meet German demands not to renegotiate the deal and yet give some hope to the citizens of Spain and Italy, who can't see any light at the end of the austerity tunnel.

Such a package wouldn't do Greece a lick of good, but it might convince financial markets that the eurozone is building (again) a serious protective barrier around Italy and Spain. And I don't rule out the possibility of some action from the European Central Bank once the situation has gotten so serious that the German faction at the bank is effectively isolated (again). Another round of cheap money for banks, or an actual interest-rate cut or a revival of purchases of Italian and Spanish debt, could buoy the market.

For a while. Until the endgame in Greece crushes confidence again.

The long and short of it

You can see, then, why I think these next months will be so treacherous. We could have one long correction or two dips separated by a rally. The rally itself might be relatively serious if the European Central Bank does something big enough to allow investors to focus on improving conditions in the United States and China for a moment (if there are improving conditions to focus on).

Instead of trying to figure out the timing of this macroeconomic puzzle, my suggestion is to concentrate on the short-term price and the long-term fundamentals of individual stocks. When the price is right, buy -- if the long-term fundamentals still look solid. Don't worry about whether you're catching the best dip of the summer.

I am not advocating that you forget about the background macroeconomic mess. This isn't the time to go hog wild and load up a portfolio. I think you can pick up a bargain or two, but I wouldn't advise drawing down all your cash. And I wouldn't advise reaching for risk. This is the time to try to pick up conservative plays at good prices rather than to bet the farm.

When? I'd use the May 16 meeting between German Chancellor Angela Merkel and newly elected French President François Hollande as a guide. If that meeting produces promises -- believable promises -- of a growth compact, I think that could put a (temporary) end to the current dip. I would want to look around at that point to see if any of the stocks I've got in my potential bargain bin are selling at prices that are worth a bite.

10 names to know

I started out this column by dividing the world of potential bargains into three groups, so let me finish with a few specific names in each.

The first group is composed of stocks I'd like to own for the long term at the right price. Here I'd suggest McDonald's (MCD), which fell through its 200-day moving average of $93.43 on May 9; Schlumberger (SLB), which after refusing to break below $70 finally cracked on May 9; Freeport-McMoRan Copper & Gold (FCX), which is threatening its December low on the way to the November low of $33.33; and Baidu (BIDU), which looks headed to the $115 level that has repeatedly been a profitable entry point. (Baidu and Schlumberger are both on my watch list. In my March 28 post on Schlumberger, I suggested a buying price of $64 to $65.

My second group is composed of stocks that I'd like to own for their company-specific strength. The easiest way to explain what I mean by that is to say the name of one stock: Apple (AAPL). Apple has shown the ability to move up when just about everything else is moving down on its own revenue and earnings numbers. And the stock trades at a very modest price-to-earnings ratio of 12.1 times projected 2012 earnings per share. (Apple's P/E to growth ratio is a low 0.58.) I've been waiting for $560 on the stock, and I'm pretty sure I'm going to get my chance at that price or lower. Other stocks that I'd put in this group include IBM (IBM), which is giving ground very, very reluctantly, and Nestlé (NSRGY), which looks like it is going to test its 200-day moving average at $58.90. (Nestlé is also on my watch list.)

My final group is composed of stocks where I can see strong emerging long-term positive trends that are, at the moment, submerged by the market volatility. Middleby (MIDD) is an example: This maker of equipment for restaurants is looking at the same kind of wave of buying by customers that have put off orders in the Great Recession that has driven Cummins (CMI). In this group, I'd also put NovoNordisk (NVO), the dominant diabetes drugmaker, which is looking at an entry into the weight-loss drug market. (Novo Nordisk is on my watch list, and on April 30 I suggested a buy at $130.) My final stock in this group is Cheniere Energy (LNG), the leader in the race to export liquefied natural gas from the United States. Given the risk in this one, I've love to steal it at $11 or so, the 200-day moving average for the stock.

Take your time to think about these suggestions -- or post some of your own in the comments. I think we've got plenty of time to do our research and make our picks.

At the time of publication, Jim Jubak did not own or control shares of any company mentioned in this column in his personal portfolio. The mutual fund he manages,Jubak Global Equity Fund (JUBAX), may or may not now own positions in any stock mentioned in this column. The fund did own shares of Apple, Baidu, Cummins, Freeport McMoRan Copper & Gold, Nestlé, Novo Nordisk and Schlumberger as of the end of December. Find a full list of the stocks in the fund as of the end of December here.

Updates to Jubak's picks

These recent blog posts contain updates to the stocks in Jubak's market-beating portfolios:

Jim Jubak's column has run on MSN Money since 1997. He is the author of the book "The Jubak Picks," based on his market-beating Jubak's Picks portfolio; the writer of the Jubak's Picks blog; and the senior markets editor at MoneyShow.com. Get a free 60-day trial subscription to JAM, his premium investment letter, by using this code: MSN60 when you register at the Jubak Asset Management website.

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