Kaltbaum short note on the markets!
August 26,2015 3:10 pm
They teased another nauseating reversal early on but:
Notwithstanding another end-of day meltdown (it had better not), we would suggest that the most stretched, extended and oversold condition we have seen since 1987 is now going to start to work off the most stretched, extended and oversold condition we have seen since 1987. It does this with price and time. The all-important 50 day moving average is a whopping 1500 DOW points above current price. Eventually the two will meet with price bouncing higher as the moving average price comes lower. Typically they will meet about half way. We do not know the timing or what form this comes. It can take a few weeks or in the case of this market, a few days. Only a very, very, very strong rally will enable that (QE4?). Of course, it is also end-of-month action.
China is already pulling out more stops to stanch the bleeding. Europe is talking about more QE. Who knows what’s next? Just realize massive damage has been done, this after the internals were already terrible. But again, this move was way out of the norm where eventually, a little bit of the norm will be found.
We will have a much better idea in a couple of days on how good the bounce is, how far it goes and what type of conviction is behind it. Just know that as of this writing, we have found a whopping 3 new yearly highs in all of the market.
And the Mets remain 5.5 games in first place and are quite fun to watch!
Today – Friday you mentioned we will know in two to four weeks whether we will be in a bear market. But you implied we would have
a better idea about the bounce in a few days, earlier in the week. Does that imply you expect a trading range market the next several weeks, barring any Fed intervention?