Why The Next Few Days Will Be Telling
The market is starting
to follow my script to a tee. I told you several
things in
my last report.
My bias remained that we could get a correction
of uglier proportion than we have been used to.
Any correction would be painful.
SEMIS
were going to pull back to support.
INTERNET
leaders like
(
AMZN |
Quote |
Chart |
News |
PowerRating) and
(
EBAY |
Quote |
Chart |
News |
PowerRating) were toppy.
BROKERAGE
stocks…JAPAN were to be watched, as they were
gagging.
The question remains: Is this recent drop going
to get even worse?
Tough call. Here is what we do know.
The Nasdaq and Nasdaq 100 have now broken the
50-day average. Anything can happen. Several times in the past few months,
this has occurred, only to see the TECHS turn
right back to the upside. I must say this this time feels a little different…meaning
play the TECHS, INTERNETS, BIOTECHS, WIRELESS, TELCOM…everything
that HAD been working…on the light side. In
fact, I believe many names now look shortable in these areas.
The Dow and S&P undercut the 50-day…but
just by a smidge.
JAPAN continues in its downward splat after a
big run.
UTILITIES are
now rolling over.
GOLD
is busting out again.
The DOLLAR is acting
like the New York Giants football season.
Sentiment remains a joke though the market “feels”
a wee bit oversold here.
As you see, a few negatives to chew on. I believe
in putting the pieces of the puzzle together on a nightly basis. The puzzle
is on the unexciting side right now. There is not much to do on the long side
here as many stocks have broken support or are still too extended. I can count
on a couple of hands the names of stocks that are setting up to be bought.
As I stated in
my last report,
the DEFENSIVE areas are now getting their share
of money flows.
And one last note: I keep hearing about the fact
that volume has been light on this drop. They are right. There has not been
vicious overall selling going on. BUT, in bear
phases, volume does not have to be heavy. How many times in the bear market
did I say to pay more attention to price and not volume when things are dumping?
Many!
I expect the next few days to tell a big tale.
The good news is we get seasonal strength next week. Then what? Play it light.
Gary Kaltbaum