Gary Kaltbaum is an investment advisor with over 18 years experience, and a Fox News Channel Business Contributor. Gary is the author of The Investors Edge. Mr. Kaltbaum is also the host of the nationally syndicated radio show “Investors Edge” on over 50 radio stations. Gary is also editor and publisher of “Gary Kaltbaum’s Trendwatch”… a weekly and monthly technical analysis research report for the institutional investor. If you would like a free trial to Gary’s Daily Market Alerts click here or call 888.484.8220 ext. 1.
All you need to know… Bill Clinton’s last budget was $1.8 trillion… a decade later we have a budget of $3.8 trillion with $1.6 trillion in deficits… thus the scam. Just wait until they come after your wallets… or maybe we won’t have to wait. Notice how many politicians are now cutting and running. Spend us into oblivion and then leave, and of course, pop back up as part of a lobbying firm. Remember, it is 300 million of us versus 535 of them… and an administration whose calculator has too many zeroes on it. We have a choice.
On Friday, February 5th, the market experienced what I consider a high volume turnaround day where markets were lower all day… only to finish up. These type of days occur to wash out any late sellers after a drop. Since, we have seen nothing more than wacky action on an intraday basis but at closer look, we have seen the market defend itself at support on a daily basis. This type of action could set the stage for higher prices in the near-term. Time to pick it apart.
So far, longer-term moving averages have held for most everything. The DOW, S&P, NASDAQ, NDX and the RUSSELL all held the 150-day moving average with the NYSE being the only average to go all the way down to the 200 day and then holding. It is normal in intermediate corrections to hold these levels the first time they are hit…but it is also normal to undercut them in corrections that are worse.
The all-important COMMODITY indices held longer-term moving averages and have popped up nicely. I believe any rally has to include these areas. Conversely, any drop will include them also. OILS held the 150 and 200 day… METALS/MINING held the same… GOLD held the 150 day and has traced out a classic double bottom pattern where the second low undercuts the first low in order to get rid of the late weak sellers.
I am finally seeing some leadership…though I need to see more. Keep in mind, the market has yet to experience the one characteristic that will turn this back into an uptrend and that is a follow- through day where the market experiences a 1.5-2% up day on heavier volume than the day before. Using February 5th as the recent low, Tuesday is day 7 of an attempted rally. Not every follow-through day has led to a bull run… but every bull run has started with a follow-through day.
The past week has not been easy. There is no template to play constant gaps to the upside and downside only to see them turnaround during the day… only to gap the opposite way the next day. This is what occurs when the market is dealing with a lot of news both domestically and abroad. Think Greece. Think Iran. Think taxes. Think budget deficits. This is what the market deals with when it is trying to work its way back into a defined direction. I suspect it is going to be tough as many stocks and sectors are still in rough shape here and at the very least will need a little time to either repair to go meaningfully higher or decide to croak. I am taking it quite slow here. Would love a follow-through day and would love to see major indices retake the 50-day moving average.
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