How Last Friday’s Action Told Me Where The Real Strength Was
The markets bounced
right where they should have and in fact, for
the umpteenth time, the Nasdaq bounced right off its 50-day average. My main
problem was that Friday’s volume was suspiciously below average for such a
strong day. BUT…Friday’s action gave me a chance to see where real strength
is right now.
First off, RETAIL stocks are now getting money
flows. A few names are breaking out at the same time. Here are just a few.
On top of Retailers, here are other leading names
that on the first day of a bounce from oversold conditions, ramped up and
showed true strength.

The two important points I wanted to make:
- First off…and as I have said many times, as long
as there remain a ton of stocks in good technical shape, the chances of a new
bear market are slim to none…only short-term corrections will occur. As of
right now, there is about 7 out of 10 names in positive shape. - Secondly, it is no longer a dart-throwing market.
Very simply, I am finding plenty of stocks breaking down. In other words, as
this bull move matures (and yes, it is very mature) fewer and fewer stocks
are participating in any rally. It is going to be tougher…it is going to
remain choppy as the market starts to distribute certain names. It now becomes
more important to cull any weakness, whackouts and breakdowns and raise your
bar. It is a positive that rotation continues (RETAILERS look to be the latestrecipient of inflows). Make sure you stay in gear with the rotation.
Gary Kaltbaum