Why It’s All Good, For Now…
The last piece of the puzzle was put in place
as the lagging Dow broke above 8525 resistance. All major indices have
now moved out of their respective trading ranges and now look to attack the
highs of last August and November. But that is not what I want to talk about
today. I want to talk about the tone of the individual stock. Very simply, the
amount of setups I am seeing is getting into the range of setups I saw in mid
1999 before the Nasdaq broke out and went on its parabolic launch to end the
1982-2000 bull market.
No, the market is not going to have a parabolic move here. There is just too
much bear market resistance. My point is that if nothing changes, you better not
get in the way. Do not be short. Even the lagging stocks are getting a bid.
On top of the major indices moving out, the NEW HIGH LIST
has expanded, low-level bases are breaking out and mid-levels are going for the
ride also. The technical condition is just getting better and better…and the
more and more stocks that break out of range, the better it will get.
Other positives:
Transports broke out of its range.
For the first time in quite a while, there are more positive-looking sectors
than negative…and by a wide margin now.
Advance/declines and up/down volume on a daily basis is in excellent shape.
So…nothing bad to say today. Yes, sentiment is horrid…and adding in a
bullish cover of Barron’s does not help. Yes, the market is
overbought…but it has been overbought for a few days. Every time it pulls
back, the pullback is short and controlled. Eventually, the markets will have to
deal with the fact that no one is buying puts and hedging their downside…and
everyone expects higher prices. UNTIL THE TECHNICALS
CHANGE, the market gets the benefit of the doubt. It’s about time.
I would continue to play the high-volume breakouts until they start to fail. For
almost three years, almost every breakout was a failure. This second, it’s all
good.
No matter what, sell rules should be adhered to.
Gary Kaltbaum
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