I Am Interested In This One Thing
This report is strictly by the
book.
The market, in the past two days, served up a
decent bounce off of very oversold conditions. The NASDAQ 100 came closest to
the long-term 200 day avg…and so far, has held. I was not impressed with
Tuesday’s action. The DOW was up over 90…but advancers were even with
decliners. Wednesday was different. This time, advancers led decliners by a 2
to 1 margin. The market needs much more of this. There was one major flaw of
the past couple of days…volume…or lack of. Volume came in a wee bit
heavier on Wednesday…but still lacked the conviction I want to see. The good
news about Wednesday’s action was that the market finally delivered power into
a few leading names. These names have been ripped apart over the past few
weeks.
I will be interested in one thing from here…a high volume follow-through
day…preferably starting on Monday. That would tell me the latest downturn
would be over…for now. If this does occur, it does not mean you go out and
buy with abandon. Bases need to form again…and that will take time. It would
be a good start though.
You should then start scanning the NEW HIGH LIST for emerging names. In the past
few days, we have seen strong breakouts in names like PNRA, HOLX, SYD, JNJ, ERTS and
a few others. The more things start to work, the more emboldened we can become.
Keep in mind, no matter what, I do believe the momentum high has been put in.
This simply means fewer and fewer stocks are going to participate in any rally
at this juncture.
Gary Kaltbaum