Negative divergences
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
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click here. 888-484-8220 ext. 1.
The first thing I want to say is to pay no attention to what
the DOW did on Tuesday. The average stock was much much worse. In fact, the A/D
was 3-1 to the negative. The DOW held up because the market is getting
defensive. When it gets defensive…it goes defensive. THERE IS NO WAY THE
MARKET WILL BE ABLE TO STAND TOO MANY MORE OF THESE DAYS! Everyone needs to
watch this closely. At the very least, the market has lost many areas and many
names to help it go higher. In fact, today had probably the largest and widest
divergence between the DOW and the real market we have seen in a long time. We
would rather see the DOW down 100 with the A/D flat. Most people do not get
this.
We have been negative on the following areas and nothing we have see changes our
stance.
For the most part, COMMODITY stocks are being mutilated. I believe many are now
in their own private bear markets…which means sell any bounce. OILS continue
to roll over badly. Even the strongest names we mentioned recently have now
broke down. When the strong names break down, you know the weak ones are in big
trouble. Take a look at the
(
OIH |
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Chart |
News |
PowerRating). A break below $132…and see ya for
another leg down.
The
(
XLE |
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PowerRating) is actually weaker.
The NDX is tracing out about as ugly a top as I have seen…a
big giant head and shoulders top. Please do not ignore this. I have been telling
you that this is the weakest of the major indices and nothing has changed with
that stance. A double bottom break below 1633 would be very negative. The NASDAQ
is back below the 50-day moving average while the S&P is sitting right on it.
The BOND MARKET has been rolling over. Near-term, maybe a
little oversold but the action is starting to be of intermediate-term
consequence and maybe longer.
On that note, the INTEREST-RATE SENSITIVE UTILITIES have also rolled over. This
is just another important indicator for the market. This also goes into the
negative column.
GOLD continues its own bearish phase. GOLD STOCKS are acting miserably and
completely underperforming the metal.
The market lost the
(
SOX |
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Chart |
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PowerRating) in the past couple of days. In fact, the SOX
easily sliced through the 50-day moving average for the first time since
November. This should not be ignored as the SOX is either feast or famine and is
and has been a leading indicator for the market.
I am now also seeing foreign markets acting toppy. This also
goes in the negative column. So far, it has been a normal pullback but noticing
places like JAPAN potentially getting in some trouble here. Foreign markets have
completely outperformed our market. This would be a distinct negative.
Lastly, not much good but some good from Tuesday. We are seeing good money flows
and decent charts in some of the big banks like
(
WB |
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PowerRating),
(
CBH |
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PowerRating)…but not
sure of longevity. Also, the AIRLINES continue to act well on the back of lower
oil. FINANCIALS and DOW stocks were the ports in the storm.
Gary