Tech Wreck, Shrek, Heck, Pain In The Neck, Hit The Deck!

May 30, 2001
Gary Kaltbaum

Another six-week
bear market rally or just a pullback? Does it really matter? The big
key for the intermediate-term trader is not only to get the market’s direction
correct but also to find quality breakouts. Have you seen any in Techland? Sure,
the occasional
(
MTON |
Quote |
Chart |
News |
PowerRating) or
(
NVDA |
Quote |
Chart |
News |
PowerRating). But
for the most part, and
as I have written, you
needed to buy lower base breakouts in Techland to make money. That seems to be
over. I suspect Technology is now back in its cave and I dare not predict how
long the hibernation will be.
All I know is that
the Tech
shorts I have written up are working quite nicely and that tells me something
about the whole sector. To make matters worse, most of those lower base stocks I
have been watching have now broken down.

That means go elsewhere. One of the lessons I learned last year was that
Technology does not have to be the “end-all-be-all.” I identified
Homebuilders and Tobacco right at their original breakout points.
Of course,
being the
zipperhead that I am, I
didn’t buy one share. No
way was I going to buy two boring groups.
There was just no
way they were going to be big winners.
Nine months and
100% later, I
am pulling my hair out about missing them. Â Â

As of this writing, all
three major indices have violated their previous breakout points. I must say
that, technically,
I thought they had
a decent chance of holding. Not!
That is the exact reason why I became a technician
first and everything else second. Opinion doesn’t count…including mine.
Just take clues
from the market. That’s
all.