The Market Gets the Benefit of the Doubt
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. Gary is also
editor and publisher of “Gary Kaltbaum’s Trendwatch”…a weekly and monthly
technical analysis research report for the institutional investor. If you
would like a free trial to Gary’s Daily Market Alerts
click here
or call 888.484.8220 ext. 1.
I have been talking to you about subtle negative
action in the NASDAQ/NDX. In spite of the strong seasonal strength we have seen
the past two days, the divergence remains…especially in the NDX. But first,
let’s talk about what is right with the markets.
It is a positive that the Dow and S&P continue to
trade above moving averages…and have shown literally no ability to correct.
MEGA-CAP names like
(
GE |
Quote |
Chart |
News |
PowerRating),
(
C |
Quote |
Chart |
News |
PowerRating),
(
AXP |
Quote |
Chart |
News |
PowerRating) and others are helping out here.
It is a positive that WORLD MARKETS continue to
do well…though many are now ridiculously extended and due for a pullback.
It is a positive that the SMALL CAP and MID CAP
indices held the 50 day average…TO THE PENNY in the past couple of days…and
have ramped back up.
It is a positive that we are seeing breakouts in
selective FINANCIALS like
(
C |
Quote |
Chart |
News |
PowerRating),
(
CMA |
Quote |
Chart |
News |
PowerRating),
(
AXP |
Quote |
Chart |
News |
PowerRating),
(
KEY |
Quote |
Chart |
News |
PowerRating) and others. It
is never bad when FINANCIALS are working.
I think it is a positive that OIL PRICES are in
the midst of breaking down. There is no doubt that there is a direct correlation
with stock markets and OIL PRICES. OIL PRICES topped in July…the stock market
bottomed in July.
So…for the hundredth time, until these major
averages break moving averages or even near-term support, the market gets the
benefit of the doubt.
BUT…there is some subsurface technical action
that do give us pause. As of this juncture, it has not affected the overall but
you still need to make note of.
The TRANSPORTS are in their own private bear
phase. We are NOT Dow Theorists so we are not too worried about this…but
believe you should be underweight this area this second.
NEW HIGH have improved the past couple of days
but have not even come close in confirming recent highs in the Dow…simply
meaning fewer and fewer stocks are keeping up. Maybe this is just a pause and
they will catch on again…but must make note of it.
We then finish with the NASDAQ and NDX. We
mention this because these areas have had a great reputation for leading the
markets both up and down. Again, maybe this is just a pause but as of this
second, the NASDAQ and more specifically, the NDX are laboring a bit here
especially when comparing to the Dow and S&P. The last time this occurred was
in the March/April period before the market went into an intermediate term
correction.
That said, there is no way the Dow and S&P will
get in much trouble until we see some of those MEGA CAP names show
distribution…and that has not happened yet.
So…let’s not sweat things yet. The New Year is
upon us…and for sure, we’ll take a repeat of 06 in 07.
At this time, my staff and I want to wish
everyone the happiest and healthiest of New Years…and don’t forget, think
about doing something for someone you need absolutely nothing from.
Gary Kaltbaum