Gary B. on Whether the Market Will Meet Its Maker, and More

The technician also looks at Apple, Yahoo! and Network Solutions, among other charts.
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Boy, how would you like to be

Coach K

right now?

Brand

, gone.

Avery

, gone.

Maggette

, wavering. But, prediction No. 1: You never notice their absence. Prediction No. 2: You never notice their presence in the

NBA

. In fact -- and I'm still true Blue -- isn't it true that virtually no

Duke

stars ever really shine in the NBA? Okay, well, except for

Grant Hill

!

Questions? Comments? Still can't figure out how

Tate Armstrong

made the

Olympic

b'ball team in '76? I'm your man at

technicalforum@thestreet.com. Please include your full name.

Recovery Time?

I really enjoy your column. Can you please give us a comment on (NSOL) NSOL? The last time you touched on that stock, it had a breakout. However, since then it looks like a head and shoulders chart pattern. Do you see a recovery in this stock and what does it take for it to get there? Thank you. Chris Vu

Green Turned Red

Great commentary -- easy to understand. I am long (CMGI) CMGI and liked your "trend" comment. I am also long (ELN) ELN, a k a the "Irish Merck (MRK) - Get Report," and it was like the Rock of Gibraltar until about a month ago. It took a nosedive, came back, and Friday took another nosedive. The earnings were good, the company says everything is going as planned, and I cannot figure out what happened, and where the stock is going. My steady profit is now a minor loss. Will you take a look and see if you can figure it out? Thank you. Al Caplan

Short and Long of It

Hi, I'm a mother of three, and I was wondering your short and long on (FEET) FEET. Thank you, DSG

Indecision

Sometime, could you comment on (ASHW) ASHW? I've lost about 50% on this stock and I'm not sure whether to sell or hold on for the ride up. Thanks, Kevin Narramore

Making a Call on Calls

Hi Gary, Love your analysis and suggestions on stock probabilities. I have calls in Computer Associates (CA) - Get Report, Airborne Freight (ABF) and Oak Industries (OAK) - Get Report. They have all made a nice move of late and I am in the money on all three. If it were you, would you keep riding them out or lock in your profits? Just wondering what a pro like you would do in this spot. Thanks and keep up the good work. Jeff Lewis

Jeff, let's look at OAK today.

When the Market Meets Its Maker

Gary, After reading this weekend's "Up and Down Wall Street" in

Barron's

and feeling one could put a lot of "stock" (pardon the pun!) in Mr. Abelson's views, I would appreciate your thoughts on just how a market like this meets its downfall. I understand people like yourself seemingly would make out because of your shorting ability -- however, it is my understanding that the "shorts" are somewhat of a cause in this market continuing its upward spiral. And if we have more and more legions of day traders joining the bandwagon, is this a never-ending cycle? I, for one, while continuing to invest (or is it gamble??), am quaking in my boots! Your thoughts would be greatly appreciated! Thanks, Jan Mann

How will it end, Jan? Assuming it

does

end, right? Boy, wish I knew. My guess, though: repeated blows to the head. In other words, the "buy on dips" mentality has to be broken. And that will

only

happen by the

DOT

dropping 10% one day, then rising weakly for a few days, then dropping 10% again, then rising weakly, and then dropping yet again! And this has to happen enough times until day traders, investors and whomever are SCARED to buy on the dips. And I do mean scared. Right now, folks are fearless. That's not right or wrong, by the way, just my take on the current environment.

Now, what would cause these repeated drops? Well, it could be anything: war, "accounting irregularities" at one of the .com big boys. Really, anything, and you never know when something will happen. That's why I keep coming back to one of my key rules: Know how to go short.

Yahoo! Tea Leaves

Gary, Enjoying your column. What does your technical analysis for Yahoo! (YHOO) reveal? Ken Marsh

The Willie Mays Catch

Recently, a few stocks like (QCOM) - Get Report QCOM and (CNXT) - Get Report CNXT have gapped open big time on earnings. Do stock charts like these "always" or usually fill these gaps at a later date? I have been looking at a plethora of similar charts and they seem to always fill most or all of the gap on either intraday trading moves or market pullbacks. Is it always wise to pick a spot in the gap and just wait there like Willie Mays to make that great basket catch rather than buy at a higher level if one is looking for a longer-term hold on a stock? Dave Gordon

Dave, if there is one area of TA that is the most frequently speculated on, but least understood, it has to be "gap analysis." In fact, it's difficult, period, to pin down anything firm on gaps, because they distinctly fall into one of those "know 'em when you see 'em" categories. Yes, there are some gaps that everyone would agree on: This past Wednesday, it's safe to say

(MCK) - Get Report

MCK gapped down! The rest of the time, though, it's a little harder. How many gaps can you find in a CMGI chart? I might find many, you a lot less. Is it a gap if it opens up one-quarter of a point higher than the previous close and never looks back? On some stocks yes, on stuff like

(DCLK)

DCLK, probably not.

So, in answer to your question: It's impossible to answer, except to say one thing: There are no "always" in TA, and very few "usuallys." The best we can hope to find are situations where the odds are in our favor.

All that said, my observation on gaps is this: Assuming we both agree the chart has a gap (i.e. MCK), the odds are the stock will continue in the direction of that gap, at least for a few days. Unless, of course, it doesn't!

Apple Antics

Hi Gary, This is my first time writing to you. I am from Pakistan and have been involved in the U.S. stock market for about a few months. What I need to ask you is, when everyone is looking at all the great companies, no one has paid any attention to Apple Computer (AAPL) - Get Report. I believe it has the potential of a great turnaround story. And with the new product are they poised to go the RealNetworks (RNWK) - Get Report route??? What do you think of it? Please let me know. I am also a big fan of Steve Jobs. I think he still does have a couple of tricks up his sleeve. Thanks, Nadeem Shaikh

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 had no positions in the stocks mentioned, 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 also writes Technician's Take, which appears every Monday, and Charted Territory, which runs Wednesdays. While he cannot provide investment advice or recommendations, he welcomes your feedback at

gbsmith@ibm.net.