Gary B. Smith chatted on Yahoo! on Wednesday, May 10, at 5 p.m. EDT. As with all chats, this transcript is unedited.

laura_the_street:

Gary B. is in the house! And we'll get started shortly!

gsmith4:

Yes, please keep your questions coming. Remember: I know all; see all. And have NEVER been wrong!

kevins1031 asks:

Hi Gary! Nice move hiring Alicia Silverstone as your "aide."

gsmith4:

Thank you. Seeing as her movie career has fizzled, I thought it was the right thing to do!

twinsoulsita asks:

Hi Gary, maybe I'll get your take on STM this time. A kind of a little flag on the short downtrend? Or just touching the uptrend started in September 1999? What do you see?

gsmith4:

Still moving sideways. I'd be neutral on it!

AlHillbilly asks:

Before we get into a serious stock discussion, would you update us on the girls' swimming. Thanks.

gsmith4:

Absolutely: Diana started out the long course season winning the 50 and 100 breast! Personal best in the 50 free!

gah65 asks:

Gary, loyal reader of your column. I bought

Trade Your Way to Financial Freedom

per you referencing it -- great book -- can you recommend your favorite book on TA?

gsmith4:

Yep: Edwards and Magee:

Technical Analysis of Stock Trends

.

twinsoulsita asks:

What about CSCO, Gary? I thought it was building a congestion, but today it looks like it broke down.

gsmith4:

Not a complete collapse, but certainly weak.

sreitz2001 asks:

What do you think of Helene's bearish flag outlook on the Nasdog when coupled with today's ugly black candle on higher volume?

gsmith4:

Hey, that was MY bearish flag from last week! Anyway, I think down looks better than up for the Nas.

sweatin_bullets asks:

On average, how many orders do you place each morning?

gsmith4:

On a really hot day, I might do as many as 20. Today ... zippo.

berishb asks:

How do you learn to program screens in TC2000?

gsmith4:

Just have to go through the online help.

sreitz2001 asks:

When are you going to have a contest like

Cramer's

to spend a day with Gary (I'll even get up at 4 for swim practice)?

gsmith4:

Hmmm, now there's an idea. Of course, you'd have to be satisfied eating Special K for lunch!

roic_2000 asks:

How does AAPL look to you Gary?

gsmith4:

OOH-GLY.

berishb asks:

How do you implement a stop-loss? I do define an exit price at the beginning, but when I look my stock's gone beyond that and I'm left hoping for a return. Worse yet, it does return, and may give me a profit which sets me up to give things more room, and next thing you know, I'm out a lot of money.

gsmith4:

Well, you have to have your stop on the books and then its hit and you're out automatically.

twinsoulsita asks:

I'm just looking at some charts, but they all look like SHORT opportunity ... Is this market REALLY so bad?

gsmith4:

Let's put it this way: It's certainly not a bull market. But, be careful on the short side too!

sitbythepc asks:

GBS, what do you see for SEBL?

gsmith4:

Ah, kind of neutral. I've seen worse for sure, but trust nothing right now!

odeus_2000 asks:

How do you see ICGE moving -- is it at a bottom?

gsmith4:

Maybe, but if you buy now, I'd have a stop around $29.

spencer23nobull asks:

Hi Gary! Do you have a time of day to jump in or out of your positions?

gsmith4:

Nope. I try not to do an intraday. I'm in or out when my targets are hit.

sreitz2001 asks:

How long have you been trading?

gsmith4:

In one form or another about 12 years I'd guess.

gah65 asks:

Gary, what screens do you use to determine what stocks should even be bothered looking at more closely (i.e., how do you find the stocks you consider investing in)?

gsmith4:

See my 5/3/99 col!

sweatin_bullets asks:

If a stock looks like an excellent candidate to buy or short, do you further investigate to see if perhaps a reason for the breakout might be purely spurious, such as by scanning the Yahoo! News items about the stock?

gsmith4:

No, I live and die by the charts!

bluzjamn asks:

Hi Gary, my wife read these were safe, and wanted me to ask you about them. (FLEX), (CLS), (JBL), (SLR) and (SCI). Do you like any of these? Thanks.

gsmith4:

Can't say as I do. Sorry.

berishb asks:

Your take on Helene's diamond comments?

gsmith4:

You mean that she wanted more data until she believed it? I agree.

sitbythepc asks:

Gary, where do you see AMD going?

gsmith4:

Not looking terrible. But it should drop a bit more.

twinsoulsita asks:

Gary, I've read all your columns since I subscribed to

TSC

. How do you choose the charts you look at before the market opens? You don't chart ALL the stocks, do you?

gsmith4:

Again, see my 5/3/99 col.

allegre asks:

Gary, do you ever trade options? If so, under what circumstances?

gsmith4:

I have in the past. No longer. I always screw up the time decay. Plus the spread is a bi---.

SDilday asks:

What is your take on RFMD?

gsmith4:

Interesting for sure. It may have stopped going down. One I'd watch ...

sreitz2001 asks:

What's your most recent favorite read?

gsmith4:

The Story of Jesse Livermore

. Fascinating.

sreitz2001 asks:

When looking at candlestick charts do you look for patters (hammers, engulfing patterns, etc.) or do you just look at basics (support, resistance volume)?

gsmith4:

The basics. I notice the candlestick stuff, but don't trade off them specifically.

max2max2 asks:

What is your short and long take on NTAP stock?

gsmith4:

Headed down I'm afraid.

tonyoregan asks:

Gary -- No April Fooling now! It takes guts now to go long or short tech stocks at this level on the

Nazzdo

g. If 3000 is on the way, is now the time to short?

gsmith4:

I would NOT go short right now. The problem: Bear rallies are strong and fierce. Almost better to sit out right now.

trader_in_securities asks:

How long do you think this bear market will last?

gsmith4:

At least until Nas 3K. However, this may go through the summer.

waynes460 asks:

Looking at the NDX, I read it as having some support at about 3200. In assessing this market, how strong do you think that support is?

gsmith4:

Feeble.

penq45 asks:

Hi Gary, are you short the qqq's?

gsmith4:

I am not. Almost did it two days ago. Chickened out. Don't know why!

roic_2000 asks:

Gary, how does NOK look at this point?

gsmith4:

Bad gap down today. Good night NOK.

sreitz2001 asks:

Ever try using Trade Station instead of TC?

gsmith4:

I have. Big, expensive, complicated and not worth it.

sweatin_bullets asks:

How do you invest your cash that is not used for trading?

gsmith4:

I keep it in my broker's MM account.

averagemover asks:

Great article today on when to hold, when to fold. Does this mean you have overcome your skepticism re moving averages?

gsmith4:

Thank you. No, I still don't use the MAs, but offered that up for consideration. I use the trade threshold approach.

shmoopieboopie asks:

GBS, what do you think about NT and JDSU? Can you see a bottom?

gsmith4:

NT maybe 45, JDSU maybe 74. But those are tenuous.

sweatin_bullets asks:

Do you have any long-term stock holdings or invest in any mutual funds?

gsmith4:

Nope.

doctrz asks:

How does CIEN look?

gsmith4:

Holding it's own. But ... still weak.

Dchex asks:

Do you put limit orders in as soon as you start a position?

gsmith4:

Yes, limit sell orders if it's a long.

averagemover asks:

Gary, your take on DRG (drugs) and JNJ in particular?

gsmith4:

JNJ is looking pretty good. Not a bad place to hide.

AlHillbilly asks:

Are there days when you shut your screen down and go to the course? Or do you slog away all day long every day?

gsmith4:

Well, I could actually shut down as soon as I have my fills since I don't day trade. But, with the writing and taking care of the kids, I must admit my game is rusty!

KRAZITRAIN asks:

If $NDX 200 dma breaks .. where does Gary see support?

gsmith4:

I don't. See above. 2600 on NDX.

shmoopieboopie asks:

GBS, what's the easiest short right now?

gsmith4:

Yeah, I liked it. But ... in this market second guess everything.

b_hambaricho asks:

Hi Gary! What is your opinion on FMO?

gsmith4:

From my chair, Gene, the Odyssey is dying. (Sorry, couldn't resist an

Apollo 13

movie line!)

trader_in_securities asks:

Is this the worst tape that you have ever traded in?

gsmith4:

Yeah, by far. But, I have to say, I'm doing OK. At least I'm holding on to my gains by not doing anything stupid!

sitbythepc asks:

Gary, does YHOO look like a safe buy here? Tnx.

gsmith4:

No tech is safe right now. Wait for the

Fed

at least.

Sosantoso asks:

Gar, you indicated that you use closing prices. But what if your target is hit intraday? And what about the highfliers that can just really move +/- 10% in one day?

gsmith4:

I take my profits when my target is hit. So if my target is 5%, I'm gone.

chessnuts44 asks:

Hi Gary! What's your outlook for RMBS?

gsmith4:

Weak.

seanhunt001 asks:

What does CFMD's chart tell you?

gsmith4:

Sorry, don't have that symbol.

cashflow_474 asks:

At what point does MOT become a bargain?

gsmith4:

Hmmm, it's at support now ... but the gap down today kind of negates that. I wouldn't fish on this one.

Icover asks:

Gary, as a percentage of total trading capital are you in cash, short or long anything?

gsmith4:

I am living in flatsville! Total cash.

averagemover asks:

Gary, ever attracted to puts as an alternative to shorting risky Nazzdogs?

gsmith4:

Nope.

perrychr98 asks:

Any take on kon Phillips (PHG)?

gsmith4:

Another weakening stock.

odeus_2000 asks:

Gary, how useful do you think technical analysis is for less-traded stocks? I am particularly thinking about CDTS or SCON, which seem to bounce around more on sentiment than anything else.

gsmith4:

Something like CDTS is fine as it still has enough liquidity. Just make sure whatever you're trading isn't too thin; say under 30K shares per day.

Sosantoso asks:

Gary, do you think Livermore was a successful trader, considering he went bust many times?

gsmith4:

He had his moments. His biggest downfall, was not the method, but the mind. He violated his own rules and that cost him! But, he certainly had a beautiful feel for the markets!

wbboomer9 asks:

When are you coming to Detroit area or Midwest? (Go Katie--Swimmers rule!) Also, will you be at the Omega conference in New York? Best--Bill!

gsmith4:

I was not invited to Omega conference (shows what they know!). As for Detroit, etc, I am thinking about a GBS roadshow. So maybe in the fall! And thanks for the swim cheer!

lilschwan asks:

Gary, I got TC2000, which I love, but do you have any real-time streaming data programs that you use?

gsmith4:

I do. I use MyTrack.com. Love those guys.

allegre asks:

How do you read the PSIX chart?

gsmith4:

Made a nice bounce recently. Don't hate it right here.

bigcheesey2k asks:

Do you think the general reason the market falls short of recovering is because of the Fed?

gsmith4:

That is a big part, yes.

rectumwrecker_99 asks:

Gary, does your style of trading work in a choppy market like this? How will we know when the NDX has a clear trend instead of a trading range?

gsmith4:

My style is not that effective in a choppy market. As to how will we know, well, sadly, it's always after the fact!

golfore1 asks:

What/where is the best place to learn how to invest responsibly?

gsmith4:

I think you're asking the wrong cowboy, Golfore!

justinqueree asks:

If the market bounces off a support level, how do you define if the bounce is a bear market trap or not?

gsmith4:

A good tip-off is to watch the volume. Notice on the last few rallies how the volume has declined?

bluzjamn asks:

Gary, I have $1,500.00. Would you have a stock to recommend to put it in, or maybe a mutual fund? I would like to try and grow this money and I won't need it soon. I know it's not much but I have to start somewhere.

gsmith4:

Hmmm. I guess if your timeframe is long enough, I still like MSFT.

tonyoregan asks:

Mister Softee (MSFT) from here?

gsmith4:

Short term ¿ down. Long term ... up.

bigcheesey2k asks:

Gary, I need an honest opinion of KIDE.

gsmith4:

Not the place to be right now.

ebiderman asks:

What do you think of IPET's future? (pets.com)

gsmith4:

Bow-Wow!

sitbythepc asks:

Gary, 3 questions, 3 answers. Thank you very much! Keep up the good work.

gsmith4:

Thanks, Sitb. But, shoot, you just missed the 4/4 record!

sweatin_bullets asks:

GBS classic produced several good short candidates yesterday evening. Why didn't you take them?

gsmith4:

OUCH! I was going to, but I had an early a.m. errand, so I wouldn't be around to get my fills. So I had to pass.

Sosantoso asks:

Gar, when's the last time you changed your method of trading? How long did it take you to find your optimal trading methods?

gsmith4:

I am constantly tinkering, so maybe this morning! As for optimal, am still searching!!

trader_in_securities asks:

Based on your own observations, do you believe the Fed needs to be aggressive here on inflation?

gsmith4:

More a

Padinha

question, but yes. The Fed needs to act. Just too much cash flowing into the economy lately.

Dchex asks:

Has CTXS bottomed?

gsmith4:

Unlikely.

sreitz2001 asks:

You going to let us know when you identify a trend and get back in the chair?

gsmith4:

Maybe. But, now every time I give a market call, everyone is all over me if I'm off by even a day!

Dchex asks:

When did you make the transition from investor to trader?

gsmith4:

About 1993 or so.

valentinegirl14 asks:

How old are you may I ask?

gsmith4:

21.

gsmith4:

Just kidding: 42.

Yahaol asks:

Do you have an idea on US$/euro?

gsmith4:

Zip.

Yahaol asks:

Do you think QCOM is a good buy at this level?

gsmith4:

Too risky, so no.

brakemaven asks:

Would you buy AOL or TWX?

gsmith4:

AOL.

valentinegirl14 asks:

Gary, nave you ever been nervous?

gsmith4:

Yeah, like on every date I ever had in high school! But, in the market? Oh, gosh, I'm nervous just about every day!

odeus_2000 asks:

Gary, can you give us the 5-minute version of how you start screening stocks ? Are you scanning the whole market with TC2000 or just specific sectors?

gsmith4:

I scan the entire market. I look for a volume and price surge and go from there.

tekmp asks:

SYMM breakout yesterday on 5x avg. vol. Any thoughts?

gsmith4:

A good example of a stock that was too "V" ish to take.

brakemaven asks:

Would you buy the JPM or Goldman Sachs?

gsmith4:

Boy, both doggie right now. GS I guess.

canuck422 asks:

What makes you decide, Gary, about a true long-term break from this bear?

gsmith4:

I guess I'd need to see either sideways congestion broken upwards on high vol or a downtrend broken on high vol.

NeumanAE asks:

Gary, what sectors look best for now?

gsmith4:

Oil service is about it.

iceburg1a asks:

What do you think of AMZN? Worth shorting?

gsmith4:

And challenge The Motley Fool? Horrors! (But yeah, it's due to drift back down.)

Sosantoso asks:

Gary, how do you fill up your time after entering your trades in the a.m.?

gsmith4:

Well, email now takes about 2 hours to get through. Then I write my column. Then I goof off until the kids come home.

iceburg1a asks:

Shorted MU today, what's your take?

gsmith4:

Good trade! Now, don't get greedy.

whataboutuu asks:

Gary, when you go long or short the

S&P

index, what kind of stop-loss point do you use, and how does that fit into your trade timeframe?

gsmith4:

For those I normally put a stop below support (or above resistance). Those trades generally last about four or five days.

canuck422 asks:

If there is strong volume on a break do you wait for a retest or do you jump in with four feet?

gsmith4:

All footies on board!

laura_the_street:

Gary's PC just died. Thanks for joining us this afternoon.

laura_the_street:

He'll be back next month to chart for you.