Gary B. Has the Fundamentalists Running Scared

Note to Cramer and Lashinsky: Come clean and admit you're technicians.
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Yeesh! First

Cramer

, then

Lashinsky

. Yeah, those guys are picking on me!

As background, Cramer says I was "waffling" about

Dell

(DELL) - Get Report

on the Aug. 14 "TheStreet.com" TV show. (For a transcript, click

here.) This from Mr. Pick-His-Spots! And then Lashinsky leaves me a phone mail during my recent

Yahoo!

chat -- probably because he knew my phone lines would be tied up, that weasel! -- gloating about Dell's earnings.

Typical scared fundamentalists, I guess. What they can't back up with performance, they try to mask by giving me lip. In fact, here's what I'm thinking: Both these guys would really love to come clean and announce they're technicians. But they're just too darn scared to admit the truth. That, or they took some fundamentalist oath somewhere, and if they back off now they'll lose their drinking privileges at the Fundy/Elks Social Club. Well, as Cramer would say: hoo-hah! You want a piece of me, boys, come and get me!

Anyway, let's revisit that Dell chart and a few others today to see where I was, and am, coming from.

I also had quite a few questions this week, including some during my Yahoo! chat (click

here for a transcript), about Internet stocks. Reading between the lines, many people think -- or thought -- the rout was over. Me? I'd be extremely wary right now. As background, a chart of a non-Internet stock --

AnnTaylor

(ANN)

-- is a good illustration of what I'm talking about.

Now that you've looked at ANN, take a look at

eBay

(EBAY) - Get Report

,

Amazon.com

(AMZN) - Get Report

and

Yahoo!

(YHOO)

, and see if you see any similarities.

OK, does this mean you should immediately go short if a stock rises to its downward trend line? No, of course not. However, what I think it does mean is to be cautious. If a stock is going to turn, right at the trend line will be the moment. So, adding to your position or going long right then would be the last thing I'd recommend.

If, in fact, the stock does reverse downward, you made a good trade by doing nothing. And if it bursts up through the downtrend line, then the odds are the new trend is up and you can then jump on board.

I guess it's just a matter of picking your spots and waiting until the reward/risk ratio is at its highest. But, you know, actually thinking about things logically is something those seat-of-the-pants fundamentalists will never understand. And folks, that's why technicians will ultimately RULE THE WORLD!

Finally, reader

Scott Kramer

wanted to know about

Liposome

(LIPO)

, a stock in the news lately.

Gary: Please review the chart for Liposome. As a biotech company, it's shown consistent profits this year and is awaiting Food and Drug Administration approval for Evicept to treat breast cancer. Is it pausing before the runup or perhaps to sell off on good news?

You'll see on the chart below that if Scott had asked my opinion only a few days earlier, I'd have said Liposome was just resting before the next leg up. Whoops! The next leg was down, and on heavy volume. So, more information, and a more informed opinion.

And if I had been on record earlier as saying Liposome was strong, now I'd be neutral at best, and probably a bit bearish.

That, of course, is where technicians get nailed. The chart changes, and sometimes so do our opinions. So, when it looks like we're running hot and then cold, all we're really doing is using the most recent facts available.

Do you get whipsawed doing this? Sure, but you also prune your losses at every opportunity. And if I can keep that debit column down, it's just a matter of time until my winners start to take over.

Oh, and let me close by wrapping up my Pittsburgh vacation/swim saga. First, I apologize to everyone who wrote whom I wasn't able to respond to. It's irritating, I know, to get those canned responses -- but rest assured, I read every email.

As for Diana's 100 breast swim on Friday, I think she'd give it a B-minus. The good news: She set a personal best. The bad news: She definitely had something left in her at the end of the race. My take, though: I was damn proud just to be her dad!

Gary B. Smith is a freelance writer who trades for his own account from his Maryland home using technical analysis. At time of publication, he held no positions in any securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Smith writes five technical analysis columns for TheStreet.com each week, including Technician's Take, Charted Territory and TSC Technical Forum. While he cannot provide investment advice or recommendations, he welcomes your feedback at

gbsmith@ibm.net.