Here Are The Positives Occurring Right Now

  • April 16, 2003
  • Gary Kaltbaum


“First off, the

SOX.
Since the SOX has been leading the market up and down, keep watching the SOX.
A break below 295 could be significant. Many

SEMICONDUCTOR
names are acting terribly. I have outlined this for you in the past couple of
weeks and the SOX is now following my script to a tee.

“Support on the

DOW
is 8140, and more significantly 7929. Support on the

S&P 500
is 862, and more importantly 843. The

NASDAQ
has support at 1351, and more importantly 1336. This remains the toughest
environment I have seen in ages. It was easy when the market was going
straight down, you just short the world. But right now gaps to the upside and
downside, reversals to the upside and downside, and intraday news are just
very hard to play. The good news is that a good case can continue to be made
for a long triple bottom being traced out since last July.”



No sooner did I pen those words in my last report, then the SOX dropped to 296, just
a point above support…and held. At that point, I covered 50% of any
“market” short I had in my service. On Tuesday morning, I covered the rest.

It is now Tuesday night. If nothing changes, the market will have another one of
those gaps to the upside on supposed good news from
(
MSFT |
Quote |
Chart |
News |
PowerRating) and
(
INTC |
Quote |
Chart |
News |
PowerRating). I will let
the market decide on whether it is good news. There are definitive positives
occurring right now.


  • More names are starting to break out accompanied by strong volume.


  • The market is ignoring bad economic news…for a change.


  • Companies that have recently warned have held up well.


  • This is all good. It will also be a positive if the market can break out of this
    range it has been in the past few weeks.


BUT — and you knew I had a BUT — dropping markets end with a crescendo of selling
while bearish sentiment hits extremes. Thus, rising markets also end with a
crescendo of buying while bullish sentiment hits extremes. Every sentiment
measure is now stretched to the extreme bullish side as the markets gap up on
Wednesday. Do I hear another potential reversal? That is not a prediction, but
something that must be watched for. The VIX, VXN and QQV have now basically
imploded…indicating a ton of complacency now pervading the market. Maybe this
time is different from the rest of the times the market would top at this
juncture. I will let the market answer that question. Should be a fun Wednesday.

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