A bounce is possible, but focus on what matters
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 “Investors’ Edge” on over 50 radio stations. If you
would like a free trial to Gary’s Daily Market Alerts
click here
or call 888-484-8220 ext. 1
First off, happy holidays to all my
Jewish readers.
I wish I had better news about the market. Despite oversold
and extended conditions to the downside, this market cannot find a friend. I
do suspect a bounce will occur somewhere…but the most important thing to
keep in mind is that bounces are about the short-term trend. Keep your eye
focused on what really matters…and that’s all the major deterioration we are
seeing on a daily basis.
The SOX
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PowerRating) finally has played catch-up with the rest of the
market. I have told you many times as bear phases go deeper, the market
usually finds just about all sectors to pick apart. The SOX has now dropped
below the 452 short-term support area and has violated its strong July
breakout. The SOX is probably the most oversold area near-term and is due to
bounce…but like most sectors, bounces are now sellable.
The NASDAQ’s
(
COMP |
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PowerRating) wide and loose action has now resolved itself
to the downside. The strong 2100 has been violated. 2040 is going to be key
support. Watch that number.
The Dow feels like it wants to try to stall its recent drop at or around July
support. If it fails, the next stop is what I consider the major line in the
sand…the ever-popular, psychologically important 10,000. Last April, the Dow held 10,000 to the penny.
The S&P
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PowerRating) has now lost its lead over the DOW. For a very long
time, the S&P had much better relative strength than the DOW. It also has held
its July Support around the 1183 area. A break below and see you at 1150.
I suspect that the Dow and S&P will put up a fight around
here. They are at support and oversold. But don’t let that change your stance.
This market cannot put up with the constant barrage of selling as well as the
poor ADVANCE/DECLINE figures we have been seeing. For instance, on Tuesday,
the DOW was up 14 but decliners led advancers by almost 2-1.
Lastly, I received a lot of emails and complaints about my
stance on Alan Greenspan and the Fed. Funny, I am not seeing any more of those
complaints. The bottom line is that the Fed has been behind the trend and
behind the curve for years. I find it amazing that after inflation is already
in the system, they decide there is inflation. Didn’t they know that oil
products go into everything including your Reeboks and your Nikes? They are
now in a box as they feel they must raise rates to whip inflation but at the
same time, is causing a massive sell-off in consumer stocks and probably cause
a major slowdown in consumer spending. I can go on and on about Big Al but I
will be nice.
Gary Kaltbaum