Good Chance For Upside–Here’s Why

  • October 1, 2004
  • Gary Kaltbaum

I believe my job is simple…to
stay one day ahead of the market. As you know, since late January, I have told
you to underweight this market. I have said this for many reasons…but most
importantly, there has been a clear lack of set-ups and a clear lack of power
in the market. All year long, I have been sitting back and waiting for things
to change.

 

I think there is a chance things have changed…and for the better. I say this
for several reasons:

 

Breakouts are FINALLY starting to work.

 

The market has completely ignored blow-ups in important names like FNM and MRK.

 

The NEW HIGH LIST has expanded nicely this week while the market has lagged.

 

Most importantly, the amount of set-ups I am seeing is expanding. If there is
anything I need to see it is more and more stocks setting up to break out of
range…and that is exactly what is going on right now.

 

I believe there is a good chance for decent upside here…maybe not as much in
the indices but in the average stock. There is not much you can do about a MRK
which was down the equivalent of DOW 88 points on Thursday. Do not be fooled
by the weaker DOW and S&P this week. They have been held back by many big-cap
names. 

 

Your job is to gauge the breakouts I am seeing. If more and more occur…and
succeed, that will be everything you need to know about the market.

 

Conclusion: for the first time in a while, I believe the “market” has a real
chance to move higher…and yes, if the market moves higher, the SEMIS will go
along for the ride.  This has nothing to do with my opinion of the economy or
anything else. This has only to do with the technical characteristics in the
market I am seeing.

Gary Kaltbaum