Earnings Season Begins, And This Is What I’ll Be Watching…
For starters, I couldn’t
care less what people say about the first
five days of the year. Yes, the action was gross but let’s not get
crazy about what it means. There have been years where the market had a bad
year after a bad first week but in 1985, 86, 91, 93 and 98, the market was
higher at the end of the year…SO…pay no attention.
care less what people say about the first
five days of the year. Yes, the action was gross but let’s not get
crazy about what it means. There have been years where the market had a bad
year after a bad first week but in 1985, 86, 91, 93 and 98, the market was
higher at the end of the year…SO…pay no attention.
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The most important things you need to know:
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Tops don’t happen overnight . If this was the top,
expect a lot of backing and filling as the market puts in a top over time.
expect a lot of backing and filling as the market puts in a top over time.
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There is a chance the MOMENTUM TOP has been put
in. We called the same thing last January and then watched some serious uglY
until the market decided to bottom again late in the year. This means that the
major indices can go higher but less and less stocks do the lifting.
in. We called the same thing last January and then watched some serious uglY
until the market decided to bottom again late in the year. This means that the
major indices can go higher but less and less stocks do the lifting.
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A ton of stocks and sectors broke the important 50
day average. In fact, the small cap indices have started to deeply penetrate
this important short-term moving average. The NASDAQ and NASDAQ 100 are just a
wee bit below.
day average. In fact, the small cap indices have started to deeply penetrate
this important short-term moving average. The NASDAQ and NASDAQ 100 are just a
wee bit below.
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Leadership names have been crushed. Only a handful
like AAPL have been left standing.
like AAPL have been left standing.
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Volume was heavy. If there is anything that will
kill a rally, it is high volume drops by the major indices and leaders
buckling.
kill a rally, it is high volume drops by the major indices and leaders
buckling.
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Advance/decline figures have been horrid.
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There is now a clear lack of bases to buy off of.
At the very least, it will take time to repair some of the damage being done.
At the very least, it will take time to repair some of the damage being done.
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The market has been selling off into the close.
Another lesson you need to know is that when the market is in bull mode,
closes tended to be bought and vice-a-versa. All these negative
characteristics will need to change. The market does not stand a chance unless
it does.Â
Another lesson you need to know is that when the market is in bull mode,
closes tended to be bought and vice-a-versa. All these negative
characteristics will need to change. The market does not stand a chance unless
it does.Â
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The market is short-term oversold and should
bounce…just based on price. But, it is the type of bounce that will tell me
the real next move. If the volume is light and the A/D does not improve,
expect another wave of selling in short order. Lastly, if the S&P and DOW join
the party trading under the 50-day average, then things may get even tougher
in marketland.
bounce…just based on price. But, it is the type of bounce that will tell me
the real next move. If the volume is light and the A/D does not improve,
expect another wave of selling in short order. Lastly, if the S&P and DOW join
the party trading under the 50-day average, then things may get even tougher
in marketland.
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Lastly, earnings start coming out in droves this
week. During the last quarter, I kept telling you that bad news was being
bought. I am going to be watching closely how the markets accept supposed bad
earnings as well as good.
week. During the last quarter, I kept telling you that bad news was being
bought. I am going to be watching closely how the markets accept supposed bad
earnings as well as good.
Gary Kaltbaum