Editor’s Note: This article was intended for 7/26/10. It has been re-published for informational purposes at the request of Gary Kaltbaum.
Gary Kaltbaum is an investment adviser with over 25 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.
Commentary for July 26, 2010
I am now back to my normal writing schedule as the summer of Gary is almost over.
The last time I wrote the market was getting smoked and breaking below important support…but that lasted all but a couple of days. After a 15-20% drop in most major indices, the market finally caught a bid and that bid continues. No doubt, the action has been spastic. Just a bunch of constant gaps and reversals. The good news is that the market shrugged off a couple of nauseating days in the last week and have now moved major indices back above the 50-day average…but more importantly, I am starting to see some leadership.
The best part of the action started Tuesday as the down and out METALS/MINING/STEEL/COPPER finally caught a bid…and a strong bid at that. After a four day romp, they are already overbought. On top of that, the blasted consumer areas like RETAIL have also finally looked to have turned the corner. Just keep in mind, these areas are just getting back some of the serious losses that occurred in previous months.
Now…just because patterns look much much better and things are finally starting to break out, we know one thing. We are in more of a news-driven environment than any time in the market’s history so we must stay on our guard…but notwithstanding the fact that market is near term OVERBOUGHT and could pull in, until the market shows distribution again, I am giving it somewhat of the benefit of the doubt…but don’t blink. Just know there is massive resistance overhead and anyone expecting this to be easy has another thing coming to them. And just as a point of reference, markets are now just to where they were 6-7 months ago…umm…just back to where they were in October ’08…ummm…back to where they were in 2001…ouch!
So…overall, the good news is that major averages are back above the 50-day though most remain below the 200-day…and will now encounter loads of resistance. But for now, the action is better. As always, I have no clue how long a rally lasts or how far it goes but will try to take it for all its worth. Your own review should be the new high list as all leaders hit that list eventually. The first names are usually the strongest. Do keep in mind there is still a ton of earnings to come out and you should know when companies are reporting.
Politically, a rally would be the norm as we get toward November, as predictions are for gridlock going forward if the party in the minority either gets close or actually wins back both houses. None of them thrill me but to have Washington go into a standstill mode after the taxpayer castration we are seeing and are about to get in 2011, standstill is good.
One last word on the positive European bank stress tests…HA!
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