Why This Pullback Could Be Constructive
For a change, I actually, maybe, could be,
almost like what I am seeing in the past couple of days. I told you in
my last report that a good strong bottom happens over time and around the
same prices. I told you and showed you that the NIKKEI was tracing one of these
potential bottoms out.
That leads me to our wonderful market. EVERY time
the market has put in a short to intermediate-term bottom over the past couple
of years, the market went straight up. In fact, July and October lows were
followed with quick, monstrous 1200 point rallies. In this environment, rallies
like this fail. The same thing happened in September of 2001. You don’t need my
opinion…just take a look.
The market finally put in a near-term low last Thursday. But this time, the
market…especially the Dow and
S&P…instead of going straight up…is
pulling back. This is potentially constructive. I say potentially because the
tape is still an absolute mess. Most stocks and sectors are still in major
downtrends and volume remained light on the move up. Anything can happen But if
the market starts a period of retesting, it simply gives the charts time to put
in stronger lows, which they can lift off of.
Yes,
there continues to be no leadership…yes, breakouts, for the most part,
continue to fail…yes, sentiment is still not bearish enough.
But…but…hopefully, a decent bottoming process could be starting. In the
meantime, no need to think too much. Sit back, relax and wait until a semblance
of leadership shows up…and if the major indices break Thursday’s low…see ya.
The
Nasdaq is holding up much better now…and by a
wide margin. I suspect it has to do with all the humongous shorts in
TECHLAND…which tend to hold things up better.
Keep in mind, I can’t even find a decent-looking chart in TECH…just stocks
coming off near-term lows.
Gary Kaltbaum