Here’s What I’m Looking For On Any Pullback
There is not much to add from previous reports.
Right now, the market is in gear. The turn was not just quick, it was sudden.
It started with the positive divergence and the outperformance in the NASDAQ
and led into other areas. Here are some important thoughts to think about from
both ends of the spectrum:
We are already hearing that a TECHNOLOGY bull market has started. OK! It is
amazing that it never takes much to get the TECHIES out of their cave. The
good news is that right now, the worst thing we can say about TECH is that the
recent move is extended and due for a pullback. It would be quite normal for
the NASDAQ to pull back a few percent here. We would want to see any pullback
occur on light volume and hold support.
Major indices are now back above their short and long-term moving averages. We
are big believers that major indices need to stay ABOVE these areas. As we
stated, we do expect a pullback sooner rather than later…but feel pullbacks
will be on the nominal side at this juncture. As we stated about the NASDAQ,
any pullback needs to be on lighter volume and to hold recent support.
We have put more sectors in the positive column. As you know, during the 4
month “ugly,” almost every sector joined the party to the downside. Keep in
mind, there are still more sectors in poor technical shape than sectors we
would overweight. We are still suspect about the COMMODITY areas, though they
have improved also.
This leads us into our next thought:
We have talked about the “nauseating trading range” for many moons. For sure,
the market has improved. But we are going to have to see a lot more before we
REALLY get excited as we are just back into the middle of the “nauseating
trading range” that has been around since late ’03. Notice we are not even talking about what has happened since
’00.
Gary Kaltbaum