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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 or call 888.484.8220 ext. 1.
Fox Business Channel Oct. 15th.
Did anyone of you notice that when the DOW was down 281 points on Friday, the media had a party? Did any one of you notice that when the DOW rallied 286 points Monday, the media was silent?
In my last report, I stated that with all the bad news out, markets could perversely start to rally...especially with such deep oversold conditions as well as deep negative sentiment.
On Monday, the DOW followed through on day 4 turning the downtrend into a confirmed rally. While other major indices did not follow through because they undercut their lows on Friday, a confirmed rally needs only one major index. A follow through day does not mean you go out and buy blindly. Every bull move has been preceded by a follow through day but not every follow through day has led to a bull move. One now waits for stocks to set up in proper consolidations for high volume breakouts.
That takes me to Tuesday's action. Simply put, the FED gave the markets every excuse to sell off by their non-action as well as their non-participation in the discussion of any problems. The market sold off over 100...ramped 100...sold off 100 and ramped up 140...and amazingly...sold off into the close...dropping 140 points in 10 minutes before rallying up 45 points in the last 3 minutes. I cant make this up. BUT...the most important part of Tuesday was the action I saw in leading stocks. Many ripped to the upside...and that is important to me. I couldn't care less what major indices do as long as leading growth stocks are powering forward. Here are some of those names for your review: CMG, RIMM, BIDU, WYNN, NILE, FSLR, TSL, GRMN and a bunch others.
To say the very least, the market action has been psychotic, ridiculous and all over the map. The only people who win are the ones who sell Xanax. But by following a strict set of rules and disciplines, you can see how we have stayed out of trouble...and are now back looking for long positions. I am still extremely negative on almost everything FINANCIAL...but they are now in bounce mode. I am actually going to look to short some of those names as they rally up into resistance. If I start to see distribution in the next few days, I will have to adjust. At the very least, this will remain a very tough environment.
This market action does not change my overall feeling about the lending, housing ,mortgage and buyout business. Maybe the market has already had a nasty reaction to all of this...and that nasty reaction is over. Time will tell. Do not shrug off all this news just because markets are in bounce mode.
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