These are the positives that point to a short-term reversal to the upside
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. If you
would like a free trial to Gary’s Daily Market Alerts
First off, my heart goes out to all who have been affected by what may be the
worst disaster this country has ever experienced. We have all stood in stunned
silence at the videos and pictures. Years ago, I read a quote that I have
tried to live by. It went something like this. "The true measure of a man is
how he treats someone who he will get nothing in return from." Ladies and
gentlemen, this is our time to do something for the people that have been
devastated by Hurricane Katrina.
In my
last report, I wrote about the potential for a near-term bounce. Well,
we got one…and much better than expected. Let’s pick things apart.
On Wednesday morning, you could cut the negativity with a knife. I heard the
word "recession" at least a dozen times. All the news was about the disaster.
What a perfect day for the market to turn. In spite of the news…in spite of
$70 oil…in spite of all the dire circumstances, the market turned…for the
short-term.
At the close, the market put in a strong, high volume reversal to the
upside. I have taught you that these types of reversals usually mark a
short-term change in trend. Everyone who wanted to sell…got out…and buyers
took over. Keep in mind, everything is not all clear. The market has had
multiple distribution days in the past month and many leading stocks and
sectors have been blasted. BUT…
The NASDAQ
(
COMP |
Quote |
Chart |
News |
PowerRating), NASDAQ 100
(
NDX |
Quote |
Chart |
News |
PowerRating), MIDCAP 400
(
MDY |
Quote |
Chart |
News |
PowerRating), RUSSELL 2000
(
RUT |
Quote |
Chart |
News |
PowerRating) AND SMALLCAP 600 all
reclaimed the 50-day average. This is a positive. The S&P 500 is now sitting
right on it.
Leading stocks that have been holding up well are already starting to move
out.
HOUSING
(
HGX |
Quote |
Chart |
News |
PowerRating) stocks and REITS may have turned the corner. They have been
leading groups up until the past couple of months..
BIOTECHS
(
BTK |
Quote |
Chart |
News |
PowerRating) and SEMIS
(
SOX |
Quote |
Chart |
News |
PowerRating) continue to roll. I do believe these are the two groups
that would have to roll over to tell me the party is over. I am seeing strong
action in leading names like
(
DNA |
Quote |
Chart |
News |
PowerRating),
(
GENZ |
Quote |
Chart |
News |
PowerRating),
(
CELG |
Quote |
Chart |
News |
PowerRating) and
(
AMGN |
Quote |
Chart |
News |
PowerRating) in the BIOTECHS and
(
NVDA |
Quote |
Chart |
News |
PowerRating),
(
TER |
Quote |
Chart |
News |
PowerRating),
(
TXN |
Quote |
Chart |
News |
PowerRating),
(
NSM |
Quote |
Chart |
News |
PowerRating)
and
(
BRCM |
Quote |
Chart |
News |
PowerRating) in the SEMIS.
The BOND MARKET
(
TLT |
Quote |
Chart |
News |
PowerRating) continues to act well. Long rates continue to plunge.
Lastly, despite all the individual stock carnage, the major indices have only
pulled back a few percent.
I would like to give you more than just the short term right now. The markets
are just too spastic and too news driven to go further than that. Follow
through will be key.
Gary Kaltbaum