Does the Market Stand a Chance?
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 NETWORK…OCTOBER 15TH
Why is Alan Greenspan on 60 Minutes two days before, arguably, the most
important day in Ben Bernanke’s tenure? Talk about wanting to continue to hog
the stage! I don’t even want to discuss in length what he had to say. Just to
refute one of his points, the Fed’s job IS TO oversee bank lending practices and
not to sit there like a mannequin. Imagine, this dude just said he saw the
problem…but did nothing about it. This, after creating the problem. Now…we
have Bernanke. Amazingly, he is going to base his moves on simulations that his
minions are going through. I have a sound question. What if the simulations are
wrong?
The New England Cheaters…I mean Patriots…were caught…simple as that.
Where was the bold statement? Fining a team $250,000 that is worth over $1
billion is a joke. Fining the coach $500k who makes $10 million/year is a joke.
If you really wanted to send a message, Belichick should have been suspended
several games and after one week of play, the Cheaters should be 0-1 and the
Jets 1-0.
Merrill Lynch kinda, sorta maybe issued a profit warning on Friday as they
performed what they called “fair value adjustments” to its portfolio of stuff.
Do you see anything wrong in the wording “fair value adjustments?” Yup…I do
not see the word “market.” If Merrill was going to do the right thing, they
should have performed “fair MARKET value adjustments.” The problem we have seen
with these financial companies for years is that they set their own values on
their own products…and amazingly, to this day, the regulators say nothing. We
are finding out that there are trillions of dollars of off-balance sheet
stuff…and nobody cares. We have heard that some of these off-balance sheet
thingamabobs are leveraged 15-1…and nobody cares. I will be on the conference
call when Merrill reports as well as the other big brokers. I am in hopes that
someone will have to the grapefruits to dig deep into just what the heck is out
there. I may be holding my breath for a long time.
Hillary Clinton is coming out with her universal healthcare proposal. My
wallet is already feeling lighter.
NOTES ON THE MARKET!
The market has a chance here. Well, at least some of the market. The set up
is there if the DOW breaks above 13,500 and the S&P breaks above 1496. It will
also be of help if the NASDAQ can get above 2644. The problem is the rest of the
market. As I have told you, this market is a big and mega-cap affair. The small
caps and mid caps…so far, cannot find a friend. You may add the TRANSPORTS to
that list. I have seen nothing on the tape that makes me change that stance. I
will not be surprised if the market attempts something here because of whatever
the Fed does. The question remains whether the broad market will join any
further upward move. So far…negatory. And it is not written in stone that
markets have to rally because of anything the Fed decides to do or say.
As of this second, the BROKERS are finally getting their long-awaited
oversold rally. I suspect there is more to go but keep in mind, there is a ton
of resistance ahead…and the biggies report this week. Expect them to put loads
of lipstick on the pig. Many FINANCIALS are also in oversold bounces. Add RETAIL
also to the bounce list…but once again, these are nothing more than oversold
bounces.
So let’s review a bit. There was what I believe a very important high in
July. Advance/decline figures topped out 6 weeks in advance. New highs topped
out way in advance. FINANCIALS topped out way in advance. REITS topped out way
in advance. RETAIL topped out way in advance. Amazingly, the day after the DOW
topped, new lows led new highs…a monstrous negative divergence. 60-70% of all
stocks are now in poor technical shape. BIG-CAP indices continue to mask a ton
of damage that has be done. The best example of this is the NASDAQ A/D line is
at ALL-TIME LOWS here…a big WOW! Even today, with the DOW back up to 13,500,
new lows led new highs on friday. Volume has been a joke on this move up…this
following a heavy volume drop. I gather the next week or so will reveal a
lot…just keep in mind, many areas are already in bear markets. Just look at
the chart of the RUSSELL 2000 versus the NDX.
I love GOLD…but on pullbacks. My favorite names remain AEM, ABX, GOLD.
OILS and COMMODITY names continue to lead. I have told you they were back to
their leadership roles. The problem right here is that they have come straight
up and are now in v-shaped patterns.
A good sized chunk of my favorite growth names continue to do well. They had
strong relative strength before the market top…and have reasserted themselves
off this rally back up. They are the same names I have been mentioning for
months…AAPL, AMZN, BIDU, BCSI, CMI, CMG, CROX, FLR, FWLT, GRMN, ILMN, PCLN,
RIMM, WYNN and others. You should be continuously scanning these names for
leadership.
I HAVE NO CLUE HOW MARKETS REACT TO THE FED. All I know is that if the market
continues to rally on anemic volume, it will tell me the rally is not supported
by the important big-money crowd. This will eventually invite sellers back to
the market. I believe any severe distribution here will put a fork in things.
This market is just not broad-based enough to support any more selling. I hate
the fact we are held hostage by the imbecilic FED but it is what it is.