Here’s How Things Have Changed

September 29, 2003
Gary Kaltbaum

Before I even start, I urge every one of you
to read and print out

Mark Boucher’s report from this weekend. I just want to be one-tenth the investor/trader he is.

It’s not the news, it’s how the market reacts to
the news. This week, for a change, the market acted horrid to the news…and
you need to get in gear with it.

Anything can happen, but this past week’s drop
feels a lot worse than any of the drops since the market bottomed in March…and
I want you to treat it with respect.

LISTEN CAREFULLY. What I have to say will impact your performance if you don’t
listen. Very simply, THINGS HAVE CHANGED...and if you don’t roll with the
changes, you get cooked. Anyone who did not roll with the changes in March
2000…well, let’s not go there. No, I am not saying we are in for a 2000-like
top.. I am just letting you know that everything that had been working has now
stopped…and if you force the issue, you will be snowed under. Here are my
thoughts.

It’s a big negative that the S&P 500 has now failed its breakout at 1010-1015
and has broken the all-important 50 day average.

src=”https://tradingmarkets.com/media/2003/Kaltbaum/gk092903-02.gif” width=”379″ height=”330″ />

It’s a negative that many FINANCIALS which just broke out…failed for the
most part.

It’s a huge negative that so many leading names TOPPED in the past couple of
days.

src=”https://tradingmarkets.com/media/2003/Kaltbaum/gk092903-03.gif” width=”381″ height=”328″ />

src=”https://tradingmarkets.com/media/2003/Kaltbaum/gk092903-04.gif” width=”383″ height=”329″ />

src=”https://tradingmarkets.com/media/2003/Kaltbaum/gk092903-05.gif” width=”381″ height=”328″ />

src=”https://tradingmarkets.com/media/2003/Kaltbaum/gk092903-07.gif” width=”383″ height=”328″ />

Some of these names may entice you by bouncing up a few dollars. I would
suggest if you catch them right, trade them. I will be looking to short the
bounces.

It’s a negative that I have zero breakouts to buy tonight.

It’s a negative that over 800 stocks broke the 50-day average in the past
three
days.

Lastly, recent breakouts have failed. That’s how I know to stop the buying
and why I sold a ton in the past couple of days. Failed breakouts do tell a
tale.

So…what to do? I don’t know how low we go, how long the correction/drop
lasts. I just know to get more defensive here for the coming weeks.

Another trend I believe is going to occur is that the small-cap area will now
underperform. Take a gander at some of the small-cap proxies and you will see
what I mean. This is happening because of how far and
extended they are as well as how frothy things have become.

src=”https://tradingmarkets.com/media/2003/Kaltbaum/gk092903-08.gif” width=”383″ height=”324″ />

If you have BIOCRAPS, low-priced junk or anything small-cap that is very
extended…this is a warning shot. I believe many of the low-quality stuff could
be in big trouble. There are plenty of no-revenue companies that have doubled
and tripled on suspect announcements and hype.

Very short-term, we may get a bounce…only because we had a mini-bungee jump
in the Nasdaq the last three days and end-of-quarter window dressing. If we do
bounce, I doubt it will be long-lasting. I believe the Nasdaq will have serious
problems trying to get back above 1830…check out the chart.

src=”https://tradingmarkets.com/media/2003/Kaltbaum/gk092903-09.gif” width=”382″ height=”327″ />

Please understand that anything can happen. Osama or Saddam can be caught and
the market get jacked up…BUT IT WILL BE A SELLABLE JUMP. Odds favor an
intermediate top has been put in and I would not force the issue.

You must also remember that sentiment stinks. All my indicators are off-the-map bullish…while froth and speculation have been rampant. When things change
back to positive, I will let you know. And…don’t forget to watch the
SEMIS.
Once again, they have been a great indicator for the market. As they topped, the
market topped. Some names like
(
AMAT |
Quote |
Chart |
News |
PowerRating) look horrid at this juncture. As I mentioned
in past reports, the SOX has tremendous support at
410…its last breakout.

src=”https://tradingmarkets.com/media/2003/Kaltbaum/gk092903-01.gif” width=”380″ height=”328″ />

src=”https://tradingmarkets.com/media/2003/Kaltbaum/gk092903-10.gif” width=”381″ height=”326″ />

Until next time,

Gary Kaltbaum

Here’s How Things Have Changed

BUY THE FEAR, SELL THE GREED

Quick Links

Company Info

Contact

Company Resources