Looking For A Pullback…Here’s Why
Not much has changed since my last report.
The market remains in gear…BUT!
Shorter-term, we are expecting some sort of pullback in the coming days. We
say this for TWO simple reason: #1- markets are extended in price, especially
the NASDAQ. In fact, the NASDAQ has come straight up recently…without a
rest. Any pullback on lighter volume would be buyable as money flows continue
in the TECH space…and if you are looking for extended names, look no further
than INTEL as the stock refuses to even have a down day.
#2- All of our shorter-term sentiment indicators
are overbought…and we mean all of them. A pullback will serve to work off
this condition.
Sector-wise, we do have a few things you need to
know about.
The SOX has come straight up since we stated we expected outperfomance in
TECHLAND. One never knows if a pullback will occur, but any will be buyable.
We have been negative on GOLD for quite a while. We believe a TRADING bottom
has been put in this past week. Longer-term, GOLD remains in bad shape. We
just believe there is going to be some upside testing here.
BIG-CAP DRUGS are feeling toppy here. They had been outperforming.
OILS are now trading all over the map. There are some at NEW HIGHS, some in
between and some that have not even budged. Be careful about playing these
wide and loose names.
BROKERAGE stocks continue to act poorly. We believe the BROKERS are an
important linchpin for the market to go higher. LM is acting great but GS is
imploding.
Just take a little more time here. We believe you should be more cautious as
the market nears the high end of the trading range that has been in effect
since January of ’04. Time will tell if the market wants to break out. There is
no need to guess.
Gary Kaltbaum