The Test of Market Strength
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 Alerts click here or call 888.484.8220 ext. 1.
26-year low in consumer confidence, talk of depression, housing continuing to plunge, oil at 127, commodities soaring… the list goes on and on about what is wrong. But the market continues to edge higher in the past couple of weeks. There has been improvement in some of the worst areas like the SEMIS while the strongest areas I have mentioned often, have continued higher… some straight up. In fact, OILS, STEEL, METALS, MINING, COAL have gone nuts. You must remember, these were the first groups to break out when the market turned. I have taught you throughout the years that what holds up best in the bear… and breaks out first, usually leads – and once again, that is the case.
I am hearing all kinds of worries for the short term. I am hearing that there has been massive call buying by the wrong way crowd. I am hearing we are seeing too much speculation already. I am hearing bullishness has picked up. I am hearing volume has been light all the way up. I care and don’t care about all this. What matters to me is whether things are working… and if there is one group working, I am good with it.
We are now seeing SOLARS, SHIPPERS and now even some left-for-dead big cap tech like QUALCOMM
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PowerRating) moving out. I am not so sure this is a bad thing. I am also seeing leaders like Baidu.com
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PowerRating), MasterCard
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PowerRating) and other growth names setting up in light volume tight bases. These are the types of patterns I love… of course, they have to move up out of these patterns to buy them. But usually when you get these set ups, they work.
While we have not seen heavy volume in the market when it has moved up, we have not seen heavy selling when it moves down. Until I see the type of distribution I saw to get you out back in October, I am going to continue to play the good set ups. Let this all be a lesson to you that markets can move up on bad news. That is the definition of a better market. Bad markets leave bread crumbs on their trail. Until I see those markings (and as I said last time, that would be more than just one bad day) you should continue to have your eyes out on the long side. As always, if things change, you will know it.