I’m Playing Defense Until I See These 5 Things

March 22, 2004
Gary Kaltbaum

Well,
I am back…and after a week away, I realized what an idiot
I have been. I had not taken a long vacation in many moons. That is all going
to change. You see, I have missed out. I have been spending 12 hours/day looking
at a screen of stocks without enjoying the fruits of my labor. For now on, a
minimum of 2 weeks/year, I am gone. If you are also working too hard, listen
up. You only have one life…enjoy it more.

On Thursday, went to a place called Zion National Park. The only way I can explain
it…AWESOME. One of the most beautiful places I have ever seen. Just another
place out West I recommend highly. I may have to hang out on the West Coast
a little more. Saw Carrot Top and Blue Man Group…GREAT STUFF. Blue Man Group
blew me away….and most importantly, kicked the casino’s butt in the last couple
of days. All in all, it was a terrific vacation. Next up, Hawaii in mid-summer.

Now…back to business.

The first thing I would like you to do is to go back to each of my reports going
back to Jan.
26. It was in that report I started to notice bearish action in the Semis.
The reason this was so important is because of what I have told you for years…The
Semis are a great indicator for the rest of the market. They have led both up
and down. There were several times in the past years that the Semis
teased the downside…only to turn back up.

Some of the things I said.

Good news was being sold off…in stark contrast to prior months. Just look
at AMAT from the Feb.
20 report.

And most importantly, on Feb.
5, I said…

^next^

“At the very least, you need to be off margin…you need to cull weakness…and
you need to watch your positions like a hawk as the market is starting to tear
many stocks apart…and at a moment’s notice. I would also start caring more
about your more speculative names. You know, the ones with no revenues and earnings
that have gone from $2 to $12 — which you just bought. The markets are starting
to go after these names in a big way.”

I also knew I may be onto something after one of my FOX News Channel appearances.
I mentioned on “Cashin In” that things had changed and that the Nasdaq
was in trouble. I mentioned the same thing on “Bulls and Bears” the
next week. Well, I can’t begin to tell you all the hate mail I received, just
because I was talking more bearish on TV. To some, it was blasphemy to say anything
bad about the market.

Markets have talked and I hope you have listended. TECHS remain in huge trouble
here. The SOX broke another area of support at 468 and simply put, looks lower.
Maybe it puts up a fight right here at its 200-day average…but I doubt
it holds.

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The market’s cold has been turning into a flu. Yes, on the NYSE, the damage
has been slight. BUT…the average stock has been hit harder than the major
indices. The flu can turn into a pneumonia if it wants to. Here are some very
important support areas. Watch them closely.

^next^

The Dow at 10,092.

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The S&P 500 at 1102.

src=”https://tradingmarkets.com/media/2004/Kaltbaum/gk032204-07.gif” width=”413″ height=”332″ />

The Nasdaq at 1927.

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The Nasdaq 100 at 1394.

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The Transports at 2759.

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These levels would just be following the SOX down.

Lastly, I am hearing from the “world” that this is only a correction.
I am hearing from the “world” that the market is oversold by any measure
and has to rally here. They may all be right. In fact, I also believe a bounce
is due. I just believe at this time that any bounce is sellable. Instead of
buying the drops, you sell the rallies.

BUT…and you knew there
was a BUT…BUT…I will continue to do what I have been taught to do. I will
let the market be my guide…not someone’s opinion. Until I start to see positive
action:

1. High volume up days, low volume down days…which is exactly what we are
not getting.

2. The SOX finding a bottom.

3. For that matter, the market to find a low.

4. Stocks build new bases and start to break out again.

5. Doubt! I want to hear doubt in investors’ minds. I am still hearing too much
of the “don’t worry” talk.

Until I see at least some of these characteristics, there is a simple procedure.
PLAY DEFENSE! And remember, oversold can become more oversold…just like overbought
stayed overbought for months.

Sorry for the long report. Just needed to make a point.

Gary Kaltbaum

I’m Playing Defense Until I See These 5 Things

BUY THE FEAR, SELL THE GREED

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