A very strong and much better-than-expected PMI has the juices still flowing. All good news. Recent action should serve as a lesson as you never know what can come of a market putting in a low or putting in a high. Just to backtrack…last Friday, I wrote that major averages were on the cusp of breaking long-term support and needed to put in a goal-line stand. As the week moved forward, it got easier and easier to say the hold of long-term support was getting stronger and stronger. Knowing this, I even started buying. Based on what I am seeing, the 200 day is a definitive hold now. Anything can happen in this nutty world, but for me, odds favor the recent lows will not be violated in the short term. The internals and technicals are that much better. Important DOW names like IBM,MMM,UTX have turned the corner racing up their right side. The same goes for many sectors of the market.Keep in mind, there is still plenty of resistance. There are still plenty of uglies…so my best guess in the near-term is that this now very overbought market will soon start spending some time consolidating recent gains before attempting higher prices. I am not in the camp that the market is just going to break out to new highs. Resistance must be worked through.
Gary Kaltbaum owns Kaltbaum Capital Management, LLC (“KCM”), an investment adviser registered with the U.S. Securities and Exchange Commission. The opinions expressed herein are those of Mr. Kaltbaum and may not reflect those of KCM. The information offered in this publication is general information that does not take into account the individual circumstances, financial situation or individual needs of an investor. The information herein has been obtained from sources believed to be reliable, but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results.