Here’s What My Number One Indicator Is Telling Me
The market is proving
itself here. Simple as that. Our  #1 indicator has always been how
many stocks are in good technical shape and what stocks they are. As of last
week, I would venture to guess only about 3-4 stocks out of 10 were in good
shape. Then, we saw the NASDAQ turn. Then, we saw FINANCIALS turn…then we
saw RETAILERS turn. Now many others are joining the party. What do I mean by
the word “turn”? It means that stocks held support and are now coming up the
right side. Simple as that. It tells me that that stock’s low is in and gives
the market another stock out of the negative column into the POTENTIAL
positive column. I then rank them…from the one’s just turning up off the
lows…to the ones moving out of mid-level bases…to the ones breaking out to
new highs. For example…one coming off the lows is MAN. That stock is not in
the positive column but the more stocks that come off lows, the fewer stocks
can go down…one coming out of mid-level is CAT…and one coming out of a
great base is JBX.Â
Some notes on Wednesday’s action:
We still feel all most of the COMMODITY areas are
in trouble. OIL could hardly catch a bid.
We still believe some of the HEALTHCARE areas are
vulnerable here.
For Wednesday, that was the bad.
The good:
Volume was strong. It’s about time. Wednesday was
a strong accumulation day…any way you cut it.
Many groups…which had been in downtrends…are
turning the corner.
Major indices are plowing through resistance
areas.
OIL is down. Yields on the 10 year are down
to almost 4%.
NEW HIGHS are picking up as breakouts are
occurring for the first time in quite a while. Â
Let me just say, the past 2-3 weeks have been
about the toughest to gauge we have experienced in a very long time. Normally,
we have stayed a wee bit ahead of the game…and that’s all we ever needed.
But the past 2-3 weeks were impossible. 100 points up…100 points
down…reversals to the upside…reversals to the downside. So far, it is NOW
becoming evident the market is trying to resolve itself to the upside.
BUT…and not to throw cold water on 300 points in 3 days…but it is just
that…and we have seen this before. The market is just back in the middle of
the nauseating trading range that has been going on for much too long. The
sharp swings didn’t just start this week. Keep in mind, most major indices are
right where they were in Dec 03…not to mention where they were in 2000.
So…don’t think for a second that this game does
not remain tough. Shorter-term, markets are extended. If we had the market do
our bidding, we would get a nice quiet pullback before the next move up…but
asking for a nice quiet anything in this market is a reach.
Gary Kaltbaum