Why I think Wednesday’s decline may have been important
Gary Kaltbaum is an investment advisor with
over 18 years experience, and a Fox News Channel Business Contributor. Gary
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Wednesday’s action was the first distribution day since the
August 15th follow through day. Normally, I would tell you that one distribution
day is not the end of the world…normally! But there has been nothing normal
about the recent rally. In fact, I believe it has been a “less than meets the
eye” rally. The dirty little secret is that the Dow and S&P have masked very
poor action in many important areas of the market. The RAILS have not budged.
The TRUCKERS have not budged. BIOTECHS have not budged. The AIR FREIGHTS have
not budged. The RETAILERS have not budged. HOUSING is now breaking new lows. The
DISK DRIVES hardly budged and are now gagging badly. The BROKERS have lagged.
The LENDERS are acting like the RED SOX. COMMODITY stocks have just stayed in
range…and most importantly, the SMALL CAP and MID CAP INDICES have lagged
badly. All this while the Dow and S&P were close to cycle highs. Keep in mind,
since May, we told you the Dow and S&P would outperform during this time.
I am now seeing tops in names like NOKIA, XILINX, TEXAS INSTRUMENTS, LAM
RESEARCH and a bunch of TECH names…on the first bad day we have had. This
could be meaningful. Why? Because if TECHNOLOGY and more specifically, the SOX
tops…well, I don’t need to tell you my thoughts. The SEMIS are vital to the
health of the market and they may have just put in the high of this latest move.
One day is just one day…but in the context of the past few months, it may just
be an important day.
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Other notes:
My thesis on OIL and OIL STOCKS may just be coming to fruition. OIL prices
continue to head lower and OIL STOCKS are now plunging. This now includes some
of the bigger cap names like COP, MRO, OXY and XOM. Remember, a break of $130 on
the OIH and good night.
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WORLD MARKETS may have also just topped. This has to be watched closely because
WORLD MARKETS joining in to any downside would be a confirming negative.
SHIPPERS have now topped also. This group has been acting well for the better
part of 3 months.
Friends, it could just be an interesting September…and oh yeah…the FED says
everything is just fine.