Here Are My Two Concerns…
Individual stocks are acting well. Notice I did not say the
“market” is acting well. This is something we have to be watching from here. You
see, it is a big positive that on a daily basis, the advance/declines have been
doing fine. It is a big positive that the NEW HIGH LIST
has expanded. It is a big positive that more and more names have been breaking
out of low-level bases, mid-level bases and to new highs.
My two concerns are
simple. Firstly, the Dow continues to churn at resistance and is having trouble
breaking through. The bottom line is the longer it takes, the more odds favor a
drop from here. Secondly, sentiment remains gross…and in fact, I am now being
told that sentiment does not matter.
Yes, after nailing every drop in the last three years, partly because of my
sentiment indicators…all of a sudden, they just don’t work anymore. I will let
you decide but there is one indisputable fact when it comes to the stock
market…it is out to fool the masses…and when the masses are too complacent
and too bullish only a few weeks off of a six-year low for the NYSE, I begin to
wonder. We shall see.
Nevertheless, didn’t
mean to throw cold water on things but that’s my job…to keep your feet on the
ground. Just when you think everything is fine, the market tends to bite.
Don’t let my comments
stop you from buying the high-volume breakouts. Things are working right now and
working the way one would want. In fact, I have not seen so many setups since
mid-99 when many TECHS were coming out of bases
followed by the breakout in the Nasdaq. Of course, this is different because of
the massive resistance ahead caused by the bear market but there still is money
to make as long as this continues.
No matter what…protect your capital and keep stops on everything.
Gary Kaltbaum