The Only Thing That Matters To Me…
It
doesn’t matter to me that the Dow and S&P 500 are still
a stone’s throw away from their highs. It doesn’t matter to me that the market
has had a big run. The only thing that matters to me is what is happening
right now…and I don’t like what I am seeing.
On top of the Semis topping
out, Chinese Internets, Media, Cyclicals, Disk
Drives, Metals, Software, Networkers, Autos, Computer Manufacturers, Homebuilders,
Airlines, Truckers, Rails, and Growth
Cyclicals are now all in the near-term “yonk” category.
A few charts that indicate what I am seeing…a drastic change in market action…and
it is all happening underneath the surface of a strong Dow.
Cisco
(
CSCO |
Quote |
Chart |
News |
PowerRating) tops and gaps down.
src=”https://tradingmarkets.com/media/2004/Kaltbaum/gk020404-03.gif” width=”418″ height=”336″ />
Dell
(
DELL |
Quote |
Chart |
News |
PowerRating) breaks the longer-term
200 day average…and on volume.
src=”https://tradingmarkets.com/media/2004/Kaltbaum/gk020404-04.gif” width=”418″ height=”336″ />
Foundry
(
FDRY |
Quote |
Chart |
News |
PowerRating) gaps…toast.
src=”https://tradingmarkets.com/media/2004/Kaltbaum/gk020404-50.gif” width=”418″ height=”336″ />
Asyst Technologies
(
ASYT |
Quote |
Chart |
News |
PowerRating)
crumbles through all support.
src=”https://tradingmarkets.com/media/2004/Kaltbaum/gk020404-06.gif” width=”418″ height=”336″ />
^next^
Intrado
(
TRDO |
Quote |
Chart |
News |
PowerRating)…bye-bye.
src=”https://tradingmarkets.com/media/2004/Kaltbaum/gk020404-07.gif” width=”418″ height=”336″ />
Oh...I can
go on and on…but in short form, 471 stocks broke their
50-day average on Wednesday and another 133 broke the 200-day
average. This is on top of the many names that broke in the past week.
Other notes:
The Transports sliced through
support.
src=”https://tradingmarkets.com/media/2004/Kaltbaum/gk020404-01.gif” width=”418″ height=”336″ />
The Semis are trading very wide
and loose…several names have been blasted.
src=”https://tradingmarkets.com/media/2004/Kaltbaum/gk020404-02.gif” width=”418″ height=”336″ />
Pay no attention to the fact that Procter &
Gamble
(
PG |
Quote |
Chart |
News |
PowerRating), International
Business Machines
(
IBM |
Quote |
Chart |
News |
PowerRating), Johnson
& Johnson
(
JNJ |
Quote |
Chart |
News |
PowerRating) and a couple of others are holding up
the Dow. Advance/declines are turning down and the internals are deteriorating.
At the very least, you need to be off margin…you need to cull weakness…and
you need to watch your positions like a hawk as the market is starting to tear
many stocks apart…and at a moment’s notice.
I would also start caring more about your more speculative names. You know,
the ones with no revenues and earnings that have gone from $2 to $12 — which
you just bought. The markets are starting to go after these names in a big way.
The good…
Definitive money flows are going into Pharmaceuticals,
Telecom, Household Products, REITs…and many big-cap stuff.
I have culled any weakness in my
service while starting to short stocks that are breaking down. The market
is taking on a different tone here…unlike we have seen in many months. Many
times, bears have been calling for a big correction only to see the market turn
back up. I don’t know about the market. I do know individual names
are turning upside down.
My long list has shrunk
dramatically while my breakdown and short list has grown big time. For the near-term,
I believe bounces (which could happen soon) are now sellable instead of pullbacks
being buyable for the many names that have broken down.
I am also keeping a list of the strongest names. These names are not budging
on the downside and are forming new bases. I will just sit back and wait for
the clouds to clear as some of these names will break out first. You can find
them in the contracting NEW HIGH LIST. Just remember,
it is easiest to isolate strength when most things are going down.
Gary Kaltbaum