Support Still Holding

Gary Kaltbaum is an investment adviser 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.

I came into this week saying the ice was getting thinner...and for a couple of days, it sure looked like it was, but something happened on the way. The market continues to defend support and I am now seeing positive divergences while the market puts in a contracting pattern. Contracting patterns usually lead to good moves...one way or another. So...bottom line, the next high volume move will win for the near term. With the jobs report and with the Obama administration coming out with another bank save as well as a sham of a stimulus plan, expect some fireworks. Where are the positive divergences starting to occur?

All the COMMODS are sitting tight off the lows, many above 50-day, many sitting right on the 50-day. If the next move is up, the market moves up. The set up is there.

Despite horrid news and numbers, the SEMIS and BIG CAP TECH is getting a bid here. If they can continue this, market goes higher. Remember, it is not the news, it is the reaction to the news.

The NASDAQ and NDX are now way outperforming the DOW and S&P.

FINANCIALS are still gross but are now smelling another bank save as well as new mark to market rules. Unfortunately, this only gives the bad guys a chance to hide losses freely. In my opinion, this is another sham...but we are all just spectators. In my opinion, BAC was again on the verge of going bye-bye before news of different accounting rules came out. This is a company in dire straits (just look at the stock) but I believe they now will be saved one way or another by the latest Geithner plan.

Speaking of shams, here comes the stimulus bill. I have not seen such a piece of garbage in many a year. Obama is now using words like CATASTROPHE as well as saying if not passed, WE MAY NEVER REVERSE THIS. This is laughable and tells me Obama has no respect for Americans' intellect. It is not even close as to how bad this package is. I am amazed at the hypocrisy of the left as they blasted Bush for his scare tactics.

So...another bad jobs number is out...but on top of this, accounting changes, bank saves and an Obama's speech all by Monday. Expect some fireworks. In a contracting pattern, next high volume move wins for the near term.

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