Get The Heck Out Of The Way!
“Get the heck out of the
way.” Yup…that’s what I said. Three times in my January
17 report, I said to get the heck out of the way. I don’t know why I said
it. It just came out because…once again…I saw the perfect storm
converging. High-volume negative reversal day,
plus extreme bullishness, plus leading
stocks breaking down has almost always equaled lower prices. So, here
we go again. The markets are back on the
defensive…particularly big caps.
I don’t know why, but all of a sudden I am thinking about
Stork from “Animal House.”
His most popular line: “So what are we supposed to do you morons?” I
don’t think we are a bunch of morons, but I do
think it was one heck of a funny
line, and when markets buckle, comedy is a necessity. What are we supposed
to do? Let’s look at the tape.
The DOW went through the important support I outlined for
you at 9700.
The S&P 500 dropped below 1115.
The NASDAQ broke below short-term support at 1918 and
looks headed for important
support at 1870.
There is some light at the end of the tunnel. Most of the
damage was done in the large
caps. I am still seeing constructive action in the small- to mid-cap
areas. I will stay with them, but have a
closer watch. Rest assured, if the markets
continue this buckling…small- and mid-caps will follow suit.
The other light comes from the next
exercise I will be doing. It is easiest to
isolate strength in weak markets. So, I will be looking for stocks and
sectors that refuse to go down, have the best
relative strength, and are setting
up to break out.
Hang in there.
Gary