Markets Bounced, But Was the Move For Real?
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
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editor and publisher of “Gary Kaltbaum’s Trendwatch”…a weekly and monthly
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Who uttered the following quote?
“Innovation has brought about a multitude of new products, such as sub-prime
loans and niche credit programs for immigrants. . . . With these advances in
technology, lenders have taken advantage of credit-scoring models and other
techniques for efficiently extending credit to a broader spectrum of consumers.
. . Where once more-marginal applicants would simply have been denied credit,
lenders are now able to quite
efficiently judge the risk posed by individual applicants and to price that risk
appropriately. These improvements have led to rapid growth in sub-prime mortgage
lending . . . fostering constructive innovation that is both responsive to
market demand and beneficial to consumers.”
Yes…my favorite…big Al Greenspun uttered those words in April of 05. I am
mentioning this to show you why I have been so insistent that Greenspan,
Bernanke and now Paulson, are nothing more than pollyanish cheerleaders who
continue to tell us we live in a world without any worries. Here are 2 charts
that tell you the state of subprimeworld. They speak for themselves.
Charts courtesy of Stockcharts.com
Charts courtesy of Stockcharts.com
If it was only subprime, I would not be so worried…but the three amigos are
out on a daily basis telling us housing is stabilizing and bottoming. Of course,
Greenspan and Bernanke never said there was a housing problem in the first
place. My problem is that I want to believe these people are just
imbeciles…but I am starting to believe they are just lying. After all, the
chief of DR Horton said 07 is going to “suck” all year long. That’s after every
other chief of housing companies said the same thing. So who do you want to
believe?
Markets have had a bounce the past week. This is normal after the carnage we saw
off the top. Of course, the bounce buried the shorts as both Tuesday and
Thursday gapped higher nicely. So far, there is one glaring problem. Volume has
been heavy on the drops and light on the bounce. Let me be clear. If this market
does not experience a follow through day (Monday is day 5) in the 4th through
10th day off the low, then expect another bout of selling to retest recent
lows…at a minimum. If the market follows through, it will be respected. I
believe we will know in the next week or so…if not any day. Markets are not
just going to sit around.
BROKERS have rallied up a wee bit after experiencing bungee jumps. These stocks
look shortable into resistance and believe will show the way if we get the next
time down. They led down the first time.
WORLD MARKETS experienced the same type of top…all breaking trend lines as
well as near-term support. I make note that Japan feels like it is the only
country with good relative strength here.
No biggie at this point but believe the BOND MARKET put in another near term top
on Friday. BONDS have been a non-factor trading in range for quite a while.
GOLD and SILVER continue to be a little too popular. Both are tracing out
topping patterns as they wedged up on lighter volume in the past week.
Overall, this is a great time to kick back and let the market decide its next
move. I suspect you won’t be waiting too long for the market to decide.
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