Some Thoughts On This Trading Range
Let me be blunt right
out of the box. Pay no attention to anyone on Wall Street who are
telling you to sell now because it is September. Pay no attention to anyone
telling you the market is about to get trashed. Of course, anything can happen.
But, the fact is the technical condition is in too good of shape to get in real
trouble here. In fact, it is just the opposite.
There are just too many stocks that are acting
well and not enough that are breaking down to cause this market to go lower. In
fact, if the S&P 500
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out above 1016, you may get another round of short covering…leading to higher
prices. Yes, I know the VIX is low. I know volume has been light. I know that
there are too many bulls out there.
I know that the market is overvalued. I don’t
care. I am a technician first and as of right now, the market is saying
otherwise…and until it says otherwise, I believe it is folly to be short the
market…and I know some of you probably are. Will there be heck to pay
eventually? Maybe…but we must let the market be our guide. Opinions count for
nothing.
Technically, small and mid-caps continue to rule
the roost. But if FINANCIALS get legs, the S&P will
easily break out. The FINANCIALS held support (take a look at the
Banks
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are 30% of the S&P. That’s why the S&P started to move. The
Semis
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extended…and should pull back a bit soon. I will not buy a lot until a
pullback occurs.
Other positives…
THE NEW HIGH LIST
has expended quite nicely over the past few days.
WORLD MARKETS are
going along for the ride…and ASIA is cooking.
THE BOND MARKET
seems to have put in a short-term low…and may start a relief rally.
In any event, I believe the market will show its
hand very quickly. I don’t believe this trading range will last too much longer.
Odds favor a move to the upside. Until things change, give the market the
benefit of the doubt.Â
Gary Kaltbaum