Here's what's working out there now

Gary Kaltbaum is an investment advisor with over 18 years experience, and a Fox News Channel Business Contributor. Gary is the author of The Investors Edge. Mr. Kaltbaum is also the host of the nationally syndicated radio show "Investors Edge" on over 50 radio stations. Gary is also editor and publisher of "Gary Kaltbaum's Trendwatch"...a weekly and monthly technical analysis research report for the institutional investor. If you would like a free trial to Gary's Daily Market Alerts click here. 888-484-8220 ext. 1. 

We gave the market every opportunity to prove itself and the very next day...yonk! Any thought that Wednesday's action was meaningful should be wiped out of your mind. Just another noisy bear market day. It meant absolutely nothing to the bull cause. Why do we say that? For the hundredth time, bear market rallies are sharp, noisy, make you feel better and then cripple soon after. Bingo!
 
The NASDAQ/NDX and SOX have already given back everything...in spite of all the bullish talk. We repeat...these areas lead the market up and they lead the market down. But that's not the new problem. That's an old problem. The new problems:
 
The TRANSPORTS  are toast. We told you that they recently put in a double top. They have now rolled over. The TRANSPORTS dumped over 200 points...and we believe it is just the start as a major top has been put in for the RAILS, TRUCKERS and the like. 4387 is the June lows...which we believe will be next. Not good.

 
OILS continue to roll over with the OIH (OIH | Quote | Chart | News | PowerRating) now completing a major top. $131 is good support. A break below and there is only air down to the $120 area. Not good.

 
STEEL is rolling over. ALUMINUM is rolling over. COPPER is rolling over. GOLD is rolling over. SILVER is rolling over. In a word, COMMODITY stocks are now rolling over.  Not good.
 
These areas are joining RETAIL, TECH, INTERNET, RESTAURANTS, STAFFING, CYCLICAL, INDUSTRIAL, HOTELS, GAMING and just about every other area...into the ugly pile. Ignore at your own risk.
 
What’s working? What's working gives the market just another characteristic as to why we are so worried.
 
What's working?
 
Supermarkets, Tobacco, Utilities, Cleaning products, Food, Beverages, Drugs, miscellaneous Healthcare, and some Financials.
 
Why would this be? The market is the greatest forecasting mechanism and right now, this market is screaming a major slowdown, if not a recession, in the coming quarters. Every one of these areas outperform before a major slowdown or a recession occur. This is not opinion. This is classic action that we have seen before so many times. The market is all but guaranteeing that in the next quarter or two, we are going to get a sharp deceleration in economic growth...maybe even a contraction. We don't worry about why. There are a number of reasons we could put out there. Just realize that it is the characteristics of past cycles that we have studied that get us in front of things. If you are skeptical, just keep in mind, we were the ones who in August of last year put out the impending top in HOUSING before everyone else...and took a lot of nasty emails because of the call. That call came from the same cycle work that we are seeing right now.

Gary Kaltbaum