Don’t Pay A Stiff Penalty

A few thoughts:

Needless to say, yesterday’s action was gross as the market gapped down on
on events beyond our control. India’s market dropped 17% intraday and another
murder in Iraq were the catalysts.

My main point today will stray a bit from what I have been saying…but
only for the short-term. Longer-term, the tape is still a mess, the charts are a
mess and leadership is non-existent. BUT — and I am not trying to micromanage
the market — if you zig when you should be zagging, you will pay a stiff
penalty.

FOR THIS SECOND, I BELIEVE IT IS TOO LATE TO SELL AND TOO LATE TO SHORT.
Understand, this is not a longer-term call. Most stocks are very extended to the
downside — extended to the point where you would expect a bounce. In other
words, do nothing. I suspect bounces will occur. Oversold conditions do get
worked off by bounces. On top of the extended condition to the downside, I am now
getting questions on my radio show about shorting. These types of questions are
not asked while the market is going well. They are asked after drops have
already occurred. The last part of the equation is the word “feel.” It “feels”
like yesterday was the “bad news” sell day. It’s the point where all the bad
news gets factored in.

Do not get sideswiped with this shorter-term thought and miss the big
picture. Bounces can last days…and yes, bounces can last just a
day. Shorter-term thoughts are just that…shorter-term

There remains no leadership.

In the whole market, I found maybe 25 quality bases…a whopping 25
names.

Volume patterns continue to stink up the joint. High volume drops and low
volume bounces ALWAYS lead to lower prices. That must change.

Most groups are in downtrends.

World markets have gone for the ride.

Gary Kaltbaum