How To Tell How Strong Or Weak The Market Is

  • July 27, 2004
  • Gary Kaltbaum
Short but sweet.

 

To say the least, the market’s action has been
gross. In fact, the major indices have pulled somewhat of a bungee jump over
the past few weeks. Everything I have said to you in the past few weeks stays.
But…It just feels a wee bit sold out…a wee bit. What this possibly means
is that any day…a bounce is coming. Have I thrilled you yet?

 

Bounces serve a simple purpose: they work off deep
oversold conditions. Until bounces show conviction measured by strong volume,
they will qualify as nothing more than sellable bounces. If volume kicks in,
we then have something to watch. Our discipline makes us wait for the market
to prove itself. As of this second, it has not. 

 

I have always told you it is easiest to tell how
strong or weak a market is by how it bounces after a drop.  I think we may
have that chance soon. And if a bounce does not occur, you know the drill.

Gary Kaltbaum