Focus on the Narrow Leadership
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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or call 888.484.8220 ext. 1.
As you know, I follow the strict rules and disciplines espoused by the great
William O’Neil when it comes to the stock market. In fact, almost every time I
have argued with their thoughts, they have been right and I have been wrong.
Well…surprise…surprise…surprise. They are calling an end to the bear phase
as of Wednesday’s action…so I am calling an end to the bear phase…for now!
Very simply…2 of their own proprietary indices followed through on Wednesday.
Instead of me explaining and confusing you, go spend $1 and pick up today’s
Investors Business Daily and read the BIG PICTURE.
Now…very simply. Every bull move this market has ever had has been preceded
by a follow through day…but not every follow through day has worked. You need
to know this. Normally, if one does not work, it will fail quickly. I give this
one a better chance because of what I have told you recently…IT IS END OF
YEAR…AND THE S&P is up nominally. The boys need to make their year. I have no
idea how long a rally lasts or how far it goes. But I will be continually
looking for signs things could be petering out.
This does not change the fact that 70% of the market is gross…but the gross
will bounce with a follow through. You know the sectors I am talking
about…mainly everything FINANCIAL, RETAIL and all the other stuff I have
listed here. I will have no interest in the lagging groups. I will have interest
in the narrow leadership that held up best and only pulled back to support areas
in the recent down move. I have listed those names here in previous reports.
That leads me to this morning. The market is having another one of those big
gaps off the back of Bernanke comments last night. He all but said the Fed is
going to cut rates again. DUH! Is this a surprise to any one of you? Why is the
market acting so surprised? I am not. The day the Fed cut rates the first time I
told you that they will now cut…cut…cut and keep cutting. Why? Because
Bernanke, while professing to care about inflation and the dollar…couldn’t
care less about inflation or the dollar. He is and always has been what his
nickname states…”Helicopter Ben!” Not only will he drop money from
helicopters, he will drop money from the blimp…from airplanes…from balloons
and the space shuttle. Just think, we just had a 4.9% GDP growth rate,
employment at 4.7%…and the market has only corrected…yet he has been raining
trillions onto the economy. It has not just been rate cuts…but repos…and
check out the money supply growing at double digit rates. Is it no wonder the
dollar has been crushed?
In any case, this remains one of the the toughest market I have ever seen to
navigate…and I think I am decent at this. The constant gaps and
reversals…are nauseating. Take your time…be disciplined in your pivots…be
doubly disciplined in your stops.
Gary Kaltbaum