It looks like the stock market may fall in each of the first four weeks of the new year, a feat not accomplished in many years. January is supposed to be a seasonally strong time for stock prices, as pension fund and retirement account contributions flood the trading floors. Not so this year. It looks like the huge rally we saw in November and December has run out of steam. Take this morning for example. Blowout earnings from Microsoft (MSFT) and the announcement of yet another promising merger; Gillette (G) to be bought by Proctor and Gamble (PG), and yet the market can't trade up.

Perhaps it's the Iraqi election that is holding us back. If Sunday goes well, maybe the market will rally strong next week. If not, the many optimists who predicted a 10 percent market gain in 2005 may very well be disappointed. We definitely need some kind of catalyst soon, as the short term action looks bleak.

Despite a poor outlook for the broad indexes, don't think you can't make money if you know where to look. This truly is, to use a terrible cliche, a "stock picker's market." Oil prices are near $50 a barrel. Energy stocks like Suncor (SU) are still cheap. There are many financial stocks that carry p/e's under 15 and pay nice dividends. Small caps still fly under the radar most of the time, providing below-market valuations but above-average growth prospects.

And always use overreactions after an earnings report to your advantage. Verisign (VRSN) fell 15% after hitting its Q4 targets and slightly raising its guidance. Wall Street wanted more upside to the numbers and slammed the shares, but that was wrong. Now you can pick up the stock for $25 a share, giving it a p/e of 25 with a 30 percent projected growth rate for 2005.