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Gary Kaltbaum Intraday Breaking Setups
Kevin Haggerty's Professional Trading Service
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Recently, we said we expected a bear market rally of some sort. Conditions were such that one was due. BEARISHNESS has run rampant and every one of our sentiment indicators were off the charts. Here is what we wrote in our last report:
"Before we get into the overall market, let's talk about the short-term. The best news about the market is that all our sentiment gauges continue to be off the charts. The $VIX went straight up to 24. PUT/CALL figures have remained very high. ODD LOTTERS are shorting stocks at the highest level in years. NYSE MEMBERS are shorting at the lowest levels in decades. But that is all sentiment talk. Sentiment is a secondary indicator. If you hang your hat just on that, you will eventually be steamrolled. You must keep in mind, bear markets treat sentiment a lot different than in bull markets."
Combine that with how extended the markets were to the downside...and the conditions were ripe for upside testing. We are getting a bear market rally. We don't know how to say that any louder or clearer. UNTIL THE MARKET CONFIRMS UPSIDE WITH A FOLLOW-THROUGH DAY, WE ARE SUSPECT OF ANY RALLY. Wednesday's action was not a follow through day as volume was less than stellar.
Why are big gains in price and volume so important? A follow-through day tells us that the big-money crowd potentially has shifted from sellers to buyers...and we never want to fight what they are doing.
We now leave you with several charts. PAY CLOSE ATTENTION. Look how every one of these charts are wedging up...just like they did into June 2 before the last death drop. If we do not get a follow through day soon...we expect sellers to show up soon enough and send the market into its next move down.The S&P is once again wedging up and looks exactly like the bounce into June 2.
The RUSSELL 2000, representing the small-caps, can't even bounce off the lows.
The NASDAQ and NDX are also wedging up in classic textbook fashion.
The NYSE is also wedging up.
The SOX is wedging up.
All this does not mean we can't have a follow through day. But Thursday is day 7. It is starting to get late in the game for one. This market is in dire need of accumulation...and if we do not see accumulation soon, and these patterns continue, the next move will be down.
Oh yeah...one other note. The BOND MARKET is now rolling over badly again. Not sure this is good news.
Gary Kaltbaum
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