These Two Sectors Look Good
As you know, based on market action, IÂ changed my tune on the market in the
first couple of days of this year.. I will not rehash the myriad of reasons
why. I did want to repeat one paragraph from my last report.
“The market is short-term oversold and should
bounce…just based on price. But, it is the type of bounce that will tell me
the real next move. If the volume is light and the A/D does not
improve, expect another wave of selling in short order. Lastly, if
the S&P and DOW join the party trading under the 50-day average, then things
may get even tougher in marketland.”
I bolded one line of the paragraph…because that is exactly what happened
this week. The NASDAQ has had two up-sessions on Jan 10th and 12th. One
problem…volume was anemic. This led to yesterday’s action. Yesterday’s
action speaks for itself as another wave of selling showed up at the market’s
doorstep.
Just like last January, I have no idea if this action leads to a short-term
or intermediate-term correction. I don’t know if it leads to a bear market.
Last year’s top led to an intermediate-term correction with the NASDAQ
dropping 20% and the DOW and S&P about 10-11%. The one thing I will not do is
predict. As of now, I am on defense because the market is on defense. If the
market decides to turn up, it will show the exact opposite characteristics
that we have seen recently. I believe it to be folly to just sit there and let
profits disappear. Many leading growth names have already been taken apart.
TRANSPORTS have now broken the 50 day average as well as support. I bring this
up because TRANSPORTS have led.
Many FINANCIALS are breaking down. Followers of my reports know how much
emphasis I put on FINANCIALS.
All major indices are now trading below their 50 day averages. That will need
to and must change.
^next^
The only groups I am seeing with any leadership
right now are the HMOs and the OILS.
Gary Kaltbaum