Predicting is Fruitless
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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The Nasdaq romped 2% on higher volume Wednesday.
The S&P 500 and NYSE composite also moved up 1.7% each as volume also increased.
Keep in mind, volume only started coming in after the Fed announcement. This
qualifies as a follow-through day and takes my thoughts from correction to
confirmed rally. Before I continue, my canned line after a follow through day:
EVERY BULL MOVE HAS STARTED WITH A FOLLOW THROUGH DAY BUT NOT EVERY FOLLOW
THROUGH DAY HAS LED TO A NEW BULL MOVE. My last follow through day call was on
August 15th of last year. At the time, I was worried it occurred so late…but
it worked. This one does come with some issues.
The main problem with this follow through is that
it has come after only a 3 week correction. There simply has not been enough
time for stocks to form longer bases to buy off of. Studies have shown that
follow through days occurring after such a short correction have less chance of
success. This move does not give license to buy with abandon. The good news: if
this move is going to have staying power, we will see more and more stocks
breaking out of bases. That’s all we can ask for.
As usual, I have no idea of how far this move
goes or how long it lasts. Predicting is fruitless. All I need is the
information that is in front of me. I will let the Kreskins of the world tell me
where things will be in 9 months. I just don’t want to miss out if it is going
to be the real thing so we start looking for high relative strength names
breaking out of sound bases.
Notice I have not mentioned the Fed. The Fed is
getting all the credit for the move. Help me out. What the heck did the Fed do
or say for such a move to occur? In my view, they said nothing. Higher inflation
and lower growth is not a good quinela. I frankly couldnt care less what the Fed
said. They are behind the curve on everything and one day they are going to
cause a major dislocation with their trend following and stupidity. PAY NO
ATTENTION!
Also, pay no attention to the permabears on the
market. I only care about the market itself. if we were to listen to all the
“bad news,”the bet would be for a DOW 5000…and I am one who called the housing
and lending problem 18 months ago. You have to remember that markets can go up
on bad news. That’s why we watch the market first.
If this is going to fail, do not worry. We will
know by distribution showing up. After the past 3 weeks, I don’t put anything
past what could possibly happen in the next 3 weeks. Just take your time.
Gary Kaltbaum