I am seeing some light in these 5 areas

October 24, 2005
Gary Kaltbaum

Gary Kaltbaum is an investment advisor with
over 18 years experience, and a Fox News Channel Business Contributor. Gary
is the author of href=”https://tradingmarkets.comtmu/store.site/swingtrading/Books/6026/”
>The Investors Edge. Mr. Kaltbaum is also the host of the nationally
syndicated radio show “Investors Edge” on over 50 radio stations. If you
would like a free trial to Gary’s Daily Market Alerts href=”https://tradingmarkets.comsubscriptions/details.cfm?item=5736&subc
at=st”>click here. 888-484-8220 ext. 1

Random thoughts:

I am no longer upset the Giants picked up Eli
Manning.

Why do I think Harriet Miers is just going to end
up as a Trivial Pursuit answer many years from now?

If you want to know how a governor should handle
a crisis, just watch Jeb Bush…easily the most underrated public servant in
this country…and I would say that if he was in the whig party.

NOKIA misses the numbers one day and says things
are better the next day. Fool me once, shame on you…fool me 20 times, shame on
me. Does this company ever give a consistent story?

I am sitting around waiting for 50-70 mph winds
today from Hurricane Wilma today. My family has been very lucky. We had two
hurricanes hit us directly last year…but only suffered minor damage. For those
that were not as fortunate, I urge you to remember the Red Cross.

The market just experienced a high volume
FOLLOW-THROUGH DAY on Wednesday. Since, the move in the major indices has been
less than stellar. BUT…I am seeing some light. The problem is that I have zero
conviction on whether the light will last another day. Let’s pick it apart.

On the negative front:

The NYSE is also NOT helping the cause as the
NYSE is laden with OIL STOCKS. OIL STOCKS continue to underperform badly but do
feel like they are getting a little on the sold out side.

The S&P 500 is also not great shakes as big-caps
are still lagging.

The degree that WORLD MARKETS are declining is
now picking up. In the recent past, WORLD MARKETS have held up well in spite of
U.S weakness.

It is also a problem that I am still finding many
more stocks and sectors in poor technical shape than in good technical shape. In
fact, I can count on one hand the sectors I think are in good shape.

It is also a problem that the FED has basically
telegraphed more FED rate hikes in the future. These actions have almost always
acted as headwinds for the market.

On the “better” front are these areas: NASDAQ,
NASDAQ 100,RUSSELL 2000,SMALL-CAP 600 and MID-CAP 400. These areas haven’t
budged in the past 2 days while the DOW has given back 200 points. This is a
positive near-term divergence. In fact, these indices are all above the
longer-term 200 day average while the DOW, S&P and the NYSE remain below. The
DOW and S&P are actually way below. I would also note that on Friday, with the
DOW down over 65 points, advancers led decliners by more than 2-1…another
strong positive divergence that we will need to continue seeing. I would rather
have these numbers than a DOW up 65 and the A/D negative 2-1. All this tells me
that If there is going to be further follow through here, it is more than likely
going to come from secondary areas. Just keep in mind, any further upside will
just take these areas back into the middle of the nauseating trading range that
has been going on since January of 04. Anyone who thinks this is going to be
easy because the market followed through has another thing coming to them. If
this market is to go higher, there will have to be a period of rebuilding bases
because of all the damage that has been done. This will take time.

Do not forget my radio show…where we make
friends and try to make you money. You can listen live Monday-Friday at 5-7 pm
eor archived at www.garyk.com.

I am seeing some light in these 5 areas

BUY THE FEAR, SELL THE GREED

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