Jan 20th low still in play!

February 1, 2016

By Gary Kaltbaum

@GaryKaltbaum

garyk.com

Fox News Business Contributor

It is a rare occasion when we can catch a low in the market to the day but January 20 did the trick as we wrote to you three times that day to let you know it felt like the sellers had finally been washed out after 2250 Dow points to the downside in just 14 trading days. This after being bearish all the way down.

After the washout day, the market gave everyone the jitters with up 200, down 200, up 200… but when all is said and done, our thoughts that we had seen a good low for now on January 20 and that we had more to go in time and price received the confirmation with Friday’s action. We can argue that Friday’s move was because of the maniacs in Japan but we think sellers being washed out was more important. Japan now wants you to not only deposit the money but also give them the toaster. We do recognize that all these central bank moves have helped juice the markets. We just think the moves now have diminishing returns.

The last time we called a good low was in the September/October period culminating with the Oct 2nd confirmation that higher prices were ahead. The best message you can take from us at this time is that until otherwise stated we are in rally mode in a bear market…just like back then. We will let all the pundits tell you how far this goes or how long this lasts. Hint: they have no idea. The fact is we have no idea either but we will certainly know when the market starts to get in trouble again like we told you on November 8. Our best guess is a rally/bounce that lasts weeks like the one in the last quarter of 2015.

Out of this move, we did want to let you know the strongest areas remain utilities, water utilities, storage reits, food, beverage, alcohol, tobacco, household products, discount and dollar stores…and all the recession-resistant/defensive areas in the market. The only thing that really happened here is that the bottom of the market picked up and rallied up. We also needed to mention Facebook as it is separating itself from other growth names that have been blasted lately.

And of course the last question is whether it is possible January 20 was THE low and not just A low. We will give you the same answer we gave you when we called a low back in October. Anything is possible especially when you’re dealing with maniacal central banks around the globe. We are open to anything but for us, odds favor all that happened here is that everyone finally turned bearish, the last of the sellers finally sold and an extremely oversold bear market rally started. If anything changes, we will let you kno