Gary B. Smith chatted on TheStreet.com, Thursday, May 17 at 5 p.m. EST.

TSC-RealMoneyLaura:

Gary is in the house and we are ready to roll.

chat-guest801 says:

Is it likely that the

Nasdaq

will break its upside resistance?

Gary B. Smith:

Boy, tough one, I thought it got swatted down by the downtrend line today.

Gary B. Smith:

Your guess is as good as mine.

chat-guest957 says:

The small-cap tech outperforms the big-cap tech. There's no clear trend in CSCO, NT, EMC. Do you expect EMLX, QLGC to continue making new highs and pull Nasdaq along with it?

Gary B. Smith:

I do not. Both of those stocks are right near their breakdown areas and will have trouble going up much further.

chat-guest431 says:

Gary, which is your favorite chart right now? Thanks.

Gary B. Smith:

I am short DE.

chat-guest497 says:

GBS, the other day you were "worried" about eBay; is today its breakout day?

Gary B. Smith:

That's an interesting chart; it did break out on good volume.

Gary B. Smith:

But now it looks too V-ish.

chat-guest801 says:

Gary -- how often do you move your stops up on an uptrending stock?

Gary B. Smith:

I actually don't use trailing stocks.

Gary B. Smith:

So, I guess the answer is "never."

chat-guest497 says:

GBS, great piece on self-reliance. Thoughts on GX?

Gary B. Smith:

Thanks for the compliment.

Gary B. Smith:

I think GX is in great shape, but it really needs to close above 15.

chat-guest275 says:

Noticed you were a gold "bull." Favorites in this area?

Gary B. Smith:

I was long PDG.

Gary B. Smith:

I still think the chart looks good, though.

chat-guest989 says:

Is AOL overextended? It's been acting like a champ.

Gary B. Smith:

No, I think the chart still looks good, although I think there's going to be a lot of resistance at the 57 area.

chat-guest-9 says:

Any advice for drawing trendlines? Mine never seem to look the same as yours. Disclosure: short ART.

Gary B. Smith:

People think that drawing trend lines is a science. In reality, it's more of an art than anything else.

Gary B. Smith:

What I try to do is connect as many tops, and/or bottoms, as possible, and just try to capture the essence of what the chart is doing.

chat-guest63 says:

Gary, thanks for your suggestions. Do you still like USAP after its pullback today?

Gary B. Smith:

Yeah, I think after the rise on Wednesday.

Gary B. Smith:

The pullback was to be expected, and it was fine, being that it came on low volume.

Gary B. Smith:

But if it drops any lower than it did today, I would start to get worried.

chat-guest-9 says:

When looking at breakouts, how far up in terms of percentage is too V-ish to enter the trade.

Gary B. Smith:

It's really not a question of "too far up"; it's more a question of is there any support close by.

Gary B. Smith:

When I say, "too V-ish," almost straight up without any close-by support to fall back on.

chat-guest352 says:

Did you think the volume and price action on the

Dow

today helped confirm the breakout?

Gary B. Smith:

I think the Dow chart is kind of iffy.

Gary B. Smith:

I would have wanted more volume, but at least it didn't collapse back into congestion, which would have been terrible.

Gary B. Smith:

So, I'm still bullish on the Dow.

chat-guest894 says:

GBS, hope your golf swing is better than mine ... thoughts on ATK? Thank you, sir.

Gary B. Smith:

ATK is in a wait-and-see mode, although if it closes above 100, this stock could run to 125 easily.

chat-guest176 says:

Cramer

highlighted VIGN today -- what's your take?

Gary B. Smith:

I think that chart looks pretty good.

Gary B. Smith:

But,I certainly wouldn't want to short it.

Gary B. Smith:

It's up two days in a row, so that's a small concern

chat-guest801 says:

What price would MSFT need to clear for you to be bullish on it?

Gary B. Smith:

Close above today's high would certainly get me interested.

chat-guest606 says:

What are your thoughts on the semis? Especially, KLAC?

Gary B. Smith:

As good as the move was yesterday, I still think KLAC is in congestion.

chat-guest985 says:

If you had to choose only one book to learn TA, what would it be?

Gary B. Smith:

Technical Analysis of Stock Trends

, by

Edwards and McGee

.

chat-guest379 says:

Gary, I could not see much difference in your charts today between the Dow & eBay, but you gave different conclusions. What's the difference ?

Gary B. Smith:

I can't remember precisely what I wrote about eBay.

Gary B. Smith:

But there is a lot of artwork involved in looking at the charts.

Gary B. Smith:

Sometimes, one chart just strikes me as more bulllish or bearish than another chart.

chat-guest352 says:

Do you believe the same charting principles apply to commodities as well as stocks?

Gary B. Smith:

Most definitely!

Gary B. Smith:

In fact, I'd venture to say there's a lot more technical analysis going on in the commodities area than there is in equities.

chat-guest398 says:

You indicated recently the oils were shortable. What about Gulf Canada Eesources (GOU) as going against the grain? GBS breakout?

Gary B. Smith:

Yes, I certainly wouldn't short that stock, although it's almost straight up for the past week, so I wouldn't buy it here either.

chat-guest-9 says:

In your last chat, you said you were looking into trading outside of equities, citing reduced volatility

I forget exactly what you referred to . How's it going?

Gary B. Smith:

I have made zilch progress!

Gary B. Smith:

Trading stocks lately has been more than enough for me to handle!

chat-guest326 says:

Is EXDS very weak or building a base?

Gary B. Smith:

I would say it is still very weak.

chat-guest352 says:

What parameters do you use to sort stocks on TC 2000?

Gary B. Smith:

See my 5-3-99 column for some scan examples.

chat-guest712 says:

I used a version of your published tc2000 scan today and hit big on PLUG, NANO, FHRX. Thanks!

Gary B. Smith:

You're welcome ... but you know that I get $1,000 for every successful trade!

chat-guest985 says:

Do you use MACD, Stochastics, or Elliot Wave?

Gary B. Smith:

No, no, and no.

Gary B. Smith:

Again, see my 5-3-99 column for why and why not.

chat-guest275 says:

Two questions: With the recent "UP" action, do you still believe in a Nazz retest of 1600 AND how's the swim season in the early going?

Gary B. Smith:

I am still not 100% convinced that we don't drop down and test 1600 although I am less bearish than I have been.

Gary B. Smith:

As for swimming, the girls travel to Richmond this weekend for a big invitational meet.

Gary B. Smith:

So, that should be fun for dad, I'm not sure for the girls.

chat-guest105 says:

When trading short term, I set 7% stops, but what's a reasonable 5 to use on the upside for getting out?

Gary B. Smith:

That's an impossible question to answer.

Gary B. Smith:

So much depends on the volatility and how long you want to stay in each trade, and what you want your win rate to be.

chat-guest959 says:

Nasdaq closed below 2200. If tomorrow is a down day, is it likely a head and shoulder forming?

Gary B. Smith:

That depends on how far "down," down is.

Gary B. Smith:

If we stay above Wednesday's low, I still think the Nasdaq will be more bullish than bearish.

chat-guest540 says:

Nice call on VECO yesterday, any thoughts on Nucor, NUE; it appears to be breaking out of a five-year congestion period.

Gary B. Smith:

No, I still think NUE is in a down trend since middle of 1994.

chat-guest352 says:

What type of brokerage do you use for your trading and why?

Gary B. Smith:

See my 5-3-99 column yet again and then read the columns entitled "Penny Wise, Pound Foolish," for a complete answer.

chat-guest461 says:

Do you do any covered calls on your "investments"when you think the market will be flat to down after a run up, and how far out would you sell to cover? Thanks for the daily chart fix, I'm hooked.

Gary B. Smith:

Thanks!

Gary B. Smith:

My trading is too short term to really be effective with covered calls.

Gary B. Smith:

But when I was using them, I certainly went no further than one month out.

chat-guest801 says:

Gary -- XOM seems to have had a double top at 94 -- What are your thoughts now?

Gary B. Smith:

If you look at a weekly chart, XOM is still locked into a nice, steady uptrend.

Gary B. Smith:

It still looks like it will break above 100.

chat-guest352 says:

If you are in a stock on a blue-sky breakout, what do you look for in terms of exit points?

Gary B. Smith:

If you mean, I all of a sudden have windfall profits, I normally get out immediately.

Gary B. Smith:

If I'm really, really, really bullish, then I use a 10-day moving average as a trailing stop.

chat-guest90 says:

Any love lost for FTU or any other of Cramer's picks?

Gary B. Smith:

Well, I like VIGN but I can't get excited about FTU at all.

chat-guest398 says:

What is your take on the chart of AOL Latin America (AOLA)?

Gary B. Smith:

It had a nice breakout recently, then pulled back on declining volume.

Gary B. Smith:

Still looks good, though I'd have a stop in under Wednesday's low.

chat-guest410 says:

Cramer said on Monday he likes autos but Ford is dropping. What do you see on F's chart?

Gary B. Smith:

I see the quintessential double top; if Ford drops below today's low, this stock could drop all the way down to the low 20s.

chat-guest203 says:

Gary: Thanks for turning me on to TC 2000. Any helpful hints you can recommend that aren't already in print?

Gary B. Smith:

HA! I can't give away all my "trade" secrets.

chat-guest320 says:

Gary, after a breakout you exit the trade after a 5% profit, from the point of the breakout or from the closing price of the breakout day? Thanks.

Gary B. Smith:

If I'm using a fixed percentage, and it's not always 5 percent, I base my exit on my fill.

chat-guest912 says:

Do you ever pyramid into a position if the stock breaks out as you expect?

Gary B. Smith:

No.

chat-guest408 says:

Thoughts on QCOM? Thanks.

Gary B. Smith:

Great run up the path, for days, four days ... but, in dire need of a pullback.

chat-guest395 says:

Regarding money management, up to what percentage of the trading capital you suggest one should risk as a trader to achieve max return?

Gary B. Smith:

Well, I'm not sure I completely understand your question.

Gary B. Smith:

On any one trade, I try not to risk more than 1% of my equity.

Gary B. Smith:

On the other hand, if you have a reliable methodology, when the market calls for it, you shouldn't have any fears about being 200% invested.

chat-guest395 says:

I keep 12 stocks in my portfolio and am unable to maintain their progress. How many stocks do you maintain in your short-term portfolio?

Gary B. Smith:

Well, I don't have a portfolio per se.

Gary B. Smith:

All the stocks in there are trades, and as soon as they get filled, I have stops and limits.

Gary B. Smith:

In theory, I could maintain as many trades as I've got equity for.

Gary B. Smith:

In reality, I think the maximum I've ever had open at once is about 40.

chat-guest205 says:

Are you answering these questions from memory or are you checking charts as we go?

Gary B. Smith:

I have memorized the chart patterns of over 8,000 stocks.

Gary B. Smith:

Occasionally, I do have to look at one or two. LOL!

chat-guest720 says:

Gary. What about HGSI? You weren't sure on direction but thought down. Any change now that above 60?

Gary B. Smith:

Yea, I guess I got that one wrong back in middle of April.

Gary B. Smith:

I still think it needs to close above 67 to continue its bullish ways.

chat-guest382 says:

Do you ever short stocks "in dire need of a pullback?"

Gary B. Smith:

No, because the times I've done that, they never seem to pull back when I want them to!

chat-guest352 says:

When do you move to California, and are you having nightmares about how much less house you can buy for the money?

Gary B. Smith:

If we end up moving, we'll probably go late summer.

chat-guest425 says: What do you think of the GX and AGCX charts?

Gary B. Smith:

Both charts are in the handle phase of the cup and handle.

Gary B. Smith:

They need to break out of today's high in order to complete the bullish formation.

chat-guest801 says:

Can you live with 1/4 to 1 point daily moves in stocks as Cramer suggests will be the case?

Gary B. Smith:

Yea, I guess.

Gary B. Smith:

I've had a couple trades where I've had 4,000 or 5,000 shares, so a one point move in those certainly isn't a bad day's work.

chat-guest367 says:

Your quick take on the comp close and Juniper charts please (especially after the nasty downbreak)? Thanks.

Gary B. Smith:

I thought the Nasdaq's action today was just a touch disappointing.

Gary B. Smith:

As for Juniper, I don't think it's going anywhere up, any time soon.

chat-guest379 says:

Gary, I know you like other income to pay for your normal monthly outgoings, so when do you actually pay yourself from your trading account?

Gary B. Smith:

I normally only take money from the trading account for large capital expenditures like buying a car or putting a deck on the house.

Gary B. Smith:

The rest of our monthly expenses I'm able to pay for from my writing/TV income and my wife's income.

chat-guest431 says:

Gary, nice trade on FLIR. Do you still own it? Thank you.

Gary B. Smith:

I wish!

chat-guest354 says:

Gary ... is it me ... or does SWY look ill?

Gary B. Smith:

Extremely ill, but I wouldn't short it right here.

chat-guest497 says:

Ideas on CSCO?

Gary B. Smith:

Still in the proverbial trading range, I wouldn't touch it.

chat-guest408 says:

Gary, I'm long ITWO for a trade, what do you think? Thanks.

Gary B. Smith:

I'd probably think about taking at least some profits tomorrow morning.

chat-guest391 says:

Gary, How does PEP look to you?

Gary B. Smith:

Like it wants to go down to about 40 or so.

chat-guest801 says:

Would you buy ENER on a higher high tomorrow?

Gary B. Smith:

No, I think you almost had to buy ENER with a buy-stop today, if it goes up tomorrow, it'll be up three days in a row, and it'll be huge, and in need of a pullback.

chat-guest247 says:

In your last 10 years, what was your best and worst years (percentagewise)? Thanks.

Gary B. Smith:

My best year was up 95%.

Gary B. Smith:

My worst year was up 40%.

chat-guest985 says:

Does EC look like a classic breakout or not enough volume?

Gary B. Smith:

It looked like a classic breakout yesterday.

chat-guest203 says:

Is there a particular amount that you like to use per stock trade? If not, what determines how much you commit to each trade?

Gary B. Smith:

On any one trade, I use anywhere from 5% to 10% of my equity.

chat-guest801 says:

Do you think the investing public is still too bullish on tech?

Gary B. Smith:

Yep.

chat-guest395 says:

Instead of risking 1% per trade and maintaining over 15 simultaneous trades short-term (from my experience), would you suggest increasing the risk percentage to 2-3% so that it is easy to maintain less number of trades (such as 7 to 8)? It's also difficult to find 15 good trades all the time, I believe.

Gary B. Smith:

I agree.

Gary B. Smith:

It actually works out better to have more equity in less trades, because you have less commissions and less slippage.

Gary B. Smith:

But, I've never been able to pick the best trades out of my finalists, so I end up taking them all.

chat-guest105 says:

Is there any value to short term TA, say like intraday charts?

Gary B. Smith:

Yes, I think that that is definitely a methodology that can be used.

Gary B. Smith:

But like anything else, if you start trading intraday you have to do it every day.

Gary B. Smith:

It's not something that you can just dabble at.

chat-guest254 says:

Any thoughts on Jim Cramer's TRW suggestion?

Gary B. Smith:

The morning of May 10 was the time to buy, although it doesn't look too bad here.

Gary B. Smith:

Just a higher risk for the reward you might get.

chat-guest720 says:

KREM still jumping. ... Do you see any correlation to an

NYSE

move, because of less daytraders?

Gary B. Smith:

No, I think that the bulk of that move almost has to be short-covering.

chat-guest205 says:

Hey Gary -- any plans to reschedule Garypalooza?

Gary B. Smith:

No, no current plans. Although I might have some private local seminars.

Gary B. Smith:

Still working on that.

Gary B. Smith:

OK, that is a wrap! Thanks everyone. It's been fun.

Gary B. Smith:

I love doing these. Keep reading me, watching me on TV, and look for my new album where I sing with a duet with

Eminem

. LOL!

TSC-RealMoneyLaura:

Thanks for joining us today. A transcript of today's event will be available on

TSC

this evening.