Brokerages Are Downgrading Brokerages
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
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I am both a nice and sympathetic guy…but I must draw the line. I am reading
about a bunch of proposals to bail out unwary borrowers (idiots) who are now
yelling…whahhh! I am sorry. What happened to individual responsibility? Where
do you draw the line? Do you bail out a speculator who bought condos in Miami at
the highs? This is a slippery slope ladies and gentlemen. When government starts
to take care of all ills and stupid risks, we are headed the wrong way. Just my
opinion!
With all the “finding out” of all the crooked investing on Wall Street, the
criminal lending and the downright stupidity by the so-called Wall Street
geniuses, I am reminded of another great Warren Buffett quote: “You only find
out who is swimming naked when the tide goes out!” Love that quote!
My mantra in bearish phases has always been you will get no help from Wall
Street…as all the conflicts of interest shows itself. Just in the past week:
An analyst lowered FRE rating and lowered his target from $73 to $24. Now
that’s value! I have seen dozens of these late downgrades lately.
RATING’S AGENCIES have only started downgrading everything in site in the
past few weeks. These agencies should be fined, censured and frankly, an
indictment or two would suffice. I would also like to talk to those who oversee
the rating’s agencies.
How about our good friend Uncle Hank Paulson? After saying that housing would
bottom at least ten times in the past year, he is finally out saying that things
only look worse. Wonderful value from this so-called genius of the markets. I do
not even mention Bernanke any more because the only place for him would be on
the cover of Mad Magazine…WHAT ME WORRY! As I have stated, this quiniela of
absurdity have acted like lawyers for the financial community more than anything
else in past months.
BROKERAGES are now downgrading BROKERAGES!
A few notes on the market:
The 200 day average for the S&P is 1483…DOW 13,230. I would suggest to you
that the market could bounce back into those areas. I say this because of how
extended the bear market sectors have become to the downside. This doesn’t mean
a bounce will occur. It means that chances are better that one occurs. On that
note, I am expecting the two worst bear areas, RETAIL and FINANCIALS to bounce
here. It just “feels” like both areas could be sold out…but again, only in the
near-term. This is not a bullish call. The point is that things do not go
straight down forever. A bounce back up would be quite normal. The other point
is that the short-term action is the trees. The forest is that over 70% of
stocks are in poor technical shape and most sectors are in horrid shape. In
fact, I can count on one hand the sectors that remain bullish…and those
groups, which include OILS, GOLD/SILVER, DEFENSIVE are not bull market sectors.
I am actually looking for the bounces to provide great shorting
opportunities. My favorite book on shorting is HOW TO MAKE MONEY SELLING STOCKS
SHORT by WILLIAM O’NEIL and GIL MORALES. The book describes how it is best to
short the bounces. I think December may provide the bounce. Time will tell.
Continue to watch OILS like a hawk. They have been toppy…but until the OIH
and XLE break below recent lows…which is $176.41 and $70.59, I expect the
market to hold up in here instead of getting ripped again to the downside. The
day OILS top is the day another leg down occurs. This because OILS are the
leading group in the market.
A couple more notes:
I am seeing large insider buying at Wachovia. Just keep in mind, they started
buying at $49…just letting you know they are buying big in the $38-39 area. I
am seeing smaller insider buying in a few other FINANCIAL names.
Many are now turning bearish because of the DOW THEORY sell signal. If you
just turned bearish, you are in a heck of a lot of trouble. I am not a fan of
“big” theories. There is much more underneath the surface than what is going on
in the DOW and TRANSPORTS.
Gary Kaltbaum