A Tale of Two Cities
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
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FOX BUSINESS CHANNEL OCTOBER 15TH
In another case of the blind leading the blind, APPLE COMPUTER just announced
they are dropping the price of the IPHONE $200. Yes, the IPHONE which was
supposed to cure cancer had its price lowered 40%…in just a couple of months
from its launch. And in classic form, EVERY ANALYST on Wall Street spun this
news as being a positive. Not one analyst questioned whether sales were not as
strong as expected. Not one analyst thought this was even the least bit
worrisome. Who takes the award for most laughable comment about the IPHONE?
Yup…Steve Jobs actually said the reason for the price drop…”hey that’s
technology!” Let me be clear. Economics 101 states when companies have to lower
prices by a large amount in very short order from a product’s launch, it means
that something is not so good. It means sales are not up to snuff. What? You
think APPLE is so nice as to lower prices so you can more easily afford their
product? I don’t think so. As usual, shame on the amazingly shoddy work of the
analyst community. Nothing has changed.
The market is back to trading like it was before the recent meltdown. It is a
tale of two cities. OILS,COMMODITY names, SHIPPERS, FERTILIZERS and a decent
amount of GROWTH NAMES lead the way…while so many areas of the market remain
horrid. You know the areas…HOUSING, LENDING, MORTGAGE-RELATED, TRANSPORTS,
S&LS,
BROKERAGE, REGIONAL BANKS, MONEY CENTER BANKS, SMALL CAPS continue to woefully
underperform. All one needs to do is look at a chart of the NASDAQ 100 next to a
chart of the RUSSELL 2000 and you will see what I mean by large-caps versus
small caps. While the NASDAQ 100 is above the 50 day average, the RUSSELL cannot
even get near the longer-term 200 day average. I also make note that the 50 day
crossed the 200 day on the RUSSELL…not a thrilling sign. The problem for this
market is simple. All of these negative areas continue to weigh on the market.
They are of no help. If they do not get a bid, the groups that have been working
may just top and then we are back in trouble again. The main problem I am seeing
right now is that the leading groups have made V-SHAPED moves up and could be
prone to sharp pullbacks. I would just be careful…and I would not be
complacent right now.
I do make note of one down and out group that is now getting strong money flows
and that is BIOTECH. GENENTECH (DNA) broke a major downtrend and seeing
continued great strength in BIOGEN. Also add CELG to the strong action category.
I am not sure BIOTECHS will have much influence on the overall market.
I also make note that GOLD PRICES may be on the verge of a major longer-term
breakout here. I am talking about a serious long base breakout. The best looking
charts in GOLD STOCKS are AEM, ABX and GOLD.
