As Long As I See These 3 Things, I Am With This Market
After last Tuesday’s follow-through to the
upside, I penned these words:
“I couldn’t say it any better.
I have been waiting for this type of action for over 4 months…and we are
finally getting it. I am already hearing both sides yap away. The bulls say the
“correction” is over. The bears say it is a short-covering rally which will be
short-lived.
Gary says…as always…let
the market be your guide. It is a simple procedure. The market held its low and
because of Tuesday’s action, I would be done with the short side. Because of
Tuesday’s action, I would be probing the leaders. If they keep working, you
become more and more emboldened. If the leaders start to fail, you act
accordingly. Don’t worry about what title people are giving to the market…bear
market…bull market…dull market. It all does not matter. There is major
resistance straight ahead. If you think this is going to be easy from here, you
may be disappointed.”
Since, I cannot say anything bad about what I am
seeing…but let’s not get too crazy yet. Here are some thoughts:
On the positive side…
Major indices are now back above their 200-day
averages. This is very important…very important. Some are now firmly back
above their 50-day averages.
I am seeing many names turn the corner and come
up their right side.
I am seeing a decent amount of names poised to
break out. This is in stark contrast to the past four months. LXK and MOT come
to mind.
I am seeing leadership names show power. This
is one of the more important signposts for you. EBAY and RIMM come to mind.
This latest move was much better than I
anticipated. A/D figures on a daily basis have been strong.
OIL prices have been coming down and BOND PRICES
are finally cooperating a bit.
On the negative side…
I am still finding plenty of short or sell
candidates but the numbers are getting better..
I am still finding more groups in poor technical
shape than in good technical shape…but the numbers have been getting better.
Four months of resistance lie ahead though the
small cap indices are already through a lot of it.
For this second, I am going to continue to give
the long side of the market the benefit of the doubt. BUT…do not forget my
thoughts that we are in the latter stages of this bull move. The market is way
past the point where you can be bailed out by mistakes. As long as the major
indices hold their moving averages, I am with it. As long as breakouts are
working, I am with it. As long as volume patterns remain in better shape, I am
with it. If you are worried about a turn back down, don’t sweat it. Look how
this column…to the day…transitioned you out of the short side and into the
long side. If things change again, we will know just by the market action. AND
if the market starts to whipsaw, we just head for Hawaii.
Gary Kaltbaum