The Ice is Thinner-er!
Gary Kaltbaum is an investment adviser 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.
My last report was back on June 17th. The title of that reports was “The Ice is Getting Thinner!“; I did not feel it necessary to write since markets have remained range bound. On top of that, I wanted to wait until after the usual end of month/quarter window dressing…of course, which doesn’t happen. Well, the market received the window dressing but that has not been enough. The ice, indeed, continues to get thinner and now major indices are on the cusp of breaking near term support.
Markets had a chance to break out to the upside…and now they have the chance to break down. Thursday was gross…yes on light volume but it counts. Also, it is normally a good day before a holiday so the fact it was down so bad is not good news.
Before I get in depth, here are the important support levels that if taken out, will lead to the first good correction of unknown time and price since the lows … S&P 888 and more important 878 … DOW (which is weaker) 8259 and then 8221 … NASDAQ 1753… RUSSELL 488 and then 470. If they are not broken, the market gets a chance to repair recent damage … BUT I believe odds now favor a break occurring. I am noticing on the other end how good looking inverse funds look. Many are on the verge of breaking ABOVE the 50-day average with some like the OILS sitting in nice bullish wedges ABOVE moving averages … so something to watch and look at.
I have told you recently that a lot of the COMMODITY areas are getting in trouble…and all that has happened is that they have worsened. OILS, FERTILIZERS, COAL, METALS/MINING, SILVER are all toppy, topping or topped on a near term basis. Maybe they are oversold so bounces could happen but serious tops look to be in for now.
Many RETAIL names now breaking support/moving averages.
Most importantly, the FINANCIALS now seem to be breaking down from a tight bearish wedge formation. As I have told you … WATCH THE FINANCIALS. If they go, markets go.
Go scan the DOW 30 and notice how a few names just broke support. Not good news … think IBM.
A couple of other things I have been a little worried about are the amount of secondary offerings and the low priced action. There have been a zillion offerings which dilutes the market … not just in the financials but other areas. Also, I have been seeing a few too many $1 stocks going bonkers indicating frothiness … which should not occur so soon off the lows.
At the very least, I would be kicking back. The best news I can give you is the 40-50 leading names I follow have hardly budged. Yes … a few now trading wide and loose as some CHINESE names going straight up and straight down, BUT overall, leaders are not getting hurt yet. But the rest of the market is another story. The market most definitely needs a goal-line stand here.
Lastly, I must talk policy to you today. It is a must because in our history, we have never seen the things that are going on right now. In my opinion, this administration is in the midst of trying to roll back everything that has made this country what it is … and that is the ability of the people to create, the ability of people to become, the ability of the people to enjoy the fruits of their hard work … and I can go on and on. I am now hearing from this administration how they inherited a mess … thus the reason for their crazy spending and policies. I beg to differ. This administration and every administration before it inherited the greatest country to be put on this great earth. We have had struggles in the past but the greatness of the people, not the government, has always brought us out of trouble. This administration is making excuses for their nonsense.
These policies, in my opinion, are going to affect the markets and the economy in a big way. This cap (yes I know that one was not a typo) and trade plan is officially the worst policy ever … even worse than the recent stimulus plan and the tarp plan … and I am not kidding. It is an onerous plan that does nothing for no one except puts more burden on consumers and business while growing more government and putting more power into government’s hand. It raises costs for everyone and puts into play mandates no one wants and no one needs. This whole bill is economically illiterate voted on by legislators, most who have never run a business or took risk with their own capital.
As far as the health care bill, I have only one question … Since when is it logical to spend $1.6 trillion to SAVE MONEY? Explain that one to me. And anyone who believes it will only cost that much, I have a few condos in Miami to sell to you. Whatever they say the cost will be…just multiply by 3, 4, 5 … and think of the BIG DIG! Very simply, it is my opinion that this administration is the most anti-business, anti-consumer, anti-success, anti-wealth, anti-capitalism, pro-government, pro-mandates, pro-power, pro-regulations, pro-spending and pro-taxes administration in this great country’s history … but don’t worry, just ask them. They will say they are the opposite.
Do not listen to what they say. Watch what they do. I am sure some of you will disagree. I ask you to forget who is running the show and just look at these bills … without bias. I ask you to realize we are being told they will cut deficits in half … after they tripled the deficit. I ask you to realize we are being told one thing while the opposite is being done. And unfortunately, the people who are supposed to be the watchdogs, the mainstream media, have fallen down on the job. They are more worried about Michael Jackson’s will than what this administration is doing. There has been no investigation, no checks and balances and no care about whether these policies are good or bad … it is all a popularity contest at this point in time.
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