Where is the leadership?

Gary Kaltbaum is an investment advisor 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. 888-484-8220 ext. 1. 

The best way to tell you about my thoughts right now is to tell you my thoughts at the beginning of the week. At the time, I stated a bounce could be in order because many areas were right at important support. Here is what I said:

"Near-term, I think we can get a bounce. Just remember, that is the trees. The forest is the overall market...which has been a horror show. Why a bounce? The same reason for the other bounces we have seen. The markets are already extended to the downside...that's for sure. But the other reason is that the RUSSELL 2000 (RUT | Quote | Chart | News | PowerRating) is sitting right at support at 670...where it would be normal to bounce. I could also say the same thing about the MIDCAP 400 (MDY | Quote | Chart | News | PowerRating).

"Lastly, it's end of month. You already know the shenanigans that goes on into the end of every month/quarter.

Also of note:

The OIL SERVICES INDEX was the latest to do a bungee jump. It is at significant support at $130...where it could also put up a fight. The same goes for many COMMODITY names THAT HAVE BEEN WHACKED."

Now let's look at the charts. As you can see, the RUSSELL 2000 has held 670. The MIDCAP 400 has held around 710 and the OIH held $130.

I would add one more major index that held right where it needed to...the DOW...at 10,700. You can go back a year to see the 10,700 was resistance...which finally broke out. Every pulback has held at 10,700. It held in December and January. It held in June and it held this week.

I have no idea how far this bounce/rally lasts or how far it goes. I do know that when support levels are held, it is a near term positive that will always lead to upside testing. So far, I have not seen the conviction nor have I seen the leadershipI want to see to tell me this move will have legs...but hey...I am open to anything happening. I gather we will know a lot more over the next few days as the market enters resistance areas. I will say this. The support levels I outlined had best hold or what has been an ugly 2-plus months...will just have another leg down.

Gary Kaltbaum