JUST LETTING YOU KNOW…
What is Important for Duration of This Move…is Now Happening
Last week we had a 200 point down day. And on that day I said, “Okay, maybe we’ll get a little correction here.”
The next day the Fed leaked to the media about another Quantitative Easing and the market turned back up.
But today something happened that is important for the durability and duration of this market. As you know I follow certain areas of the market more than others for darn good reasons.
I am a big believer in watching three things:
- Financials
- Semiconductors
- Leading growth names
Today, the Financials broke out of range to the upside, and it was on big, big volume. This is key, because if these areas continue to break out of range, the market is going to be in good stead.
The weaker Transports broke back above the 50-day moving average today.
That’s good.
And then, what I would call a terrific last hour brought the market up to the final numbers.
All you have to do is look at Financial ETFs like XLF, IYF, FAS, KBE, and the KRE…and you’ll just see range breakouts. That basically means there was an area of resistance that was taken out today on some pretty good volume. Typically, we’ll see some backing and filling in the short-term, but with some higher prices ahead.
Financial Stocks in No Particular Order
BankAmerica has been sitting for four or five weeks in a tight range. It broke out today on really good volume. Not the most gargantuan volume, but a lot of it came into the close.
JP Morgan. That really didn’t break out of any area. That happened two weeks ago and has been drifting higher. But you can see that’s power today.
Well Fargo…New high ground for the year. Big breakout. Volume was double the average.
American Express is almost at new highs. Looks like it’ll get through.
BB&T broke into new high ground.
U.S. Bank Corp was one of the stronger names broke out on more than two times average volume.
PNC Bank broke back above the 50-Day Moving Average on strong volume.
Fifth Third Bank is just about ready to break out to new highs.
Goldman Sachs broke above resistance today with almost 2x average volume. And you can see that Goldman Sachs which could not break above that 120 level for about 7 months – went through it today.
GE had a little breakout today on an increase in volume.
So that’s your financials.
But there was more to it than that. It was a very strong market, overall. Housing stocks moved out again…including Home Depot and Lowes.
Also of Note…In the Dow
Look at Caterpillar. Notice that it held the 50-Day Moving Average perfectly on the pullback. And if you look at a weekly chart, you will notice that Caterpillar finished on the high end of the week last week and puts Caterpillar in a really nice Cup and Handle. A break above 116.95 would be strong, and, of course Caterpillar is an important stock for the Dow.
As well, IBM which broke out about 2 ½ weeks ago is now extending its break out.
I have to also mention Chevron, which is in a 12-month base. It edged out to new highs at the close today. If that sticks, that’s a big break and that’s in the Dow, so it’s good news.
Things like DuPont, in spite of terrible earnings, broke above resistance today.
Disney went into new high ground, though revenues were only up 1%. In fact, it’s almost at a new yearly high.
Just Because Something Breaks Out Doesn’t Mean It Holds
There is something called failed breakouts, so you never know. But this is pretty good.
LISTEN TO GARY LIVE ON WEEKDAYS
6-7 pm EST
Best of Investor’s Edge
Saturdays 1-2 am EST
Gary Kaltbaum owns Kaltbaum Capital Management, LLC (“KCM”), an investment adviser registered with the U.S. Securities and Exchange Commission. The opinions expressed herein are those of Mr. Kaltbaum and may not reflect those of KCM. The information offered in this publication is general information that does not take into account the individual circumstances, financial situation or individual needs of an investor. The information herein has been obtained from sources believed to be reliable, but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results.
