The Market Could Rally Here…But Don’t Blink!
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.
“The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.” — Winston Churchill
I am in hopes you are reading all the articles of the sham that is the rating’s services as well as all the other nonsense we continue to see. Why aren’t more people worried about $several trillion of conjured up money to pay for companies that failed?
Why don’t more people recognize that the only thing people like Hank Paulson are good at is using other people’s money to fund their escapades…and now Hank has created the largest hedge fund in history…the U.S. Government…and our government fell on their knees agreeing to this. Why weren’t the crooks from Citipuke paraded up to Capitol Hill to plead for the $45 billion they just received along with a guarantee to back $300 billion in loans? This remains one of the most disgusting financial events in our history…and we the people are helpless.
The 530,000 job loss was the worst since 1974. In December of that year, 602,000 jobs were lost. Did you know the bear market of 1973-74 bottomed in that quarter? I am not saying this to call a bottom or the bottom of this bear market. I am just pointing out precedent. I also must point out that the unemployment rate is a lagging number…and from my studies, stock markets will bottom way in advance of the unemployment rate topping out. By the way, before all the pundits tell you we are heading for another great depression, here is a statistic that most don’t pay attention to. 93.3% OF THE POPULATION IS EMPLOYED!
Well, we got another follow through day this week…even with Monday’s 670 point drop. The market has experienced a follow through day several times in this bear market…and has failed every time. This only emphasizes the importance in remaining disciplined until a slew of leadership shows up…and so far, leadership continues to be on the lighter side. The market’s ability to reverse Friday in the face of the horrid job’s number tells me there is a chance the past 8 weeks of a nauseating trading range just may hold for now, at least into the end of the year…which means we rally some into the end of the year as December is usually seasonally strong.
Now…I know it is kinda sorta stupid to take any real stance here as we have seen 300-500 point swings, but eventually, every bear market has good rallies in them. So…don’t be surprised. The short-term levels that must be watched are DOW 8831, S&P 896 and NASDAQ 1535. I suspect there is a better chance here because the patterns I am seeing are slowly getting better during the past 8 weeks.
JUST BE CAREFUL! There is one thing that has been sticking at me for this whole bear market. It is somewhat on the secondary side but it still matters…and that is all the bottom calls. The media actually touted Bill Miller and a bottom call this week. Bill Miller is the mutual fund manager who beat the market 15 years in a row…only this year, he is down in the 65% range. On top of this, this same man called a bottom in the market back in the April/May period…but now he knows. The same goes for Barton Biggs as he has been paraded out several times in the past year…even though his prognostications have bordered on the miserable. You know about the rest. It seems that every up day is the bottom. I would have thought by now a 52% drop would have shut these people up…but no. I guess we have to get used to them calling bottoms even if the DOW went all the way down to 1000.
My discipline is not to make grand calls out of nowhere. The market action is all I have needed…thus you have not heard one bottom call from me. All I need to know is right there today and today, the market has held again under the worst of news…which may be good for something. I will be looking for more high volume up days and hopefully, no distribution days. Until distribution rears its ugly head again, I am turning to the long side for this second. But please remember, I have one motto here…DON’T BLINK!
Lastly, I am now watching the bond market closely. It seems to me, there has been a melt-up in bonds as investors moved away from risky assets. I saw the one month yield just about at zero. On Friday, I saw bonds finally come under pressure…which means money may start looking for some risk again. Again, for the first time in a while, I am very itchy for the long side. A break below 8000 DOW and 815 S&P will take that itch away.
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