Market Follow Up: What’s Still to Come…
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.
After scanning the market, I started to think of the best way to explain where markets are and the potential for the future when I realized that if you just look at my last report, it covers just about everything. The point is that I do not think much has changed except the DOW and S&P are now breaking down… and possibly badly. In my last report, I told you that the DOW and S&P were now lagging badly with the DOW tracing out a negative inverted cup and handle. Well, the DOW blew up with the S&P going along for the ride. The DOW broke below near term support… same for the S&P which broke back below the 50-day average. I also told you that small and mid-caps had the relative bid for the first time in a long time. I do not believe that has changed. I will be looking more to these areas when markets stabilize as they were hitting new highs on Thursday while the DOW/S&P were still gross.
It is pretty simple what is going on here. All the bearish areas I have told you about for months are now leading down again… and in nasty fashion. A lot of that is the FINANCIAL imploding again. I have been debating with many who have called the FINANCIALS cheap, a bargain, value, buy of the decade and all the other nonsense. The bottom line for me has not changed. How do you touch an area of the market where the companies have lied, where the companies have not disclosed, where the companies have cheated and where the companies have absolutely no idea what their earnings are? All it takes is one glance at many of the financials and you will see exactly what I have told you… made up accounting. These companies continue to just move a zero, a decimal, a loss, a gain and anything under the sun in the place that benefits them most. It is almost laughable at this point in time. Frankly, you do not need my opinion on it. Just look at what the market is saying. I have covered Lehman Brothers
(
LEH |
Quote |
Chart |
News |
PowerRating) for you but I must tell you… when you have a chance, take a glance at Bank of America
(
BAC |
Quote |
Chart |
News |
PowerRating). The market is really voicing some concern there.
On top of these financials, I repeat the bear market areas. Financials includes BANKS, BROKERS, LENDERS, MORTGAGE, INSURANCE, S&Ls, and REGIONALS BANKS.
Everything CONSUMER continues in a bear market including AIRLINES, AIR FREIGHT, AUTOS, CRUISE LINES, GAMING, HOTELS, HOUSING, RESTAURANTS and many RETAIL areas.
I also think you can put the REITs back into the bearish camp. They had rallied up into resistance where they sat for the past couple of months. It looks to me they are about to roll over again.
The bullish areas remain the same. For starters, just about everything COMMODITY is still in fine shape notwithstanding a few names that have not kept up. This includes STEEL, COAL, OILS, FERTILIZERS, MINING, RAILS. I suspect if markets continue to come in, they will pull in also… but I will be looking for proper support areas to probe if volume is low on the pullback. I also make note that GOLD and SILVER may have put in good lows on Friday as the dollar is now renewing its bear market after showing recent relative strength. Europe has recognized first that there is an inflation problem… thus trumping Uncle Ben’s comments earlier in the week. All of a sudden Uncle Ben has seen the dollar gods and realized his loose policy has been a contributing factor for the slumping dollar which in turn has caused commodities to spike. Again, Uncle Ben joins the party after the cows are already out of the barn. That leads me into the OIL PRICE moves.
In the past 2-3 months, I have called a few near-term tops in OILS. Each time, oil prices pulled back… but amazingly, each pullback lasted only days before it ramped right back up. In recent days, I have told you OIL was getting about as noisy as an investment area can become as every magazine, newspaper, and TV show is covering the move. Oil was working on another pullback when it went into overdrive on Thursday… jumping over $16 in less than 2 days. The volume on USO came in the highest ever on Friday. There is now a chance oil prices could be going climactic here. Many legs of bull markets end with climax runs where after a big move, the move then becomes vertical. This move usually sucks everyone in at the most inopportune moment… reverses and then heads straight back down… ending that leg of the bull. I am just outlining the chance of this. Nevertheless, this move is now getting legs… and let me be clear, nothing good happens when oil prices keep going up.