Major League Rotation
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 or call 888.484.8220 ext. 1.
There is a very good chance the last of the bull market sectors have now entered their own private bear market… at least for the near term. These are the sectors I have been writing about as holding up during the carnage. This includes GOLD/SILVER, OIL, COMMODITIES, FERTILIZERS and AGRICULTURE. They have been the only game in town thus a lot of late money and a lot of momentum money flooded in. That cuts both ways as momentum is twice as quick to get out… thus the recent yonking. I do believe there is a longer term bull market in the COMMODITIES but there was no way they could keep the rate of ascent they have been experiencing.
That leads me to the potential good side of the equation. I am a big believer in inter-market work. That simply means if OIL goes down, what benefits? If COMMODITIES drop, what benefits? I believe there is a good chance that we are going to see rotation into areas that have been dead in the water… how about RETAIL, RESTAURANTS, TRAVEL , TRANSPORTS and the like. You get where I am going with this. If we do not get rotation into these areas… look out as the market will break. If we do get rotation, I expect the market to hold.
Other sectors of note:
HOUSING continues to trace out a low I talked about weeks ago. So far, the whole group has put in one higher low and has held. That is how bottoms are put in place. But for sure, there will be more work needed… and yes, they can bottom on more bad news as they are already down 60-90%.
FINANCIALS… yikes! The only thing I can say is that technically, it looks like a panic low was put in on the Bear Stearns news. Just look at the charts of Lehman Brothers
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PowerRating), Goldman Sachs
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PowerRating), Merrill Lynch
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PowerRating), and Morgan Stanley
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PowerRating) as that is the mother of all washouts.
RETAIL is firming up but except for a Wal-Mart
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PowerRating), do not have good charts. If RETAIL can get a bid, it would go a long way in helping the market hold here.
If the major averages can continue and continue to hold, this would technically give the market a chance to repair all the damage and give the market a chance for a decent rally for the first time in a while… and not just a one day wonder. At any rate, this market has been nonsense. The constant gaps and reversals, the constant bailouts, the constant noise from the fed and Uncle Hank make it almost impossible to play on a daily basis. Hoping for better days ahead. I am now less bearish on the initial bear market areas like FINANCIALS, RETAIL, RESTAURANTS but now turning bearish on the COMMODITIES.