Three For Three

  • March 7, 2002
  • Gary Kaltbaum

Wow! Monday’s high
volume move made it three for three as all three major indices have
now had follow-throughs. You can’t argue with that. Ye who does…gets squashed.
Last night I went through every stock in O Neil’s database. This gives me the
best feel of the market. I have to tell you that I haven’t been this impressed
with the technical condition in a long time. It is amazing how after
follow-through days how things can come on so quickly.

Let’s start with the
Nasdaq
(
$COMPX |
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PowerRating) because it is bringing up the rear. Bottom
line…because of how deep the bear market has been, it will take much longer to
repair the damage. I outlined this in October’s TradingMarkets 2001 convention.

You have to go away from the Nasdaq to find
most leading stocks. The Dow
(
$INDU.X |
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News |
PowerRating)
has finally made a higher low by jumping above the important 10,300 level. That
level is now support instead of resistance.

The S&P 500
(
$SPX.X |
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News |
PowerRating) completes the higher low at 1177. Odds favor it happening. On a
longer-term chart, one could argue that the move would complete a reverse head
and shoulders. This break above 1177 would only enhance the bulls’ case.

On the sector front, a lot going on. There are
366 new highs right now from many areas:
Defense, Homebuilders, Containers, Regional Banks, REITS,
S&Ls, Utilities, Airlines, Gold. Now, if this could just last a while. I
have no idea how long and how far…but right now, the market is speaking pretty
loud and clear.

Please keep in mind that you are now entering a
ton of longer-term congestion so it may slow down. But when I see a ton of names
coming up their right side, when I see every major index following through on
heavy volume, when I still doubt the move, when I am scared —-less, it usually
means it should continue. I would love to see a
pullback towards support levels but I don’t know if you get it at this
second. It seems there is a rush to get in at this juncture and you never
know how long it lasts.