Summertime, and the Market Isn't Easy
Is it starting to get warm where you are? It sure is here in little ol' Bethesda. Why, it was just a week ago I had the heat on. And just last night, the air conditioning. In fact, in only four short weeks, the kids have their first
outdoor
swim meet.
So, summer is right around the corner, and things are heating up. Keep in mind, though, the May to October time frame is
not
a historically hot time for the market. In fact, if you sit out the summer and fall each year, you're normally ahead of the market. In some years, far ahead.
Will that play out again? I haven't a clue!
However, I do have a clue about the charts below. Not any great clues, of course, but clues nonetheless. Just email my aide,
Alicia Silverstone
, at
technicalforum@thestreet.com. She will forward all interesting requests directly to me.
Make or Break Time For GE
Gary: How about a look at General Electric (GE) - Get Report? This stalwart seems to be having problems cracking the 160 level and staying there. -- Bob Morris
Will Terra Networks Seek Terra Firma?
Gary: What's happening with Terra Networks (TRRA) , especially with the lockups looming on May 12. -- David Peck
Excellent Question
Gary: From a technical analysis standpoint, how do you attempt to filter the charts with outside information, such as, oh, say the Soros Effect, on the market for the last (at least) month? When a $20 billion group throws money at a sector, loses $5 billion in less than 30 days, and kills every rally before it can sprout (in effect, having the house change the rules of the game), don't you have to somehow filter your chart analysis through that? Just wondering. -- Jim Freyer
Jim:
You raise a good question, and one asked quite often. That is, how do I incorporate outside events, particularly extreme outside events, into my charting? And the answer is, I don't.
Two reasons behind that. One, how would I make the cut of which outside events to include? OK, I discount Soros' selling. But, what about the next cut-down of hedge funds? How and where would I draw the line?
The second reason is that even if I could draw a line, what exactly would I do with that info? Assume the charts are
not
broken, and that prices are 10% higher than current? Do I assume tech is not broken, but drugs are?
Really, when you start trying to incorporate
any
outside events, as well as fundamentals into your charts, you really muck up the process and probably add nothing to your analysis.
Gary
Seeking a Second Opinion
Gary: Could you give me your take on Sun Microsystems (SUNW) - Get Report? It looks like it wants to go up, but like going to the doctor, I want a second opinion. -- Phil Sharlet
The Declining Volume Death-Knell
Gary: Would appreciate your take on Safeguard Scientifics (SFE) - Get Report. -- Mike Cotton
No Gold in Goldman
Gary: How about looking at a chart of Goldman Sachs. It's off the highs of March. Is there trouble ahead for this investment banker? -- Richard Lee
The Exodus from Exodus
Gary: Enjoyed your review on Saturday, will you consider a review of Exodus (EXDS) in the near future? Given the wild ride and volatility, I would appreciate a technical analysis perspective. -- Dave Degen
Nice Breakout!
Gary: I have put money into NBTY Nature's Bounty Inc. (NBTY) , and am interested in the pattern/volume analysis and if it would meet your criteria. -- Winfield Henry
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@attglobal.net.
