Here’s The One Area To Watch…
Amazingly, all we are hearing is that the market dumped yesterday because OIL
went above $60. Are you kidding? What’s the difference between $59 and $60.
All in all, we want you to know that we believe a trading top has been put
in…and there is a decent chance for an important top has been put in. For
sure, there are still plenty of stocks in good shape but nothing buyable as
the RETAILERS and OILS are extended. We think it is time to take the foot off
the pedal and see where this wants to go. One day’s action does not change the
world. ..but we do not want to ignore what we have just experienced.
The lagging TRANSPORTS croaked first. It fell below all moving averages and
on volume. This remains a place to stay far away from. RAILS, TRUCKERS and
AIR FREIGHT were all yonked.
The DOW, which has also lagged, broke below its 200 day average and gave
back the past few week’s gains…all in one day. One only has to look at the
chart of GE, IBM, MMM to know why the DOW lags. A break below 10,400 would
negate its May breakout…and odds favor that will be the case.
The one area that needs to be watched is the SOX. It was breaking out on
Thursday and the jury is still out. We believe the SOX was taken down by the
rest of the market. In fact, it was actually up on the day.Â
CYCLICALS, BASIC MATERIALS and the like, after trying to bottom, have now
gagged again and are acting horrid.
We will have a lot more for you after the weekend. No matter what, this game
is going to remain very tough to play. Where have we heard those words
before?
I will be appearing on “Cavuto On Business” at 1030 am et Saturday on FOX
NEWS CHANNEL. Do not miss it.Â
Gary Kaltbaum