Gary Kaltbaum is an investment adviser with over 25 years experience, and is 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.
My down the road, big picture themes remain the same. The Fed continues to crash the dollar on purpose in order to bubble up the stock market and asset prices. Unfortunately, there has been repercussions that always occur with misguided monetary policy. The consumer, especially the lower and middle income earners, are now facing much higher oil prices, much higher commodity prices and at the same time, make absolutely zero on their savings. Eventually, this will come back to haunt the market…like it always does. Speculators continue to feast on commodities as Bernanke keeps saying inflation is anchored. The markets think differently.
In my last report, I told you I thought the market was turning the corner back up. This has occurred….but the recent rally back up into the highs has driven sentiment to extremes. The bull/bear ratio is the widest I have seen in years. These extreme numbers must be watched as they are often the precursor of a pending top of consequence as the wrong-way crowd joins the party late. As far as the technical characteristics, it is a mixed bag but the near term action is is acting a little tired.
For starters, the tape is becoming increasingly split with more and more names not participating in any rally. Secondly, and more importantly, a few important areas that I follow are showing distribution., The SEMIS continue to be faded every time they rally up into the 50 day moving average. The TRANSPORTS look like they just failed a breakout. The FINANCIALS are trading erratically and back below the 50 day. Combine that with the V SHAPE move back up and the stalling at the highs and I think it is time to watch closely again.
The good news is that all major averages remain above the 50 day average. As I have told you, nothing bad can happen when things are above the 50 day. But I will tell you, any break below and I will be much more worried this time down than the last as the market has had more time to put in a top. Remember, tops take time. They do not happen in a day, week or month. The top in 07 took months. Now…I am not calling any top just yet. I am just telling you a break below support will carry much more significance than the last time.
WATCH THESE LEVELS. The NDX right here as it is the weakest index…2320. The NASDAQ at 2750…the S&P at 1312…the DOW at 12,150 and the RUSSELL at 815.
Gary Kaltbaum owns Kaltbaum Capital Management, LLC (“KCM”), an investment adviser registered with the U.S. Securities and Exchange Commission. The opinions expressed herein are those of Mr. Kaltbaum and may not reflect those of KCM. The information offered in this publication is general information that does not take into account the individual circumstances, financial situation or individual needs of an investor. The information herein has been obtained from sources believed to be reliable, but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results.