Watch These Trading Levels

  • June 28, 2004
  • Gary Kaltbaum

Before I even start, let me say I don’t know what the heck happened at the
close on Friday. I know there was a Russell rebalancing, but the market went
haywire. The DOW traded down 40 points after the close and many stocks saw 2-3
point moves. I have no clue whether it gets fixed up on Monday.

 

We continue to deal with a “market” that remains in a trading range…BUT…I
have a few new things to say today.

 

It may be a short-term negative that both the DOW and the S&P 500 failed their
recent mini-breakouts. I use the word “may” because it may fix itself up from
Friday’s close. If it doesn’t, things may get a little sloppy again.

 

The many “DEFENSIVE” areas that have led recently have topped. I am talking
about FOOD, DRUGS, BEVERAGE and HOUSEHOLD PRODUCTS. I would now underweight
those areas.

 

I would now slowly start to overweight the more aggressive areas that have
been lagging. I noticed the better money flows for you earlier in the
week…and they started to get traction later in the week. Notice how with the
DOW down 70 points on Friday, the NASDAQ was up…as well as the oft-mentioned
SOX.  Near-term, I believe we see more of the same. 

 

Here are trading levels that need to be watched. The range is tight…so it
can go any way. On the upside, DOW 10,490…S&P 500 1147 and NASDAQ 2034. On
the downside, use DOW 10,306…1122 and then more importantly 1113 on the
S&P…and 1960 for the NASDAQ. Remember, I think the NASDAQ may be back in
better shape here…so I am not thinking the 1960 level is in play at all. I
am just mentioning it as support.

 

More and more stocks are acting better. I am finding more bases and more NEW
HIGHS to look at. Keep in mind, the number remains way below where things were
back in January even though the market is a stone’s throw away from the yearly
highs. This divergence will eventually come back to the haunt the market…but
not yet.

 

That all said, there is major news in Iraq this week as well as with the Fed.
I am predicting nothing. I will just react to what the market decides. Expect
more whipsawing as the market deals with the news…and then…it’s earning’s
season. Ain’t this fun!

Gary Kaltbaum