It’s a start…

  • October 20, 2005
  • Gary Kaltbaum


Gary Kaltbaum is an investment advisor with
over 18 years experience, and a Fox News Channel Business Contributor. Gary
is the author of

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In yesterday’s report, I penned these words:

 

“I wish I had better things to say, but hey, I just interpret the action.
Unless we see a monstrous high volume reversal day to the upside, stay clear.
A high volume reversal to the upside would wash out all sellers for the near
term. I don’t predict an occurrence like that. I react to them. What you would
be looking for is a very weak open on so-called bad news…and a reversal to
the upside.”

 

Out of nowhere, a reversal is what we got. The timing of me writing about a
reversal was pure luck…and we will leave it at that.

 

So…what does Wednesday’s action mean? Here are my thoughts.

 

After a brutal sell-off in most sectors of the market, the market has found a
near-term low. You want me to go farther than that? Nope…not me! I am not
that courageous. This market has been too spastic to think past today.
Wednesday’s early action flushed out all remaining sellers giving the buyers a
clear field. Short sellers then went to work covering their shorts…adding to
the move. I loved the volume. That is the difference-maker for me. Volume
shows conviction and volume moves like Wednesday usually lead to upside
testing. I also liked that for a change, RETAIL, GAMING, RESTAURANTS, LEISURE and
HOUSING caught a good bid. These areas topped first.  

 

 

Wednesday’s action qualifies as a follow-through day on the fifth day off the
recent low. Keep in mind, while every new bull move has started with a
follow-through day, not every follow-through leads to a new bull move. It is
time to now start watching the leading stocks for breakouts as well as their
ability to hold their moves. Keep in mind that we are just back into the low
end of the nauseating trading range that has been going on since January of
04. Keep in mind, there are still a ton of stocks and sectors below resistance
as well as moving averages. Keep in mind that the major averages are still
below resistance while many are still below longer-term moving averages. Keep
in mind, plenty of stocks have not yet reported this quarter’s earnings.

 

That said, it’s a start!

 

Gary Kaltbaum