Will Lagging Financials Lead Next?
Gary Kaltbaum is an investment adviser with over 18 years experience, and a Fox News Channel Business Contributor. Gary is the author of The Investors Edge. Mr. Kaltbaum is also the host of the nationally syndicated radio show “Investors Edge” on over 50 radio stations. Gary is also editor and publisher of “Gary Kaltbaum’s Trendwatch”… a weekly and monthly technical analysis research report for the institutional investor. If you would like a free trial to Gary’s Daily Market Alerts click here or call 888.484.8220 ext. 1.
Everyone knows the market is extended, stretched and overbought in the near term. This recent move caught many looking at mini-head and shoulder tops and instead, we got a follow-through day on July 13th and no let up from that day as shorts were squeezed and buyers came in. Markets hate people. That is why it is so important to follow the tape daily. This move occurred even though earnings were not out yet… just when most investors/traders thought it was going to be quiet. The market has spoken up and for me, it is nothing but bullish. The DOW, S&P, SMALL CAPS, MID CAPS, RUSSELL, TRANSPORTS… all have broken above multi-month resistance. I do believe the lagging FINANCIALS could be next… as they are just sitting tight and ready to move represented by the FINANCIAL ETFS.The NASDAQ/NDX moved out earlier as they have been stronger. The SOX is the same. Just imagine the 100s and 100s of stocks that now look like these indices. So ignore all and watch the market.
Back to the overbought and extended conditions. This is the end of the month so not sure it matters, but eventually it will, so expect pullbacks but I think any pullbacks will pull those major averages toward support, maybe undercut a smidgen, but that is it. As of this second, I see very little risk below the 940-950 S&P area… but as always, will deal with the evidence coming in. Now we know anything can happen and we will always adhere to what the market gives us in the present but all evidence is that the market is in gear… and on a note of overbought. It is actually bullish that the market can get this overbought. Until distribution shows up in a meaningful fashion, the market gets the benefit… and I am not talking about one bad day.
So… how does one buy into this move now? It is very tough. I don’t have that answer. As stated, markets are stretched, markets are extended and markets are overbought. It is a matter of feel and where you are at. No one likes letting the market get away from them just like no one likes being in while the market is being trashed. I personally have my list of leading names that have moved too far, too quickly as I did not want to play with earnings reports. The problem with waiting is many of the leaders moved out of SECONDARY bases… which studies show are the most powerful. Sometimes, the market just doesn’t let you in . Friday and yesterday is a case in point to what a bull is like… overbought, extended, stretched, bad earnings in a few important names… along with bad reactions… and the market ignores it.
I hope you are getting my point. I deal with the evidence the market is giving… nothing more. We are talking serious multi-month breakouts in major areas… as well as world markets. Until things change, I wouldn’t be arguing. Please stay in close contact with the NEW HIGH LIST as all big leaders show up there. If not, one has to wait for another chance which eventually you get but from where and when is anyone’s guess.
I give no targets though one could say the longer the base, the better the move. Away from leaders, FINANCIALS look ready and seeing a few BIOTECH names setting up also.
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