Leibovit, who is consistently ranked among the top newsletter advisors according to Timer Digest, explains, "Recent buying was broad based as volume increased breadth was strong. Investor sentiment as measured by the AAII poll Wednesday evening January 23 was at 59.02 bearish, a very extreme number.
"Since the poll began in 1987 the bearish percentage only exceeded 55% three previous times. Each time was near significant market lows. The VIX also was at high levels seen at correction lows in stock prices!
"The financial media is pointing out fairly frequently that the market is off to its worst start since 1991. They make it sound like that has ominous implications. That bad start in 1991 actually presented an exceptional buying opportunity.
"Upside potential is still 1420 on the S&P 500, but if we go through that, the potential of seeing a test or breakout into all-time highs would exist. And, if the 1271 low in the S&P 500 and the 11,634 low in the Dow Industrials don't hold, 'Katy bar the door!'
"The bottom line is that this rally looks to have further to go. Sellers were washed out last Wednesday, and now we will see how much new money is committed to the long side. The fact the market could rally in the face of 'bad news' was very impressive.
"The market spoke and we listened. As long as last Wednesday's low holds, we could see a very good rally unfold. The farther away the price action gets from that low with volume, the more likely this rally attempt will be sustainable."
Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.
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