Why I think the market will go lower

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.

We couldn’t help but alert you to two great articles out of
The New York Times. The first by Gretchen Morgenson talks about Fannie Mae and
all the criminal activity that went on. We have several questions when it comes
to Fannie Mae. We know there was a $10 billion fraud but…where are the perp
walks? Where are the handcuffs? Where’s the jail time? Where’s the media? We
will tell you where…nowhere! Everyone seems to be taking a dive on this one
because of the well-connected personalities. Ladies and gents…there is not a
level playing field in corporate America. The second was written by Joe Nocera.
He talks about Home Depot turning a deaf ear and a blind eye to their
shareholders….and after reading the article, we agree. Five years and $245
million…that’s how long Robert Nardelli has worked there…and that’s how much
he has taken in from the company in pay.

Disgusting…ridiculous…outrageous…over the top…ludicrous. And after
reading what Mr. Nardelli did at the recent shareholder’s meeting, we believe
Hugo Chavez would be a step up. We do not like dictatorships at Investors
Edge…and Home Depot is getting close to it. You will not see us investing one
of our hard earned dimes in this company until things change.

Bernanke apologizes. Says he won’t have loose lips any more…and since…

Bernanke announces that long-term inflation expectations well contained…the
same day another Fedhead says they have to start worrying about inflation.
Ladies and gentlemen, I repeat…this Fed is eventually going to cause a severe
dislocation in the markets with their ridiculously loose lips. Mark this down.

The DOW…which has held up best in this recent carnage, held right near the
11,039 support that held in April. We have told you that in downturns, the DOW
will always hold up best.

Look where the S&P just put in a near-term low…right at MAJOR support at 1245.
You can draw a line at 1245 going all the way back to 7/28/05 and see that’s
where the S&P broke out from…where the S&P bottomed on Jan 3 and where the S&P
just held. This is normal to bounce off such important support the first time.

The big problem remains the NASDAQ and NDX. They lead up and lead down. Both
remain way below their longer term moving averages with the NDX much weaker than
the NASDAQ. Until we get some leadership here, we question what the market can

It is no help that the SOX continues to go no place fast. The SOX has been a
great indicator in the past. We will always watch this closely and right now,
nothing doing.

A big part of Thursday and Friday’s moves were the COMMODITY areas. They were
also overdue as their recent drubbing was unprecedented. We suspect they are
going to continue to trade violently with daily gaps to the upside and downside.
Most of the COMMODITY STOCK charts are gross and need some work repairing the
damage. This includes GOLD and GOLD STOCKS. GOLD has now pulled back near its
moving average…where
it will be important to hold. GOLD STOCKS continue to under perform the
metal…and badly.

We would like to give the recent bounce the benefit of the doubt but believe
this latest bounce is nothing to write home about. It was overdue and came out
of weakness…not strength. We suspect there is going to be more work to do as
this bearish action continues to show its face…and until we say otherwise,
rallies and bounces will be sellable. Yes, we are seeing some better action in
areas like the BIOTECHS but we really don’t trust anything right now. Caution
remains warranted.