Curb Your Enthusiasm
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.
Now that we know you will never ever hear the word “contained” again from
anyone on Wall Street, I must backtrack a wee bit. This…a quote from Uncle
Alan Greenspan:
“Innovation has brought about a multitude of new products, such as sub-prime
loans and niche credit programs for immigrants. . . . With these advances in
technology, lenders have taken advantage of credit-scoring models and other
techniques for efficiently extending credit to a broader spectrum of consumers.
. . Where once more-marginal applicants would simply have been denied credit,
lenders are now able to quite efficiently judge the risk posed by individual
applicants and to price that risk appropriately. These improvements have led to
rapid growth in sub-prime mortgage lending . . . fostering constructive
innovation that is both responsive to market demand and beneficial to
consumers.”
I dare not foist all blame upon this man….but it must be noted that he
enabled it…and when it was early enough to do something about it, he stood
like a mannequin. These is enough blame to go around…and the good news is that
the police are finally showing up. Remember what I have been telling you. It is
never a problem until it is a problem…and the police do not show up until a
lot of money is lost. We are now seeing the SEC investigating everything under
the sun. We are now seeing the NY Attorney General investigating Wamu, Fannie
Mae and Freddie Mac. Merrill, Bear, Countrywide and the rest are now all going
to see their lawyer’s bill go up….and rightfully so. We have yet to see any
class action lawsuits…but many are right around the corner. I am sorry but I
am also sick and tired of all the B.S. coming out of these companies. The line
that “they had no idea how bad things would get” and “this came out of nowhere”
is a royal bunch of bullcrap. Many, including yours truly saw this coming over
1-2 years ago…but I have to admit, I had no clue how much was at stake as far
as dollar amounts.
70% of the stock market has been in its own private bear market. You know the
areas. FINANCIALS, LENDERS, HOUSING, S&Ls, BANKS, BROKERS, INSURANCE, MORTGAGE
anything, RESTAURANTS, HOTELS, RETAIL, SEMICONDUCTORS and REAL ESTATE have not
just been heading lower. They are now being blasted. This report has been front
and center about these areas and how you should avoid them. These areas topped
out months in advance of what we have seen recently. Ten years ago, the major
indices would have already been toast but in the past few years, new leadership
emerged in the COMMODITIES, OILS, GOLD/SILVER, BIGCAP TECH and other areas like
SHIPPERS, FERTILIZERS and SOLARS. Whenever the market would go up, it was led by
these few areas while the worst areas would bounce. When the market would be
hit, it would be led down by the worst areas while the best areas came in. It
has been my contention that the “market’ would not croak until the best areas
came in. Well, the best areas came in yesterday. In fact, we have now seen three
monster days to the downside…OCT 19,NOV1 and yesterday.
To be blunt, there is no way this market will be able to stand more days like
yesterday. The internal deterioration of this market has been going on for
months. For instance:
My NEW HIGH/NEW LOW figures topped out in February.
My overall A/D line topped out 6 months ago.
My % of stocks in good technical shape topped out in February.
While the NASDAQ has moved to new highs, amazingly, the NASDAQ A/D is at ALL
TIME LOWS. This year, the RUSSELL 2000 is down while the NDX is still up 25%.
None of these stats are new to you. It just simply tells you that while major
big cap indices have held their own, the soldiers have been leaving the
battlefield…leaving fewer and fewer stocks to do the job. Very simply, all
these stars are classic signs of tops. I have thought we were in a 99ish period
and thought there could be a couple of more months to hold up…but the horrid
news we are now hearing may just be igniting things faster. 1490 support on the
S&P was taken out…10,400 support on the DOW was taken out. The NASDAQ and the
NDX are now in pullback mode. The market had better pull up its bootstraps and
soon. I am not sure it will be able to.
And I never mentioned the dollar. That’s for next time.
Gary Kaltbaum