The market is looking very stretched
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
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A big shout out and get well to my dad who is back in the
hospital for the third time in the past couple of months. I think watching Eli
Manning caused the problem this time.
You don’t need me to tell you what has happened since the
beginning of the year…so I won’t. The only thing I want to tell you is that
things are now very stretched. That’s all. When things get stretched, risk picks
up in the near-term. The last time I was thinking this way, it was end of
November/early December. The market then went through a correction of a few
weeks and a few percentage points…stopping and rallying right off the 50-day
moving average. The good news was that it ended up being a normal correction off
of extended conditions. Markets always revert back to moving averages after a
period of time…whether they are bouncing after a drop or pulling back after a
rally.
Currently, the NASDAQ 100 is at 1747 with the 50 day moving
average at 1680.
Currently, the NASDAQ is at 2316 with the 50 day moving
average at 2238.
Currently, the SOX is at 529 with the 50 day moving average at
485.
I have seen times where the markets have been a little more
stretched than this…but not much. I am just saying I suspect we have some
corrective work to do as we enter into earnings season…and that started
yesterday. Markets will either make a right turn and stall…letting the moving
averages catch up over the next few weeks or they will start pulling back into
them.
This in itself does not change the playing field. The latest
move has been more than impressive…and in yesterday’s pullback, I found very
little damage being done. The OILS reversed down on volume but remain in bull
mode…and big-cap BIOTECHS have topped…but that’s about it. Just letting you
know pullbacks are a normal course of business in the market. Sometimes, you
have to let the market come to you. I know it is not easy but you have to keep
your emotions in check when things do get too extended. It is something I have
to work on every day.
And don’t get me started about the DOW being back under
11,000.
Gary