This Sector Still Looks Buyable

  • July 15, 2005
  • Gary Kaltbaum

That’s 2 days in a row.
2 days in a row where the average stock is now doing worse
than the market. 2 days in a row where big-caps masked some underlying weakness.
We are not sure it means much but after the move we have just seen, we would
suggest a pullback is not out of the question. Here are our thoughts on on a
bunch of sectors.

REITS- We would lay off any new buying as I believe a near-term top could be in.
This shouldn’t sway you if you own. They were just very extended and due.

AIRLINES- Acting much better. In fact, good accumulation in CAL, AMR, AWA and
others.

OILS- OIL PRICES have put in a near-term top. It seems the $60-62 area is acting
as a decent ceiling. OIL looks like it could be headed into the low 50s. OIL
STOCKS also were whacked. We do not believe the play is over. We do believe you
halt any new buying in the area.

HEALTHCARE-We believe most HEALTHCARE is acting toppy. First, it was
HOSPITALS…now the HMOs and NURSING HOMES are starting to “feel” the same way.
BIG DRUGS have been stagnant.

RETAIL- Starting to feel a little heaviness to the RETAILERS here. We have only
seen a few leading names turn over like PLCE, MIK…but nothing to get twisted
over yet.

We are amazed at what the SEMIS and the market have done since the open last
Thursday. We believe those areas are overheated and due to pull back. Unless
volume kicks in on the pullback, TECH/SEMIS still look buyable…just have to
have patience. Whether they pull back is another story.

GOLD STOCKS now feel topped. We would not touch here.

Lastly, earnings come out in droves next week. We must be careful because
earnings reports change the playing field.

Headed for Wyoming for a little fly fishing, river rafting,
horseback riding and hiking. Then, it’s off to Vegas. If you ever have a chance,
we recommend it highly.

Gary Kaltbaum

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