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
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Well...that was a doozy! Lots of notes!
Tuesday's action was downright ugly but what to take from it. Before we get
into that, I have a little statistic I wanted to share.
Since the beginning of the 2006, here are the cumulative S&P 500 returns by
days of the week:
Monday 1.40%
Tuesday -0.36%
Wednesday 18.72%
Thursday 4.36%
Friday -0.61%
Today is Wednesday...so with markets very oversold on a short-term basis?
My next question is to ask: what is the Fed worried about? After all, they
have been telling us the mortgage problem is no big deal. Why were 3 Fedheads
out this morning telling everyone not to worry? Why is it that on every down day
in the market that the Fedheads feel they have to calm the markets? These are
the people that enabled the problems to occur. These are the people that said
subprime lending was good for the economy. These are the people who oversaw the
worst lending practices we have seen in decades. And we are supposed to listen
to these people?
In any case, all I saw happen yesterday was that the worse became worser.
These are the areas I have been yelling about. They include BANKS, REGIONAL
BANKS, S&Ls, LENDERS, UTILITIES, MORTGAGE-RELATED, RETAIL and those ugly, ugly
BROKERS.. On the other end, the best decided to come in. There is no doubt my
thesis that the RUSSELL 2000 would lead down if we saw any downside is
occurring...as the RUSSELL broke badly yesterday. It just so happens that the
rest of the market decided to follow. So what next? Does the market follow
through to the downside or does it put up a stand. Simple! I DON'T KNOW! All I
can do as a follower of market action is to look at important support
levels...and if they break, I deal with them. At this point in time, I would
suggest to watch the recent double bottom the S&P put in around 1485. If it is
taken out, then we can start talking about a good correction. For me, that will
be of import. If it doesn't break, it tells you the BIG CAP area of the market
wants to hold.
But be rest assured, there has been a lot of technical damage done recently.
You do not see 600 new lows and think all is well. But I am not stupid. This
market has had 10 lives...and I don't think this market wants to die
easily...thus I will watch that S&P support level. This does not take away from
my thoughts of the many areas that are in bear mode. Keep in mind, those bear
areas are about as stretched and extended to the downside as I have seen in a
while...thus dont be surprised if we start to see sharp and violent bounces to
relieve the downside pressure.
I still like the action in the SEMIS...at least many of the SEMIS and cant
help but like the action in BIG-CAP TECH. Stocks like ORCL, MSFT, EMC and a few
others continue to lead...albeit slowly.
One of the points I have made was that the market will not get into trouble
until OILS get into trouble as they have led up. I repeat what I have recently
said. More and more OIL names are breaking. This must be watched. The good news
is that I am seeing a few gap up this morning on their earnings reports.
As far as the leading names I have been mentioning, they were smacked
also...but as of this writing, I am seeing AMZN up over $15...I am seeing BOBJ
up over $3.50...I am seeing BA up almost $3. I am not so sure we would be seeing
that type of action if the market was going to get into real trouble...but once
again, I will defer to the major index action.
Markets are opening up strong this morning on the back of good reactions to
earnings as well as the Fedheads waking up early to tell everyone things are
fine. A little hint...in bear phases, markets open up strong and finish poorly.
It is only one day but I will be watching today closely. I have no prediction
but it will not thrill if markets sell off the early strength.
Gary Kaltbaum
