Here’s Why I Like Oil

  • January 12, 2004
  • Gary Kaltbaum

Straight
to the point.

I believe the overdue pullback for the Dow-type
stocks could be here. I suspect the extended CYCLICAL
names that have led the Dow are in pullback mode.The S&P
will most likely follow suit. BUT…don’t sweat it. I suspect the pullback will
be controlled and rotational as the Dow and S&P work off their overbought
and extended charts.

I also suspect the Nasdaq will follow suit…BUT…I
can only be impressed with what I saw last week. First off, I told you the SEMIS
were acting toppy but had not caved in yet. Well, instead of breaking down,
they ramped up for the umpteenth time in the past 9 months. The problem
with most SEMIS is that I am not finding proper bases. One name that does
have potential is
(
KLAC |
Quote |
Chart |
News |
PowerRating) as it broke out on Friday with expanded volume.


image src=”https://tradingmarkets.com/media/2004/Kaltbaum/gk011204-01.gif” width=”418″ height=”323″ />

The real story is in TELCOM as many names led by
big-cap
(
NOK |
Quote |
Chart |
News |
PowerRating) moved out. You can also look at long-term charts of many TELCOM
names to see that they may have turned an important corner here. Just look at
the powerful moves in both NOK and
(
ERICY |
Quote |
Chart |
News |
PowerRating)…and when you have a chance,
look at the weekly move.


image src=”https://tradingmarkets.com/media/2004/Kaltbaum/gk011204-02.gif” width=”418″ height=”323″ />


image src=”https://tradingmarkets.com/media/2004/Kaltbaum/gk011204-03.gif” width=”418″ height=”323″ />

^next^


I told you the HOMEBUILDERS had topped. I
thought the top could be of short-term duration. I now believe it will
be of intermediate and maybe even long-term duration. Just check out these two
HOMEBUILDERS charts. I would not be playing this group right now.


image src=”https://tradingmarkets.com/media/2004/Kaltbaum/gk011204-04.gif” width=”418″ height=”323″ />


image src=”https://tradingmarkets.com/media/2004/Kaltbaum/gk011204-05.gif” width=”418″ height=”323″ />

I thought the BOND market had a chance to break
support. Friday’s employment report put the kibbosh on that, as rates went back
to the low of their trading range.

I thought RETAILERS were in trouble. Nothing has
changed. I would underweight the group until they find a low and set up again.
Many RETAILING stocks look horrid right now.


image src=”https://tradingmarkets.com/media/2004/Kaltbaum/gk011204-06.gif” width=”418″ height=”323″ />

OIL SERVICES continues to act great. The
(
OIH |
Quote |
Chart |
News |
PowerRating)
broke out of a “cup and handle” on Friday. Many names in the group
look exactly like the OIH chart.

I believe the CHINESE ADRs should be avoided. It seems like their parabolic runs have come to an end. They will need to find support and build new bases before entering again.

More importantly, 7-8 out of 10 stocks remain in good technical shape.
Markets just do not gag when so many stocks have great charts. I can’t begin
to tell you how many people have emailed me telling me “the big top”
was in. When this market tops, it will take weeks of deterioration before it
really sets in. Stocks give clues to both bottoms and tops…so don’t fret it.

Please keep in mind, this week starts earning’s season. I will go slower and
wait to see how individual names react to their numbers.

Gary Kaltbaum