Defensive stocks cannot lead this market right now
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. 888-484-8220 ext. 1.
We told you someone is going
to jail. Major investigations now expanding on all the suspicious
trading before recent buyouts including
(
HCA |
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PowerRating). When will people ever learn
that if you trade on insider information before a deal, you will have the SEC
proctologist visiting you within days.
GDP drops off the ledge and is way below estimates. Gee…we
had no idea! Just because RETAIL,GAMING,RESTAURANTS have been falling off a
cliff…we had no idea. Once again, the market forecasted the falloff in GDP. We
love the spin. It is now a great thing when the economy slows markedly. Didn’t
they say it was great for markets when the economy was strong?
Mel Gibson. Cant write what I am thinking. We really liked his
movies.
Floyd Landis: would it be a pun if I said…WHAT A DOPE!
Dennis Kucinich calls for a 100% windfall tax on Oil
Companies. I will let that bit of comedy stand on its own.
We told you the options back-dating scandal will have legs. We
believe we are just in the first inning and do believe it is going to get nasty.
If BERNANKE and the FED raises rates again, get the
straightjackets. In fact, we believe a cut in rates is in order here. Fed funds
are at 5.25% with the 10 year under 5%…begging the Fed to stop raising.
This is what was said in the last report we put out:
“I have no idea how far this bounce/rally lasts or how far it
goes. I do know that when support levels are held, it is a near term positive
that will always lead to upside testing. So far, I have not seen the conviction
nor have I seen the leadership I want to see to tell me this move will have
legs…but hey…I am open to anything happening. I gather we will know a lot
more over the next few days as the market enters resistance areas. I will say
this. The support levels I outlined had best hold or what has been an ugly
2-plus months…will just have another leg down.”
We have not changed our stance. We believe a bear market, bear
phase, bear anything…whatever you want to call it…started on May 11. We have
had 3 rallies in this bear…and so far, all failing. The recent failing looks
to be right at short-term resistance at 1280 S&P…but do believe a move above
is possible. We won’t go into the shenanigans that keeps occurring into
month-end. Just that you need to know every rally has ended into the end of
month window dressing. Tuesday’s action looks to be the same. Of course, window
dressing is illegal.
Look how easily the NASDAQ/NDX were sent lower on Tuesday. We
have told you on several occasions that these areas lead the market both up and
down. The recent bounce was anemic and on light volume. We have told you many
times in the past, during bearish phases, the DOW and S&P will hold up while the
rest of the market leads down. This continues.
Speaking of light volume, the whole move up in the past few
days was on light volume. Until we see a confirming high-volume follow through
day, we are suspicious of any rally. We believe good and bad markets leave
footprints. One of the most important footprints is the conviction measured by
volume on any move. Always keep this in mind.
There is no way this market can be led by all the DEFENSIVE
areas we have named in the past. It is simply indicative of a market in trouble.
On top of that, there is literally no growth leadership in the market. In fact,
most leaders of the past cycle have been smashed to bits. We continue to believe
defense is the best offense.
We do like:
GOLD and SILVER. We believe they have turned the corner to the
upside. We have no clue how far the move goes.
OILS…but are now getting overbought. We were initially very
right on our top call on the OIL STOCKS recently. We were subsequently very
wrong as they turned right back up…and straight up. Big-cap OILS like
(
XOM |
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PowerRating)
are the leaders right now.
DRUGS,DRUG STORES,UTILITIES,MEDIA,BIG FINANCIALS,TELECOM
SERVICES…but that is about it.
The tape is now becoming very split and very nauseating. We
are just letting you know that we do not believe the leadership we are seeing
will last for too much longer. The market needs the
SEMIS,RETAIL,GAMING,BIOTECH,RESTAURANTS and all the growth areas. If they do not
show up at the door, the day the OILS and other areas holding things up poop
out, it will be the start of the “next time down.” Hoping for better days ahead.
Gary Kaltbaum