Bear Mountain Bull

New market commentary from Gary Kaltbaum:

I titled my last report “Is That it for the Correction?” and immediately, I received tons of emails telling me I was nuts. The news was bad. The world was ending. Robert Prechter had called for another huge drop. I was amazed at the bearish reaction even though I only posed a question and then provided possible bits of evidence. Well…I guess that was a great contrarian clue as this past week, the market finally experienced a follow through day (Monday) combined with a good follow up move on Friday. All this in spite of what was perceived bad news.

The market is now back in a confirmed rally with the onus now on the bears to show up again. Small and mid-cap indices are into new high ground. The NASDAQ is sitting right on its old high. The DOW, S&P and the NDX are just a smidge below. More importantly:

New highs have picked up markedly. Never argue when a slew of stocks and sectors break out.

Growth leaders are in gear. In fact, many never broke moving averages while the market did.

Speaking of moving averages, all major indices are now above the all-important 50-day moving average. Nothing bad happens when markets are trading above these levels. On top of the U.S. indices, most foreign ETFs just broke back above the 50-day.

FINANCIALS are poised to break out. FINANCIALS teased the breakdown into the lows of February 5th…and now are back to teasing a breakout of the 7 months-plus trading range. A move above will only help the cause.

Many COMMODITY names have moved back above the 50-day with some into new high ground. The market is not going to go too far without them.

And finally, have you watched the RETAIL stocks? I thought the consumer was dead. I thought we were still in recession. Nope. As I stated many weeks ago, there is no way way a market goes higher and things are not getting better in the economy. Just another bit of evidence for this market. I suspect unemployment figures to keep getting better based on this.

Until major averages show distribution again and breach the 50-day average, it is time to try to make hay. Of course, ultimately we are all going to deal with the attempted socialistic and high-tax takeover by the maniacs in Washington but that is for another day. Remember, the bad policies of Greenspan did not come back to haunt the market for at least a couple of years. But these dudes are making Greenspan look like a piker…and if they get their way, it will be tough to undo. Keeping fingers crossed…tightly!

As always, if distribution rears its ugly head, we will simply adjust to what the market says.