Bear Markets Don’t End in One Day
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 or call
888.484.8220 ext. 1.
Rick Santelli gets the Wall Street man of the week award. If you don’t know
why, look it up.
Rudy Giuliani’s campaign manager shouldn’t be running a lemonade stand. What
was he thinking?
Clintons = lowlifes. They can’t even hide their sleaze…and against one in
their own party. Kudos to those in their own party that are slamming their
sleazeball tactics. Talk about people who should not be running a lemonade
stand!
Several months ago, in front of more than 1 million people on Fox News
Channel, I stated John McCain would be out of the presidential race within a
month. Did I tell you I also bet on Custer?
Upon agreeing to the stimulus proposal, a certain politician said
this…”economists estimate that each dollar of broad tax cuts leads to $1.26 in
economic growth!” Nope…not from Bush…not from Romney…not from
Paulsen…BUT from Nancy Pelosi. I hope she remembers what she said when we get
around to making the tax cuts permanent.
SoGen says a low level something or other was able to lose $7 billion without
anyone knowing about it. If you believe that, I have a few condos for sale in
Miami that you just need to buy. I GUARANTEE THERE ARE OTHERS INVOLVED!
Eli Manning was on the front cover of Sports Illustrated. CRAP!
I will have a bigger report on the market after the Fed…AKA Hear no
evil…see no eveil…speak no evil…meets in a room…plays a little Nintendo
and then lowers rates another half point because “we are not predicting
recession at this time!” But I did want to make note of a few things.
As I told you, down legs in bear markets end with heavy volume reversals just
to suck out the last sellers at the most inopportune time. That occurred on
Wednesday. But amazingly, many were already out calling THE bottom of the bear
market. Some of these pundits have called the bottom about 10 times in the past
few months. This is folly. In my study of bear markets, you need to know that
they just don’t end in one day…but go through a process of bottoming over
time. I just do not believe we are there yet. I have no idea about price and
time but I do know how bear markets end…and they certainly do not end when
many are calling the bottom. So…like my good guess of an imminent reversal,
here is my next guess based on my studies of characteristics of bear markets. I
suspect we’re going to see what I call ABC-type action where the A move was the
first move off the low, which may have just ended…the B move is the next move
down, which probably started on Friday’s reversal…and the C move which is
another rally which may or may not take the market back above recent highs. Just
keep in mind, this rally only serves to work off the very extended and oversold
condition the market created on its drop. So…while I believe the recent
reversal low could hold near term, I am not so sure we are out of the woods.
There are just too many stocks and sectors that are horror shows. The last point
I want to make is about Friday’s action. The market opened up in a frenzy with
many heralding Microsoft and its earnings as a reason to NOW BUY TECH! By the
end of the day, those people were back in their caves. If there is anything you
need to know about bear markets, it was all encapsulated in Friday’s action as a
frenzied open failed and failed miserably and “good news” in Microsoft was sold
off. This type of action does not occur in bull markets. In bull markets, “good
news” like that is bought and bought and bought. Learn this characteristic. It
is right there for you to understand. In bull markets, bad news still gets
bought and good news is bought with a fervor. In bear markets, good news is sold
and bad news is crushed.
Lastly, I have received numerous emails asking what happens if the market
decides to have a follow through day this week…a day where a major index goes
up 1.7% on heavier volume. Simple…IBD will say we are back in a confirmed
rally…which I adhere to. BUT…that does not mean you just go and buy. Many of
these days fail in bear markets…especially when there are no bases to buy off
of. Right now, there is zippo when it comes to bases…and frankly, many things
are still breaking down. So, regardless, there will be not much to do.
Gary Kaltbaum