It’s Not The News, It’s The Reaction To The News

  • July 12, 2004
  • Gary Kaltbaum
What group did we tell you topped out on January
16th? SEMICONDUCTORS

 

What sector has acted poorly since then?
SEMICONDUCTORS

 

What sector do we believe is vital to the market’s
health? SEMICONDUCTORS

 

What sector has been downgraded today by Merrill
Lynch and SG Cowen…AFTER the drop? SEMICONDUCTORS

 

What was the title of the “Heard On the Street”
column in the WSJ today? “Game Could Be Over For Making a Profit On the Tech
Recovery”

 

Downgrades and negative articles usually come out
AFTER a move has already happened. No, I am not saying that, because of these
happenings, TECH will bottom and go higher. In fact, the tape remains a
mess…especially the TECH area. In fact #2, the NASDAQ remains far weaker
than most other areas of the market. In fact #3, the NASDAQ is the first major
index to break the near-term support I outlined for you…at 1960. If the rest
of the market follows suit, the NASDAQ will be the first to head towards its
May lows. In fact #4, I would not own a share of TECH here. I am just always
looking for signposts along the way. Maybe we are getting a signpost when the
world capitualates AFTER a move. At this juncture, I doubt it. We shall see.

 

Overall, I trust nothing. Breakouts have been
failing en masse and the leadership we look for is just not there. When I look
at the NEW HIGH LIST and find COAL,OIL and the like, I do not get excited. The
market is now in the heart of earning’s season. Be careful of what you hear.
Last week, I heard that GE’s numbers helped the market because they were
strong. I am sorry but GE’s numbers, year over year, were flat.

 

There is one motto I follow when entering
earning’s season…IT’S NOT THE NEWS, IT’S HOW THE MARKET REACTS TO THE NEWS.
I will be watching reactions. If stocks continue to fall on perceived good
news, that will continue to be a big negative. So far, the action has been
less than thrilling. 

Gary Kaltbaum