Why I believe the bear market remains in force

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.

I am back from my 2 week stint in beautiful Hawaii. My kids have it right. Upon landing in Florida, they both asked me why did we leave Hawaii...and when are we going back? Let's just say that if you don't like:

Taking helicopters over volcanoes
Snorkeling and scuba diving in craters
Seeing Pearl Harbor
The best views in the world
The best beaches in the world
Swimming with sea turtles
Swimming with dolphins and exotic fish
Bicycling down volcanoes
Surfing
Black sand beaches
Swimming under waterfalls
Luaus
Hiking through lava tubes
85 degree weather with a nice breeze
Golf courses on the beach
ABC stores
Shaved ice
Boating through sea caves
Jumping off of cliffs
Eating like a slob

If you don't like any of this...don't go to Hawaii

The market...the last time I wrote about this market, I talked about the follow through day on June 29. It occurred on the 12th day off the lows...which for me, made it suspect. But...as a true William O'Neill devotee, I had to play it by the book by giving it a chance to prove itself. So far...this latest follow through day is as dormant as Mount Haleakala.

I have not much good to say right here. In fact, I believe the bear market that started on May 11, remains in force. For starters:

The NASDAQ, NASDAQ 100 and the SOX are just horrid. The NASDAQ 100 is just about to break its recent lows and the SOX already has. Why is this important? As I have taught you for years...the NASDAQ, NDX and the SOX lead the market both up and down. The fact they are acting so poorly is a telling tale.





All other major indices tested their respective DECLINING 50-day moving averages...and so far...FAILED. It is important that you remember that in bull markets, PULLBACKS occur to work off OVERBOUGHT conditions...and HOLD ABOVE moving averages. In bear markets, BOUNCES/RALLIES occur to work off OVERSOLD conditions and FAIL BELOW moving averages. Just take a look at the DOW, S&P, RUSSELL 2000 and see how they failed right at the declining moving averages.





Since June 29th, the market has already experienced 2 distribution days. Sorry, this does not look good on a resume'.

Many of the strongest stocks in the market came under heavy volume distribution on Friday. This is the last thing one wants to see.

The unofficial Kaltbaum indicator says there are very few stocks in good bases to buy off of right now...but on the other end of the spectrum, there are a ton of names that look not only sellable...but shortable in here.

Lastly, earnings are going to start coming out in droves. Don't worry about the noise...worry about the reaction.

Aren't you glad I am back? I bet you bulls would love to send me back to Hawaii.