Here’s Why I Watch Volume

March 18, 2004
Gary Kaltbaum

My
vacation…Sunday
with the Griswalds,
I mean Kaltbaums: Hoover Dam, Lake Mead, Grand Canyon. I recommend it highly.
Only one thing to deal with. Getting on helicopter, I was amazed to hear music
from “Apocalypse Now.” Scared the heck out of me. Thought the helicopter pilot
was an ex-client from my non-educated days.

Monday:
Hit the hotels with family. Caesar’s…great shopping. Luxor…great rides but
I almost heaved lunch on one of those motion rides. All I kept hearing from
my 8-year-old was, “Let’s go again.” Bellagio…wow! Biggest problem walking
the strip with kids…all the paraphenalia being handed out to lonely gentlemen.
What’s a parent to do!

Tuesday:
Drove to Utah. I must say the drive north on I-15 through the mountains is probably
one of the top five drives in this country. Took a Hummer to please the kids.
I do not recommend the Hummer for those who have bad backs and hate noise…but
hey, we looked good. One other problem…had to gas up every 15 minutes. Went
to Brian Head ski resort. Snow boarding…not my gig. Much to my surprise, my
8-year-old was snowboarding like Tony Hawk. I was snowboarding like Tony Hawk’s
grandmother. Headed back.

Stopped at Burger King in
St. George, Utah. I was not a big hit there. A Brooklyn-accent wise guy in St.
George, Utah…you ever feel like the world was a tuxedo and you were a pair
of brown shoes? The young girl behind the counter acted like I was an alien.
Asked me what METS meant on my hat. It was time to leave. Got back to Vegas
very late. Totally whooped! Oh yeah, I was not the guy who caught the Ohio sniper…even
though it was right down the street.

Wednesday:
Went to wax museum. Stallone was 6′ 2″…even though he is really 5′ 8. You
get anything when you are a star. Visited more hotels. Went shopping…and more
shopping…and more shopping. Contributed to Nevada’s future. Tables not doing
well for me…but I have just begun to fight. Eating about 3000 calories/day…but
man, the food is good in Vegas!

Now…to
the markets. In the past couple of days, I have received emails
on some very smart people who watch the market. No, not ANALysts. I am talking
about those who have great track records. Amazingly, they are at polar opposites
of thought at this time.

Dorsey Wright,
who does point-and-figure charting, says that most of their indicators are flashing
bright red lights. The Nasdaq and now the NYSE are
on defense…at high-risk positions. Keep in mind, they will change as their
indicators change…and they are darn good at what they do. Tom Dorsey is one
of my favorites.

Lowrys
says that the market has become as about as oversold as possible. On March 11,
they say the percentage of stocks that went below their 10-day moving averages
went above 90%. This has only happened a handful of times since 1990…leading
to an average 23% increase in the Dow a year later. I can go on and on about
the differing opinions at this juncture.

Now you know why I play
price and volume and try to drown out opinion…from anyone.

Volume
Patterns still stink…particularly the Nasdaq. Volume
retreated on Wednesday…so once again, volume light on the move up while all
the down days have been heavy. That does not mean that we don’t get a high-volume
follow-through next week where we can become more emboldened. So far, nothing
doing.

Chart
Patterns still don’t excite me. Yes, names broke out
on Wednesday. My main problem, when I go through all stocks trading above 1
million shares/day, I have 2 good columns, 7 bad columns of stocks.

Japan…I
have said in previous reports that Japan was headed higher. JAPAN is rolling.
You can buy JAPAN with the EWJ or JEQ…or some JAPANESE ADRs.

Gold…has
been in a correction/consolidation. I believe volume and price patterns are
telling me GOLD STOCKS are about to move towards the higher end of their trading
range…and can be nibbled at here.

The bounce is at hand. Resistance
on the Dow is at the 10,400-10,500 range, S&P 500 at 1134, Nasdaq at 2000-2050,
Nasdaq 100 at 1460 and the SOX at 491.

Lastly, I will repeat…if
volume patterns continue the way they have been going, the market is going lower.
You just can’t keep going up on light volume and going down on heavy volume.

Here are some names for
your review. All have great charts and showed an ability to hold up during latest
correction.