JUST LETTING YOU KNOW
The market really didn’t do anything yesterday, but here’s the good news.
Very simply, the low we just saw is a good low for now. What does that meant to me?
And I would not be surprised if we continue bouncing a little higher into the end of the year.
I would be surprised if we have a gigantic Follow-Through Day and we’re off to races again. I don’t think the technical picture is there. But, that said, when you have a maniacal Fed, anything is possible and we understand that.
But so far, we have a strong up day out of the box. And yesterday, I call a defense day, where the market was down and finished near flat. And today, we were up, “okayly”
From a point of view of what I’m seeing right now, there are few things I want make sure you know.
- We dropped on heavy volume and we’re rallying on lighter volume. And we’re rallying on ever lighter volume as we move up. In other words, you can draw a line going down on the average daily volume and draw a line as go up. Not good. Typically not good. Normally, you want to see heavier volume with a move higher after a drop. But we do know, it’s holiday time. We’ll give it that excuse. Maybe. We try not to rationalize.
- Okay green in the oils. Most stocks in the Dow were up today. Gold and silver stocks were mostly green.
- The Dow remains trading under the 200-day moving average. And as I see it now, all we had was an oversold, stretched, extended condition where after we dropped about 1100…1200 points, everybody got bearish at the lows. And when everybody gets bearish, things usually get sold out and that’s where you bounce. Volume so far on the bounce is anemic.
- The S&P, though, is actually a smidge above the 200-day moving average. I’m not sure that means much.
- The Nasdaq – below.
- The Nasdaq 100 – below.
- The Russell 2000 – below.
- The Small Cap 600 – below.
- The Semiconductors aren’t even budging.
As a lesson, read this carefully:
If a stock, sector, a market, or market average is trading above an ascending 50-day moving average, nothing but good can happen.
If that stock, sector, a market, or market average breaks below that 50-day, it doesn’t mean the end of the world. It just means that ascension is over until it can get back above the 50-day moving average.
If that stock, sector, a market, or market average trades between the 50-day and 200-day moving average, it’s not the end of the world. It just means that maybe it’s correcting or putting in a new trading range to move back higher…and we’ll call it okay even though we know we really get can’t make money on it.
If that stock, sector, a market, or market average trades below the 200-day moving average, that’s the Twilight Zone. That’s where nothing good can happen.
So I’m just letting you know, in order for things to turn good, you first have get back above hat 200-day moving average and stick, hold it, through in some range and then start moving over of it to the upside.
And I repeat, normally it’s seasonal strength time. It does not mean it has to come. For all we know, Friday we walk in and then come back next week and…boom, they send it down into oblivion.
After all, we do have the Fiscal Cliff, better known as the “Fiscal Stiff”…and earnings and sales not that great…and the market’s not listening to Bernanke any more.
So we’ll see.
We’re really need see a Follow-Through Day and some leadership. We are not on a Follow-Through Day, which officially the market is in a correction. And, for sure, there is not a lot of leadership out there.
If it shows up, I will gladly let you know.
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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.