These 2 groups are holding up
Gary Kaltbaum is an investment advisor with
over 18 years experience, and a Fox News Channel Business Contributor. Gary
is the author of
>The Investor’s Edge. Mr. Kaltbaum is also the host of the nationally
syndicated radio show “Investor’s Edge” on over 50 radio stations. If you
would like a free trial to Gary’s Daily Market Alerts
click here
or call 888-484-8220 ext. 1.
Those who know me know I want to run for public office.
My problem is
that public office is not about who is best. It is about who raises the most
money…and that game is too tough. The number one comedy act in America
right now is watching all the politicians who are “outraged” at the
bribery…I mean the lobbying scandals. Ladies and gentlemen, these outraged
politicians are the same politicians who wrote these wonderful rules of
bribery…I mean lobbying….and that’s the problem…and will always be the
problem. The rules are being written by those who directly benefit from
them…and until that changes, nothing is ever going to be done about it.
Earmarked projects are up 10-fold in the past decade…which is a magnet for
the people that bribe…I mean lobby. Washington politics are a mess and all
are culpable for creating this system.
My problem is
that public office is not about who is best. It is about who raises the most
money…and that game is too tough. The number one comedy act in America
right now is watching all the politicians who are “outraged” at the
bribery…I mean the lobbying scandals. Ladies and gentlemen, these outraged
politicians are the same politicians who wrote these wonderful rules of
bribery…I mean lobbying….and that’s the problem…and will always be the
problem. The rules are being written by those who directly benefit from
them…and until that changes, nothing is ever going to be done about it.
Earmarked projects are up 10-fold in the past decade…which is a magnet for
the people that bribe…I mean lobby. Washington politics are a mess and all
are culpable for creating this system.
Â
If I like the market, the bears tell me the world is ending. If I don’t like
the market, the bulls call me scum. In my last 2 reports, I called for a
correction/pullback into support or moving averages, nothing more than
that…and I received a ton of emails ranging from whether I was either
psychotic to un-American. Therefore, I now have the hate mail indicator.
Whenever I think the market will go down and the nasty emails pick up, it
will most likely mean I will be correct. Yo people, be nice. It’s OK to
disagree but be nice.Â
the market, the bulls call me scum. In my last 2 reports, I called for a
correction/pullback into support or moving averages, nothing more than
that…and I received a ton of emails ranging from whether I was either
psychotic to un-American. Therefore, I now have the hate mail indicator.
Whenever I think the market will go down and the nasty emails pick up, it
will most likely mean I will be correct. Yo people, be nice. It’s OK to
disagree but be nice.Â
Â
GE is now joining the NOKIAs of the world. GE has been incessantly coming
out with reports of how business is great and growth will be in the teens. I
have been telling everyone on my radio show for months that GE has turned
into too much of a promoter…and that’s not a good sign. Well, GE just
missed numbers by a decent margin. In fact, GE’s numbers were much lower
than the number they gave out just last month. Credibility is key on wall
street and methinks GE is losing some. Just take a look at GE’s chart.
out with reports of how business is great and growth will be in the teens. I
have been telling everyone on my radio show for months that GE has turned
into too much of a promoter…and that’s not a good sign. Well, GE just
missed numbers by a decent margin. In fact, GE’s numbers were much lower
than the number they gave out just last month. Credibility is key on wall
street and methinks GE is losing some. Just take a look at GE’s chart.
Â
IBM reports a 26% profit increase but a 12% revenue drop. I am not H&R
Block…but what’s wrong with this picture?
Block…but what’s wrong with this picture?
Â
GOOGLE stock can go down! Most ANALysts have already forgotten that market
value does count. I am amazed that they have not learned the lesson of the
previous historic bear market and it was simple…value counts…maybe not
in the short run…but most definitely in the long run. Haven’t any of these
ANALYsts seen that this is a company that has a market value of of $120
billion with just $5 billion in revenues? Haven’t any of these ANALysts read
up on what Warren Buffett had to say about value during the Internet/Tech
frenzy? I am not saying the stock does not go higher because I believe in
the laws of supply and demand in the marketplace…but value does count.
value does count. I am amazed that they have not learned the lesson of the
previous historic bear market and it was simple…value counts…maybe not
in the short run…but most definitely in the long run. Haven’t any of these
ANALYsts seen that this is a company that has a market value of of $120
billion with just $5 billion in revenues? Haven’t any of these ANALysts read
up on what Warren Buffett had to say about value during the Internet/Tech
frenzy? I am not saying the stock does not go higher because I believe in
the laws of supply and demand in the marketplace…but value does count.
Â
Here is the good news. As I did my
scans this weekend, I found plenty of stocks still in fine shape…just
extended. I suspect a lot of these stocks will be in pullback mode as the
market pulls in its horns.  Small and mid-cap indices,
while they did get hit on Friday, are holding up much better than the larger
cap indices. In fact, they were down half as much as the large-caps on
Friday. World markets continue to be in fine shape…but
are extended. I suspect they are going to get caught up in any pullback
here. ODD-LOT SHORTING is at a multi-decade high. This is a
sentiment-based indicator I look at but this wrong-way crowd needs to be
watched when the numbers go to extremes. Keep in mind, this is a secondary
indicator.
scans this weekend, I found plenty of stocks still in fine shape…just
extended. I suspect a lot of these stocks will be in pullback mode as the
market pulls in its horns.  Small and mid-cap indices,
while they did get hit on Friday, are holding up much better than the larger
cap indices. In fact, they were down half as much as the large-caps on
Friday. World markets continue to be in fine shape…but
are extended. I suspect they are going to get caught up in any pullback
here. ODD-LOT SHORTING is at a multi-decade high. This is a
sentiment-based indicator I look at but this wrong-way crowd needs to be
watched when the numbers go to extremes. Keep in mind, this is a secondary
indicator.
Â
Now…let’s discuss Friday’s implosion…the worst day the market has had in
3 years. Everyone is blaming Friday’s rout on oil prices, options
expiration, Â Iran, Osama Bin Laden and myriad other things. I will not argue
with any of that…but please remember something I have taught you
throughout the years…IT’S NOT THE NEWS, IT’S HOW THINGS REACT TO THE NEWS.
Haven’t we seen plenty of times where bad news has been bought up with a
fury? Do you remember the London bombings? I did call for a correction
because of how extended the market was …BUT…in no way, shape or form did
I see anything technically that would call for such a one-day implosion.
3 years. Everyone is blaming Friday’s rout on oil prices, options
expiration, Â Iran, Osama Bin Laden and myriad other things. I will not argue
with any of that…but please remember something I have taught you
throughout the years…IT’S NOT THE NEWS, IT’S HOW THINGS REACT TO THE NEWS.
Haven’t we seen plenty of times where bad news has been bought up with a
fury? Do you remember the London bombings? I did call for a correction
because of how extended the market was …BUT…in no way, shape or form did
I see anything technically that would call for such a one-day implosion.
Â
It is a negative that the DOWÂ easily sliced through its 50-day average and
actually finished below recent support at 10,684…which happened to be the
low of the first of this year. I do give less weight to the DOW but I still
give it weight.
actually finished below recent support at 10,684…which happened to be the
low of the first of this year. I do give less weight to the DOW but I still
give it weight.
Â
On top of the GE chart, there are other charts in the DOW that are rolling
over. They include MMM, BA, JPM, C, HON. CITIGROUP looks just as bad as GE.
Keep in mind, some still have not reported earnings.
over. They include MMM, BA, JPM, C, HON. CITIGROUP looks just as bad as GE.
Keep in mind, some still have not reported earnings.
Â
We must take a look at other BIG BANKS. Pictures are worth 1000 words. The
FINANCIALS make up over 20% of the S&P…so clearly, they must be watched.
Once again, all these charts have rolled over.Â
FINANCIALS make up over 20% of the S&P…so clearly, they must be watched.
Once again, all these charts have rolled over.Â
Â
I can go on and on about the groups that are starting to roll over here.
After Friday’s action, it will be important that the market put up a stand.
After Friday’s action, it will be important that the market put up a stand.
Â
The S&P now sits right on its 50-day moving average at 1260. The NASDAQ is a
smidge (what’s a smidge?) below its 50-day average. The NDX has penetrated
it though. For a hint that this ugly action will take on something of more
importance, these major averages would have to follow the DOW and break
support. Keep an eye on these numbers. S&P 1245…which I personally believe
is vital support as that’s where the S&P broke out of its 2 year
range. Watch the NASDAQ at 2189 and the NDX at 1633…which are still a bit
away. In addition, keep an eye on the TRANSPORTS at 4038 support and keep an
eye on the all-important SOX as it has been trading all over the map
recently.Â
smidge (what’s a smidge?) below its 50-day average. The NDX has penetrated
it though. For a hint that this ugly action will take on something of more
importance, these major averages would have to follow the DOW and break
support. Keep an eye on these numbers. S&P 1245…which I personally believe
is vital support as that’s where the S&P broke out of its 2 year
range. Watch the NASDAQ at 2189 and the NDX at 1633…which are still a bit
away. In addition, keep an eye on the TRANSPORTS at 4038 support and keep an
eye on the all-important SOX as it has been trading all over the map
recently.Â
Â
The best guess is that Friday’s action is
meaningful…not just for our markets but for World Markets. I just don’t
think you can shrug off a day like Friday’s but until support levels are
broken in other major indices besides the Dow…well, let’s just hope that
does not occur. I suspect the upcoming week is going to be interesting to
say the least.  Â
meaningful…not just for our markets but for World Markets. I just don’t
think you can shrug off a day like Friday’s but until support levels are
broken in other major indices besides the Dow…well, let’s just hope that
does not occur. I suspect the upcoming week is going to be interesting to
say the least.  Â
Gary Kaltbaum