What You Should Know About Microsoft
First off, I would like
to thank those readers who emailed me on my missive on the
Columbine incident. It’s a day I won’t forget.
Secondly, and on a better note, as you read this,
I am hanging out with Shamu at Seaworld. My 8 year old, Eric, asked me to
chaperone his class field trip. I had to choose…work or Seaworld…work or
Seaworld…duh!
As you know, for the better part of the past 3
months, I have been telling you to play defense. It has been a darn good idea.
Many sectors have been trashed. After Thursday’s strong action, I felt it
important to write tonight to let you know what I think may have changed and
what hasn’t.
MICROSOFT is up 5% in the aftermarket. In
case you did not know, MSFT makes up over 15% of the NASDAQ 100…so if MSFT
can follow through on the gap, the NASDAQ 100 may get a ride. MSFT is also
part of the DOW but each point move is only worth 6-7 DOW points. MSFT has
been a MAJOR laggard throughout the bull move. This move could fit in well
with the recent skeptical front cover article on Microsoft last week.
As far as Thursday’s action…gotta love it if you
are a bull. Finally, a high volume move up. They have been few and far
between. I like the fact the market has made a lower high. I like the fact I
am finding leadership. Here are some names for your review:
I believe we are going to see upside testing
here. Keep in mind, I have told you that while I did not see a lot of upside,
I did not believe there was much downside, thus a wide and loose trading
range. We have not broken out by any means. If the market does indeed to move
fresh highs, it would be a definite positive…but fewer and fewer stocks continue to
carry the day. It is by no means “throw a dart” time. Not everything is
moving. In fact, there is still plenty of places to avoid…the same places I
have told you about.
I believe INTEREST-RATE SENSITIVE,
MORTGAGE-RELATED, REITS and HOMEBUILDERS are still vulnerable, though the
latter feel better than the others. AND…the one area that did not fall in
line Thursday was the SEMIS. They hardly budged as KLAC gapped and many names
still look and are acting horrid. As of this second, still a place to avoid
or to sell on bounces.
This has been a very challenging and very tough
market as the headwinds of higher rates and the instability in IRAQ have
emerged. Just take your time. I believe you can be emboldened here to at least
probe leadership…of course with normal stops. The NEW HIGH LIST is a great
place to start as the first names to show up usually lead for a time.
Gary Kaltbaum