Interpret The Action, Don’t Try To Predict It
I continue to be amazed by the wildly divergent action in the market.
Just in the past week, the TRANSPORTS hit a new yearly high at the same time
the DOW has hit a new yearly low. Speaking of the TRANSPORTS, if you told me a
year ago that OIL today would be $55, I would have told you the TRANSPORTS
would be at 2000, not 3400. This is the main reason why we do nothing more
than interpret the action and not try to predict.
Just in the past week, the TRANSPORTS hit a new yearly high at the same time
the DOW has hit a new yearly low. Speaking of the TRANSPORTS, if you told me a
year ago that OIL today would be $55, I would have told you the TRANSPORTS
would be at 2000, not 3400. This is the main reason why we do nothing more
than interpret the action and not try to predict.
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Lots to cover today!
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Longer-term, nothing has changed. I still believe the momentum high for this
cycle was hit in late January and will not be topped. This simply means that
fewer and fewer stocks are now in good technical shape and are leading the
market when it rallies. Major indices can hit new highs but will not carry all
the soldiers with them. As I have said on numerous occasions, this is classic
late inning action. And now, I am starting to see the same type of action we
saw in early 2000…of course on a much smaller scale. While TECHNOLGYÂ and
INTERNET are now outperforming, many big-cap names are absolutely gagging and
in their own private bear markets. One only has to look at Citigroup at new
yearly lows, MMM gagging, AUTOS, FINANCIALS, INSURERS, DRUGS, BIOTECH, HMOs,
SUPERMARKETS, BROADCASTERS, CABLE and other groups that are acting like death.
As far as the DOW at yearly lows, just take a look of the charts of these
names.
cycle was hit in late January and will not be topped. This simply means that
fewer and fewer stocks are now in good technical shape and are leading the
market when it rallies. Major indices can hit new highs but will not carry all
the soldiers with them. As I have said on numerous occasions, this is classic
late inning action. And now, I am starting to see the same type of action we
saw in early 2000…of course on a much smaller scale. While TECHNOLGYÂ and
INTERNET are now outperforming, many big-cap names are absolutely gagging and
in their own private bear markets. One only has to look at Citigroup at new
yearly lows, MMM gagging, AUTOS, FINANCIALS, INSURERS, DRUGS, BIOTECH, HMOs,
SUPERMARKETS, BROADCASTERS, CABLE and other groups that are acting like death.
As far as the DOW at yearly lows, just take a look of the charts of these
names.
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^next^
You can now add JPM, VZ and SBC to the names of stocks that have topped in the
DOW. With so many names in the DOW in such poor shape, it is no wonder it is
in big trouble.
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I also needed to repeat something I said a couple of weeks back. The groups
that led the market all year have now topped. These were mostly
COMMODITY-based areas like STEEL, ALUMINUM, COPPER and the like. They are now
tracing out potentially longer-term tops. OIL remains in good shape but is
acting tired and GOLD does feel like there is a chance of another leg up but
will wait for a breakout.
that led the market all year have now topped. These were mostly
COMMODITY-based areas like STEEL, ALUMINUM, COPPER and the like. They are now
tracing out potentially longer-term tops. OIL remains in good shape but is
acting tired and GOLD does feel like there is a chance of another leg up but
will wait for a breakout.
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Shorter-term, even though the NASDAQ was wacked on Friday, TECH/SEMIS/INTERNET
are still outperforming on a relative basis. Taking off my technician hat…it
amazes me that so many in these areas are reporting horrid numbers and still
going up. I suspect it will come back to haunt them eventually but not just
yet.  I can give you short-term support levels but with all the ridiculous
whipsaws occurring on a daily basis, it really doesn’t matter. I haven’t seen
such “tough” action since 94 and want you to respect it. The good news is that
eventually, this market will find its way out of this nauseating range.
are still outperforming on a relative basis. Taking off my technician hat…it
amazes me that so many in these areas are reporting horrid numbers and still
going up. I suspect it will come back to haunt them eventually but not just
yet.  I can give you short-term support levels but with all the ridiculous
whipsaws occurring on a daily basis, it really doesn’t matter. I haven’t seen
such “tough” action since 94 and want you to respect it. The good news is that
eventually, this market will find its way out of this nauseating range.
Gary Kaltbaum