Gary B. Smith chatted on Yahoo! May 25 at 5 p.m. EDT.

TSCEllen:

Welcome to today's chat with

TheStreet.com

columnist Gary B. Smith.

gsmith4:

Howdy, All! GBS is here, and ready to go!

mikej88 asks:

Gary, it seems the market is starting to do the job of the fed, any thoughts?

gsmith4:

Well, it's certainly trending down. But, I have to side with

James Padinha

: the FED may still raise rates!

hojoedo asks:

Hi Gary, what are your thoughts on CMTO?

gsmith4:

Awful last few days, but maybe a bottom at 16.

hoseheadd asks:

I was hoping mototrola was going up. What happened today?

gsmith4:

Actually not too bad a day: just went back to its 50 day MA. Big point loss, though, I know.

penq45 asks:

Hi Gary, Could you look at TBH, a very volatile stock, any upside or all downside? My brain is reshuffling! Thanks.

gsmith4:

My guess: a short term bottom. But, use a stop!

AHenschke asks:

Hello Gary, what validation process should I go through before I should jump in becoming a full time trader?

gsmith4:

I wrote a column on how I got started that's a pretty good starting point. Check it out in the

TSC

archives.

_sharper asks:

With the downtrend in the Internet sector, where do you see the group going, some have gone down past their 20 day moving average, while others are close to their 200 day moving average.

gsmith4:

Down further I'm afraid. See my special col. tomorrow AM.

LeeD13 asks:

What's the best part of your job?

gsmith4:

Honestly? The fact that I have the freedom to take my kids to swim practice in the mornings, and be there when they get home!

malcolm88 asks:

Hi Gary! Do you think net stocks will continue their fall in the following days? How do you like the charts of YHOO, AOL and AMZN?

gsmith4:

See my comment above on the Net stuff. All the stocks you mention look weak, although, there's a chance AOL may hold above 110.

uttbani asks:

Your opinion about INSP & INKT please.

gsmith4:

INKT I talk about in tomorrow's col. INSP looks like a goner.

mdjnr asks:

What do you see for Real Networks? Is there any support for it? And what about the Internets in general?

gsmith4:

RNWK is another broken stock.

LeeD13 asks:

Do you think there will be another great deprerssion?

gsmith4:

Only if Diana never ends up beating YouKnowWho.

whitebp asks:

Hey Gary, have you considered the back-testing capabilities of TradeStation 2000i that allows you to account for slippage, transaction fees, and interest rates?

gsmith4:

Yes, I have. The problem: you can only test one stock at a time. Wesson had the ability to test thousands at a time!

Tonysean asks:

Do you see DELL holding their current level?

gsmith4:

I do not: broke today I'm afraid.

lnnelson asks:

Gary, any thoughts on MMM?

gsmith4:

Yeah, not too bad a chart, especially given today's market.

max_powers asks:

The storage sector is hot in tech. What about QLGC?

gsmith4:

I like the breakout a few weeks ago. Now it's pulling back. Maybe back to the 70 area.

Queenie1_92677 asks:

Hello Gary, I've had Alcan for quite awhile, they signed l0 yr.pact with GM, Other car co's to follow? What are your thoughts on this stock?

gsmith4:

I love it if it can get past 33. But, that looks iffy to me.

Daimler600 asks:

How many articles do you write for

TheStreet.com

write per day, and around what time?

gsmith4:

I am now up to 5 per week. Cramer is the only one with enough energy to crank out multiple columns per day!

dswtt asks:

Hi Gary, Are you still trading the "Wesson 45" criteria?

gsmith4:

No, haven't really traded that in a long time. Every once in awhile, though, I will dabble there.

_sharper asks:

Any thoughts on egrp or sch, both seem to be following the same pattern?

gsmith4:

I think EGRP might have broken today. If it takes out its 50 day MA, hello downside.

falcomex asks:

Hi Gary. Do you use metastock or level II ? Your thoughts on these tools or others?

gsmith4:

I use neither. Level II is great, but only necessary if you're day trading.

AlHillbilly asks:

Why are all dot com IPOs priced at $18.00?

gsmith4:

Actually, some even come in at $19. But, see Cramer's excellent column on IPO pricing today.

AHenschke asks:

Do you believe shorting stocks is worth the risk/reward ratio?

gsmith4:

Let's put it this way: 70% of my profits last year were on the short side!

hojoedo asks:

Gary, when the volatility of a stock in play increases, do you widen your stops, or simply stay disciplined and, perhaps, get stopped out?

gsmith4:

I stay to "disciplined" which sometimes is a millstone.

whitebp asks:

I felt that if csco broke 111 that there was a long way to fall, how do you feel about that?

Gary:

I think CSCO will be fine unless it breaks the 100 mark.

surmatta asks:

Hi Gary, what do you think, broadcom after todays selloff?

gsmith4:

Certainly today's action was bearish. But, volume dropped, so if it holds above 82 it should be fine.

AlHillbilly asks:

I read your column every day, also Helene Meisler. Have you thought about replacing Wesson with Helene?

gsmith4:

Well, I'd have to wake Helene up at 3AM to talk to her, she's in Singapore!

max_powers asks:

So most of the tech sector has broken? Do we look for individual strengths?

gsmith4:

Yeah, if there are any!

Daimler600 asks:

Do you have past experience with ELOT elottery? They're in talk with states for contract, but no news yet.

gsmith4:

I've never traded ELOT, but now might be a low risk time to buy.

pulseprod asks:

Gary, previously you mentioned your avg. trade netted $35 could you explain: per share, per transaction, per what?

gsmith4:

Hmmm, I don't even understand my own nomenclature if I said that. In any event, my average trade nets 1.7%.

mcbaine969 asks:

Gary, Dell's below 200 day moving average for first time since 2 dollars what does it tell you?

gsmith4:

That it's going further: more on Wednesday!

AHenschke asks:

I am a consultant in the technology sector and have an Financial Accounting background, I am considering learning the technical analysis as well. My thought is to join the fundamental and technical analysis together. Any thoughts?

gsmith4:

Certainly a valid way to go. In fact, I talked about that in a few columns back in 10/98.

Tonysean asks:

Are you suggesting that we start shorting the Internet?

gsmith4:

How about a big maybe! On the one hand, it looks very weak. On the other hand, I just looked at 'Net shorts for tomorrow and could find very few. That always tells me something.

idagreidanus asks:

I have Chiron, which doesn't move. Any thoughts?

gsmith4:

You're right about Chiron: dead money, so I'd be gone.

pulseprod asks:

Do you believe in Dow Theory 'confirmation' ? What indices do you use for NASDQ stocks?

gsmith4:

I don't use the Dow theory stuff. As far as nasdaq indicies, I look at QQQ sometimes.

dswtt asks:

Gary, What method do you use currently to determine position size, and how, if at all, do you adjust for higher volatility stocks?

gsmith4:

For position size is use the formula Buying power/1000 = lot size. For volatility, I generally do not adjust.

bigcat567_1999 asks:

Gary, Any thoughts on NTBK or T Thanks.

gsmith4:

Ayyy: NTBK looks bad. Very bad.

ajt111 asks:

How about microsoft?

gsmith4:

Hasn't broken yet, but if it goes below 73.5, then big trouble.

malcolm88 asks:

Do you see Nasdaq and DJIA moving further down?

gsmith4:

Actually, the dow might find support at the 50-day MA. The nasdaq I think will head a bit lower.

Dead_battery asks:

Hey, what exactly do you do, Gary?

gsmith4:

Just tryin' to stay out of trouble Dead Man.

baccala4 asks:

Gary, Could you give me your opinion on Lucent and where it will be heading in the near future?

gsmith4:

Very tough chart to read. Total guess: it holds at 54.5.

falcomex asks:

Gary I am long sws. A few days ago it was at 95 and it tanked today to about 70. How's the chart look to you?

gsmith4:

SWS looks like a great short. Sorry!

rdtu asks:

Gary, what do you think of ELBO?

gsmith4:

ELBO is one of the few charts I really like today.

max_powers asks:

Gary, SP500 has broken 50 day MA. Will the cyclical Dow hold up or do we hide?

gsmith4:

I'm Net short if that tells you anything.

cmind_59 asks:

Gary, how does EFAX look to you near-term? Will it recover?

gsmith4:

My take would be to short it once it got back to its 50 day MA.

ajp00 asks:

Gary, what are your thoughts on CMGI?

gsmith4:

Broken.

AHenschke asks:

In your opinion are options too expensive as a whole to get into?

gsmith4:

They're not too expensive. The problem is that between the bid/ask spread and the time delay, they're brutal to trade.

hojoedo asks:

Gary, when you're determining whether or not to take a position do you use any other criteria (fundamentals, short interest, etc.) to validate the trade?

gsmith4:

Zippo.

rdtu asks:

Gary, short SUNW?

gsmith4:

Has fallen pretty far lately. Too risky for me to short!

malcolm88 asks:

Gary, what do you mean by "big trouble" (on msft) or "very bad" (on NTBK)? Do you see a 10 to 20% correction on these stocks?

gsmith4:

Hmm, hadn't thought about the percent correction. But in some cases, yeah, they could drop that far.

_sharper asks:

I saw that the 200 day moving average over a 10 year period is a smooth line for GE and MSFT, is that a critical line for evaluation? The stocks seem to be falling back down to that level.

gsmith4:

The 200 Day MA is usually critical because everyone THINKS it's critical.

psycho_trader_68 asks:

Gary, any comments on knt and fgci?

gsmith4:

KNT had a nice breakout a few days ago. Resting now, but still looks strong.

bigcat567_1999 asks:

Gary, What does the chart show on PENN? Seems to have bad resistance at 10.

gsmith4:

PENN looks fine. Probably one more shot at $10 in the next few weeks.

theking810 asks:

Why did the Barnes & Noble IPO flop?

gsmith4:

Today was "Get mad at .com" day!

Daimler600 asks:

Gary, good pick on HAUP?

gsmith4:

Blind squirrel finds acorn, Daimler!

max_powers asks:

I've used Stochastics during the net days of April. They suggest an upturn soon. Any thought on Stochastics?

gsmith4:

Don't use 'em. Sorry!

AHenschke asks:

What is the most (percentage) you ever trade in a sector (if you have a limit)?

gsmith4:

I don't limit myself by sector, AH. A bit of both. Some of the 'Net stocks, are past correction, though: they're in a depression!

LeeD13 asks:

Hey Gary, you think Vanguard Corp. is good to invest with?

gsmith4:

A Pennsylvania company, so you have to love 'em.

AlHillbilly asks:

We know quite a bit about your daughter. especially her swimming acomplishments. What about Mrs. Smith?

gsmith4:

Ah, the MRS: she's actually the true star: CEO of Digex, Inc.

MysteriousGypsy asks:

Gary, what do you make out of AMGN chart?

gsmith4:

Oh boy. Another dangerous stock. See my wed column on what to look for with these "near support" stocks.

uttbani asks:

What do you think of NOVL?

gsmith4:

Looks like it topped in April. I'd rather be short than long.

max_powers asks:

INTC? Is it over?

gsmith4:

...and out!

Trench_rat asks:

Gary, do these aberration type spikes throw a chart off, or do you just ignore them?

gsmith4:

I generally ignore them. Stuff like the October low spike, I just factored out. A judgment call, of course.

tcmotel81 asks:

I have heard the FED is trying to keep the price of gold low to help ward off inflation; your response please.

gsmith4:

Get Greenspan on line 1!

AlHillbilly asks:

The biotech frenzy came and went. The Internet frenzy looks to be over. What will be the next frenzy?

gsmith4:

I'm hoping it's Bethesda home prices!

AntSha asks:

Could this be the end of the bull market for now?

gsmith4:

Could it be? Sure. But this market has warded off enough plagues to make me wary of announcing the death knell!

ryedaguy asks:

Gary what do you think of MATT?

gsmith4:

Very Strong. But, a bit overextended.

Trench_rat asks:

Do you disregard low volume sell offs when you look to get in cheaper, or is any sell off a sell off?

gsmith4:

No, I'd prefer low volume. On the other hand, I never buy on the pullback.

stocktraitor_99 asks:

What does the spike in the utility stocks say about where bonds are going?

gsmith4:

Up (in yield) would be my guess.

Trench_rat asks:

Do you agree that all the "margin" boys are killing this market with more selling than usual because of an inability to cover margin calls?

gsmith4:

I don't know if they're killing the market, but they sure are adding to the volatility.

falcomex asks:

Gary, how does rnwk look to you today at support or fallen through, a short tomorrow?

gsmith4:

Definitely broken. But as a short? It' s probably fallen too far for me to take it.

jkcfp asks:

This is Karin, sorry I am late. Had to pick myself off the floor.

gsmith4:

Ah, I see: the market fell on top of you, Karin. You and many folks!

coolmonica67 asks:

How do you feel about the world today?

gsmith4:

You know, pretty good. The Kemper Open starts this week; my family is in good health; and the finale of Spin City is on tonight. So, you know, all is well!

TSCEllen:

Thanks Gary!

gsmith4:

Thanks, Ellen! As always, you were superb. Thanks all for joining in! And make sure to read both my Wednesday and Friday columns this week. Mucho good stuff!

gsmith4:

Oh, and I'm getting an elbow in the side: THANKS, DIANA for helping me with the charts tonight!