OK To Overweight This Area For Now

  • July 1, 2004
  • Gary Kaltbaum

Well, we got past the
Iraq handover and now the Fed meeting. Einstein couldn’t figure out
what the FED said.

 

The market is following our script very closely.
Aggressive stocks are now leading…evidenced by the NASDAQ’s continued recent
out-performance. In fact, the NASDAQ broke above near-term resistance on
Wednesday while the DOW and S&P continue to tease.  We told you this could
possibly happen.

 

More importantly, I am finding more and more names
in quality bases, more and more breakouts and more and more set-ups. This is
happening underneath the surface of the major indices that remain in their
6-month trading ranges.

 

Now, let’s dig a little deeper to see what is and
what is not working.

 

As I said, the NASDAQ is now starting to lead.
This is in stark contrast to the past few months. For now…and I mean…just
for now, you can overweight the many TECH  areas showing good relative
strength…and of course, continue to watch the SOX. For the millionth time,
the SOX has been leading the market up and down for years. I do believe the
SEMIS are due for a pullback here though as they have come straight up over
the past few days.

 

On the negative front, be careful about RETAILERS
as the bigger names like WMT, TGT and MAY have influenced the rest of the
group. RETAILING charts look horrid right now.

Here are trading levels that need to be watched.
The range is tight…so it can go any way. On the upside, DOW 10,490…S&P 500
1147. The NASDAQ moved above the  2034 level I outlined for you. On the
downside, use DOW 10,306…1122 and then more importantly 1113 on the S&P. I
am not too worried about the NASDAQ here…for this second.

Gary Kaltbaum