I’m Watching These Four Sectors…

  • October 2, 2003
  • Gary Kaltbaum

I received an email
asking why I think we are going back into a bear market. Please
read

my last report. In no way, shape or form did I say we were entering a
bear market. I believe we had entered some sort of intermediate corrective
phase of unknown price and time that started on 9/22.03. I also mentioned that
near-term, I expect a bounce because of oversold conditions. I also said that
stocks that were leading were not going to lead any more. I also mentioned
some names that I have perceived to have topped.

So, let’s look at what has happened over the past
three psychotic days. There are sectors you need to avoid and sectors that
have now come to the forefront.

LEADING stocks
of the past few months look done for now. I have already mentioned a few
names. Some dumped 25% in a matter of days. They will now need to find support
and build new bases.

FINANCIALS
held support. This is very important. Followers of my writings know that I
believe not much bad can happen when FINANCIALS
are acting well. Notice how
(
MWD |
Quote |
Chart |
News |
PowerRating),
(
AXP |
Quote |
Chart |
News |
PowerRating) and
(
C |
Quote |
Chart |
News |
PowerRating) held their
breakouts.


image src=”https://tradingmarkets.com/media/2003/Kaltbaum/gk100203-01.gif” />


image src=”https://tradingmarkets.com/media/2003/Kaltbaum/gk100203-02.gif” />


image src=”https://tradingmarkets.com/media/2003/Kaltbaum/gk100203-03.gif” />

Solid rotation can now be seen in the
HOMEBUILDERS. Yesterday’s action was a strong
bullish breakout for the whole sector.


image src=”https://tradingmarkets.com/media/2003/Kaltbaum/gk100203-05.gif” />


image src=”https://tradingmarkets.com/media/2003/Kaltbaum/gk100203-06.gif” />

I am also seeing rotation into the
MEDICAL area.

The Dow and
S&P 500 broke back above the all-important
50-day average. Keep a close watch on this moving average as well as important
near-term support. Support on the S&P is now 990 and a Dow 9230.

The Nasdaq
held the 50-day average as well as its uptrend line. Watch this line closely.


image src=”https://tradingmarkets.com/media/2003/Kaltbaum/gk100203-04.gif” />

And of course, can’t write a report without the
SEMIS. They have been a great indicator for
the market’s moves. The SOX is sitting right at the 50-day average…and most
importantly, I am noticing several names breaking down badly. Just take a look
at
(
ALTR |
Quote |
Chart |
News |
PowerRating),
(
LSI |
Quote |
Chart |
News |
PowerRating) and
(
XLNX |
Quote |
Chart |
News |
PowerRating) for example.

Wednesday’s action was strong…no doubt.
BUT…volume patterns on the major indices have
been negative. Over the past couple of weeks, rallies have been on lighter
volume than the drops. That must change. So far, the market continues to hold
up. Should continue to be fun.

Gary
Kaltbaum