Why consumer staple stocks look good
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
click here
or call 888.484.8220 ext. 1.
Did you hear everyone say there was inflation
today? Hey…thanks for the head’s up. Readers of this column already have known
about what everyone is starting to say about the potential for inflation. We saw
the BOND MARKET crack, the DOLLAR sink, COMMODITIES soar…and of course,
everything we pay for move higher. But our friends at the Fed as well as those
lovely government statistics told us not to worry. Hey guys…join the party.
But the market is not dropping because of the supposed inflation…and the
markets did not drop because the inflation numbers were higher by .1% more than
expected. This drop was and has been in the cards for a while. Markets can do
fine with inflation as long as there is strong growth. We believe there is a
good chance here that the market is telling us that growth is going to
slow…while we get a pick-up in inflation. Now…what is the Fed going to do?
By the way, thank you Dr. Greenspan for creating this with your ridiculous
easing of money down to almost 0%.
The bear phase, the bear market, the bad market…whatever you want to call
it…is now gaining teeth. We do not want to wait for the markets to be down 20%
before calling it a bear market. We just want to get out of the way when
necessary…and that was late last week. It is now important to separate the
short-term (the trees) from the longer-term (the forest).
Shorter-term, anything can happen. Markets are oversold and stretched to the
downside…but bear phases change the playing field. Just like overbought can
become more overbought in bull phases, the opposite happens in the bear. ALL
BOUNCES ARE TO BE SOLD UNTIL OTHERWISE NOTIFIED.
All that was needed to confirm the bear phases was for the S&P and DOW to join
the ugly party. That is now occurring. The DOW has now broke the 50 day average.
The S&P is acting much worse than the DOW. It actually broke a series of higher
stair steps as it broke 1280.
The NASDAQ and NASDAQ 100
(
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PowerRating) were the first to go. They are deeply
stretched and deeply oversold. Both are now in bear market territory…sitting
underneath their longer-term moving averages. The NASDAQ broke the 2232 level we
had you watching as well as the longer-term 200-moving average.
The NDX broke…well fuggedaboutit…just a bungee jump in the NDX.
WORLD MARKETS are now being rolled. As we have told you, they have been topping
as well . Keep very far away right now as many of these markets are not as
liquid as ours.
Our call on the top in COMMODITIES remains in effect. In fact, it is now looking
like a strong top has been put in. If this ends up being true, COMMODITIES ended
in a classic climax run.
OIL STOCKS, for the most part are done for now. Many are now breaking support as
well as moving averages…on heavy volume.
We believe our best call recently was the top in the BROKERS and INVESTMENT
MANAGERS. For lack of a better word, they are imploding. We told you they are a
good market proxy and could signify a turn to the downside in the market. They
sure did.
The BOND MARKET remains in a bear market…enough said.
We have liked the action in the BIG FINANCIALS recently. We believe the pin was
pulled yesterday. On a relative basis, they are champs…but think they get
caught up also.
The one area seeing money flows here is the CONSUMER STAPLES. This would be
quite normal at this juncture in the cycle. How long this lasts? Not a clue. We
just know that names like
(
KO |
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PowerRating),
(
PEP |
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PowerRating),
(
CL |
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PowerRating) are in gear as well as
many MEDICAL stocks.
Be careful. As we told you recently, the strategists will stay bullish no matter
what…the permabulls will stay bullish no matter what…but the market right
now is singing a different song. We are amazed as to how many are calling for a
bottom here…ALREADY. The cheerleaders are already out in droves. Kids…let’s
let the market decide.
Gary Kaltbaum