Whatever the Fed is Doing…Good Job!
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 institutional
investor. If you would like a free trial to Gary’s Daily Market Alerts
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Fox Business Channel October 15th
On Monday, I penned these words:
“If I was short, I would be scared every night going to sleep because you
won’t know if the FED will cut rates the next morning.”
Little did I know!
Before I tally up what is happening in the market, I want to make note of
something. All the people who never saw the problems coming…all the people who
never thought the LENDERS, BROKERS, BANKS, REGIONALS, S&LS, MORTGAGE,
HOUSING and the like would be unwound…all the people who never saw the
correction coming…all the people who just stood there like deer in headlights
as stocks were melting…all those people are now out repeating and repeating
and repeating that everything is fine and the problems are minimal. Why are they
saying this now? I couldn’t find many of them last Thursday afternoon. My point
in mentioning this is that there are never problems when the market goes up. For
an unknown reason, if markets go up, don’t bother these people with problems. If
the DOW drops 1000 points next week, problems will be back.
So let’s see. Last Thursday, the fear was palpable. Markets were opening up
wide…not just here but all over the world. Talk of 1929 was in the air. The
term “crash” was coming out of the woodwork. From 3:15 pm to the close, the DOW
rallied 300 points. Don’t get me started on that one. Just a massive massive
massive illegal insider trade by the people that found out the Fed was cutting
rates in the morning. What happens next? The DOW gaps up 300 points on Friday.
So in 45 minutes of trading, the DOW had already moved 600 points. Monday and
Tuesday were basically non-events to the indices…but something happened on
Tuesday that I liked. Leading stocks that I have listed for you in previous
reports were lighting up like a pinball machine. That was a surprise to me. What
next? The DOW gaps up 100 points on Wednesday. So…in 45 minutes of trading,
the DOW was up 700 points from the low.
As I write this, I am seeing the news that BAC is going to infuse Countrywide
with $2 billion. Every FINANCIAL is gapping up on the news…and as it stands,
the DOW is going to gap up another 100 points. That’s 800 DOW points off the low
in 45 minutes of trading. I repeat…that’s 800 DOW points in 45 minutes of
trading.
You ask: “Gary…how should I play this?” Huh!
All I can say is that again, we are seeing a market that is making
unprecedented moves both down and up. This includes the move down in February. I
must say that this time down was much much worse than February as FINANCIALS
tanked, the A/D line led and volume was humongous. I have said recently that the
only goal at this time was for the Fed and the boys to do everything in their
power to prevent a meltdown because the leverage that is out there would indeed
cause a crash. You see…when someone is margined 10-1, when out of money, they
still have to sell off all the margin. This would have fed on itself. The Fed is
dropping money from helicopters, airplanes, blimps, the space shuttle and
everything else that flies in order to stave off disaster…but the bottom
line…so far, a job well done.
I am not in the camp that it is a positive to bail out criminals. I am not in
the camp that it is a positive to game the markets…and that is exactly what
the Fed is doing. I am not in the camp that it is a positive to extend problems
into the future…but I am in the camp that whatever the Fed is
doing…again…a job well done.
No need to discuss the technicals right here because the moves are off the
map both ways. I am in hopes things start to calm down and tighten up sooner
rather than later. Already cant wait to see how Thursday goes. Just do not be
lulled into a false sense of security because the market is going up here. Maybe
we are out of the woods…but maybe we are not. As always, that will be left up
to the markets.
Gary Kaltbaum