The Fed needs to cut rates!



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
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First…some random all over the map thoughts!

Mets…Mets…Mets…probably just put the jinx on them!

The Fed needs to cut rates…and soon. Fed funds are at 5.25% with the 10 year at 4.64%. The bond market is screaming and begging for a cut. I believe the Fed should and could be at 4% Fed Funds here…and it amazes me that one bonehead at the Fed still wanted to raise rates. The longer the Fed takes to cut rates, the more odds favor a recession.

Why is our media giving any time or credibility to this dude from Iran? He is an anti-semitic nobody. He is a terrorist of the highest order. He might as well be wearing Jack Boots raising his right hand in allegiance to Adolph Hitler. He is slime…he is scum…he is the dirt that comes off our shoes. Frankly,
we don’t understand why President Bush allowed himself to be scheduled in the same day.

Why would the media give any time or credibility to that yutz from Venezuela? He is a Marxist puke. Do you see all the crap he is saying about our President? If a person in Venezuela said that about Chavez, they would be in jail. This wonderful human being has sent many to jail because they disagreed with him. The man is lucky he is in our soil saying such things. He could not say such things In North Korea or other countries run by dictators. Speaking of the applause, why don’t we just cut off funding to any country caught clapping.

Kudos to Representative Rangel and Pelosi for telling this moron to take a fly…but we must say…aren’t some of the words Chavez said just mimicking what Rangel and Pelosi have said in the past?

Speaking of taking a fly…Tom Harkin for defending Chavez.

The most insane headline of the week: “GAS PRICE DECLINE MAY SPUR INFLATION!” It’s medication time! What are these people smoking?

One cannot talk about the stock market without talking about all the divergences going on at this time…and there are a ton. This is a big-cap versus the mid-cap and small-cap game. There is no way you can get a feel for the market just by looking at the DOW and S&P.

Underneath the surface of the DOW and S&P touching yearly highs, the small caps and mid caps continue to lag…and badly. Let me be clear. If nothing changes, if the DOW and S&P ever put in a real top, I expect the small-caps and mid-caps to break down. Just look at the charts of the DOW and S&P and look at their ascent since the August 15th follow through day. Now look at the MDY which represents the MIDCAP 400. It is at the same place as it was on August 15. You can almost say the same thing about the Russell 2000 and the Small Cap 600.



As far as the DOW and S&P, last week we told you they were due to pull back. In spite of bears coming out of their caves on any down day, so far, we have only seen a normal pullback from near-term extended conditions. We would not go further than that just yet…and frankly would not start sweating it until near-term support is taken out at 11,323 and 1290 respectively. Here are other negative divergences we are worried about.

Foreign markets are no longer leading. In fact, some continue to break down. Japan is rolling over. Brazil is rolling over. Canada is rolling over. Russia is rolling over Europe is no longer leading…this is in stark contrast to recent years. Granted, a lot of this has to do with the COMMODITY drop, but you can’t say that about all the markets.

TRANSPORTS continue to be in their bearish phase. Transports led for a long time. Now…they can’t find a friend.

NEW HIGHS are a joke. The S&P has been at old highs and NEW HIGHS are less than 100 on the NYSE.

Despite hitting highs of the year, the advance/decline line minus non-operating companies has not even come close to its highs.

SEMICONDUCTORS are now starting to lose the bid. This group bears watching as it has led the market both up and down for years.

We can go on and on. We just need you to know that this market is starting to play out a little too much like late 1972-early 73…and it would not be a reach to say this market also has the feel of things in mid-1987. We do not dare predict such outcomes. We are just letting you know that some of the characteristics are there…and it is in the study of these characteristics that we have stayed ahead of this tough game.

Gary Kaltbaum