Major Support Must Break Before Bears Come Out
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
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Despite all the bearish talk I have been telling you about, the market held
the 50 day average I told you about…and the leading stocks I have mentioned
continue to act just fine. In fact, leading growth names just may be headed into
another gear.
The amazing thing about the past couple of weeks is that again, the market
teased problems…and then the pixie dust was sprinkled again and in a flurry. I
just have never seen so many distribution days without the market at least
getting into some trouble. Instead of getting into trouble, the market
held…and leading groups were on the way. The lesson simply is that until major
averages break short term moving averages AND leading stocks top, you must give
the market the benefit of the doubt.
Talking about the bearish stance, have you been reading and hearing the same
things I have been…about the dire scenarios for this economy? As you know I
have been bearish on anything real estate…but some of the things that are
being written are over the top. I have never seen more reports at one time that
the market is going to crash, real estate is going to crash, we are headed for a
depression…and so on and so forth. I read 5 reports just in the past 2 weeks
that a crash was going to occur….not a pullback…not an intermediate-term
correction…not a bear market…but a crash. Use these reports to roast
marshmallows. It is a fruitless endeavor to predict crashes and
depressions…let alone recessions. They just do not happen every often. I am
sure we are going to get one eventually. The business cycle has not died. I just
think we have heard this story too many times. Do you remember the book “The
Great Depression of the 1990s?”
There is no doubt there are areas that are in trouble. The BOND MARKET has
caused problems in the UTILITIES, REITS, S&LS, MONEY CENTER BANKS and other
areas. But leading groups have opped once again and I am now under the
impression that the 2 groups you watch to tell you the party is over is the OILS
and COMMODITIES. As soon as the market held, they started to lead…and were
bought up in a frenzy. OILS just broke out of a one year base…continuing to
remind me of the TECHNOLOGY stocks of the 90s. The same goes for the many
COMMODITY names that continue to do their thing. You may add CHEMICALS,
MACHINERY and CONSTRUCTION to this group.
So…first it was OIL PRICES, then it was CHINA…recently it has been BONDS
that thwarted the market. But every time, the market has come back and as I
stated, until those areas mentioned break…until the short term moving averages
break…it would be crazy to get too bearish.
Gary Kaltbaum