End of year worries?
Gary Kaltbaum is an investment advisor with
over 18 years experience, and a Fox News Channel Business Contributor. Gary
is the author of
>The Investor’s Edge. Mr. Kaltbaum is also the host of the nationally
syndicated radio show “Investor’s Edge” on over 50 radio stations. If you
would like a free trial to Gary’s Daily Market Alerts
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Major indices sit a stone’s throw away from their highs. Major indices are
above their breakout points as well as their major moving averages. Major
indices have hardly shown any distribution whatsoever. So why have I begun to
be worried? Everyone knows the market will rally into the end of the year.
Everyone knows the market will have a strong January as new money enters the
market. Everyone knows the economy is strong. Everyone knows the Fed is going
to stop raising rates. Everyone knows…and that is why I am starting to get
worried. Let’s talk sentiment. Keep in mind, sentiment is a secondary
indicator…but when things go to extremes, I take notice.
It is a worry that the percentage of bullish advisors is now up to 58.8%, the
highest reading in months. It is a worry that put/call figures have reached
their most optimistic point in a couple of years this past week. It is a worry
that so many IPOs and secondaries have been coming out. Lastly, it is a worry
that EVERYONE believes further upside in this market is a lock. You get the
hint. Have you heard from any bears recently? But just because sentiment is
poor, it does not mean the market will go down. Technically, the worries only
start compounding if these levels are breached: DOW
(
DJX |
Quote |
Chart |
News |
PowerRating)…10,729…S&P
(
SPX |
Quote |
Chart |
News |
PowerRating)
1249…NASDAQ
(
COMP |
Quote |
Chart |
News |
PowerRating) 2230….NDX 1671.
Technically, while the major averages have seen little, if any trouble, I
continue to see some subsurface damage. Major averages are doing well because
MEGA-CAP stocks have been taking the lead. I am not so sure this will last.
Underneath the surface, I have two important problems. Firstly, most A/D
figures are now woefully underperforming and secondly, NEW HIGH/NEW LOW
figures are an abomination compared to where the market is.
That all said, until those levels are breached, I will give the market the
benefit of the doubt. I also do know that historically, the next two weeks are
weeks of seasonal strength…and there is usually no use in fighting
that…usually! I also like the fact that world markets continue to be in
gear. I also like the fact there are more stocks and sectors in good technical
shape compared to those who are not. I just wanted to give you a head’s up
about the silent subtle changes I am seeing…that may or may not come back to
haunt the market.
Gary Kaltbaum