STILL STRETCHED AND EXTENDED

The DOW is at 10,817 with the 50 day moving average at 12,000.

The S&P is at 1123 with the 50 day moving average at 1275.

The NASDAQ is at 2341 with the 50 day moving average at 2680.

The NDX is at 2038 with the 50 day moving average at 2275.

The TRANSPORTS are at 4221 with the 50 day moving average at 5100.

The markets remain stretched and extended from the norm…and of course…to the downside. Just like when markets are stretched and extended to the upside, they eventually revert back to the norm, so will stretched and extended to the downside revert back to the norm. How? Typically, things will meet in the middle. This means the 50 day moving average will continue to decline while price bounces up to meet it. Occasionally, markets are so weak, price will just sit as the 50 day keeps coming down…but typically, the bet is on the former.

Bounces/rallies will happen from anywhere and at any time. Only when I see a confirming follow through day do I give the market a chance to have put in a bottom. Please remember how I outlined the 1998 double bottom as a possible template to turn this market back up. Major averages have retested the lows but have not undercut. Maybe this will be a successful retest, maybe not.

Futures are up strong this morning. Libya is the given reason why. Nah…it’s just the market is in no man’s land and was hit hard past couple of days. Can’t go further than that just yet…but always hopeful.

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.