Why Is The Dow Lagging? Here’s Why…
Gary Kaltbaum is an investment advisor
with over 18 years experience, and a Fox News Channel Business Contributor. Gary
is the author of The
Investors Edge. Mr. Kaltbaum is also the host of the
nationally syndicated radio show "Investors Edge" on over 50 radio stations. To
receive Gary’s intraday setups,
click here or call 888 484-8220 Ext. 1
The market, on a daily basis, is a battle of
supply and demand. When demand outstrips supply, the markets go higher. When
supply outstrips demand, markets go lower. It’s as simple as that. In the past
couple of weeks, I have been telling you of the fight going on between supply
and demand…and at a critical juncture. I have outlined for you critical
short-term support levels and told you that if broken, what had been a
controlled correction…would turn into something more of consequence. On
Wednesday, supply won the battle…leading to all major indices breaking
near-term support levels. Volume was heavy.
The weak and laggard DOW broke 10,500 and is
headed for its first line of defense at around 10,200.
Also
of note is that the DOW is now trading below all moving averages. It is not
hard to figure out why the DOW is lagging. Just take a look at the following
charts.
MMM is sitting at yearly lows.
C is attempting new lows.
DD is in new lows also.
The S&P also broke support at 1220…which just
happened to be its 50 day average. The S&P has support at the 1190 area.
The NASDAQ, which has been showing better relative
strength, reversed a strong day to move under its 50 day average. The NASDAQ
has very strong support at the 2100 area…which may or may not be tested.
I don’t need to tell you that the internals of the
market continue to deteriorate. Many sectors have lost their leadership
qualities. It is a simple procedure right now. Kick back and wait for the
markets to show confirming accumulation…and then start wading back into the
water. For sure, I still am seeing a decent amount of individual
leadership…but more distribution will take care of that.
Gary Kaltbaum