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.

First... a few valid questions.

How can the SEC investigate Bear Stearns for defending their liquidity position the week before their "demise" when in the same week, Chris Cox, the head of the SEC defended their liquidity position?

How can our government open up the spigots for Fannie Mae (FNM | news | PowerRating | PR Charts ) and Freddie Mac (FRE | news | PowerRating | PR Charts ) when combined, they lost over $5 billion last quarter?

How can the Fed save all the financial companies but throw Bear Stearns (BSC | news | PowerRating | PR Charts ) under the bus?

Why would the financial's react positively to a report from a Punk Ziegel bank analyst saying the bottom is here when this same analyst has been bullish most of the way down?

All valid questions for history to answer... my only comment will be on the Bear Stearns situation. This was not a bailout. This was Bear being thrown under the bus. If the Fed is in the saving business, then the Fed should have saved Bear. They could have easily backstopped Bear. Very weird. THERE IS NO WAY SHAPE OR FORM THAT THIS DEAL GETS DONE IN ITS FORM... AND THINK BEAR RIGHTFULLY WILL FIGHT THIS OUT!

So what do I mean by 'the greatest cover-up in financial history... and in plain sight?" Just what I said. All of these Fed moves... every one of these Fed moves... in my humble opinion... is to SUPPRESS THE DISCOVERY OF PRICE! You have billions in losses? You are on the brink of bankruptcy? You cannot pay your bills? Do not worry. We are here to save you. Firstly, DO NOT announce your losses. Just trade them in to us. We are the government... and we get to do what we want to do. We know you made horrible bets. We know you leveraged crap 30-1. We know you did not disclose all this like you are supposed to. We know you violated the public's trust. We know you broke just about every securities law ever written. We know you had no risk controls. We know you made trillions when markets went your way. We know you took trillions in bonuses. We know you took fees on fantasy prices. We know you made Enron and Global Crossing look like good corporate citizens. Don't worry... we are here for you!

The outcome of all this is that the Fed is telling those that are too big to fail... not to worry... as big losses are not acceptable. Our government is now in the camp that if they like you... do not worry. We'll take care of you. Don't worry about free markets. We'll close those markets just for you. When you start to make money again, that's when we will let free markets work again. Is it any wonder why so many homeowners are dropping the keys on the doorsteps and just leaving? Why should they have to take responsibility for their actions when the big boys don't have to? Good question... huh!

I continue to be beside myself at what I am seeing... the free market system being turned upside down... brought to you by the people who committed the crimes. Imagine the guilty being able to be the prosecutor, the jury, the judge and the warden at the jail. Every one is in bed with each other and none of us have any say in the matter. We cannot fire Bernanke... we cannot fire the regulators that let this occur... we cannot fire the people that committed these crimes. We cannot fire Greenspan... who is already out to pasture. Unfortunately, the masses seem to be happy with all these moves as they may have saved further market carnage. In the long run, I think these people are just putting off the real pain to come. When you suppress markets, they will always come back to bite. When you try to fix a problem that was caused by excessive liquidity... with excessive liquidity... eventually, it will come back to bite!

"What Did I Say"

This past weekend, I appeared on Fox News Channel's "Cavuto On Business"... and actually said I am hopeful that the economy could start to trough soon. Yes... I said that. For my readers and for my listeners, this was a wake-up call. Here is my take:

As I said last time, the masses have now finally joined me in the bearish camp. But when there is no elbow room in the bearish camp, I want out. When there is talk of 1929, I want out. When there is talk about depressions, I want out. When there is talk that all our banks could go out of business, I want out. When the mainstream media is looking for victims to interview at the top of their shows, I want out. Very simply, I have seen this before. Whenever the economy is in the crapper, the mainstream media show up last... and usually nearer to the bottom. This second, I am seeing retail stocks acting better... housing stocks acting better... transports acting better... but all I am hearing is that we are heading for a depression... and we have yet to even have a negative number for one quarter. There is no doubt the economy has headed south. I was the one who called it before most. There is a good chance that the quarter we are in could be a negative quarter. It just seems to me these "end of the world" scenarios usually come nearer to the lows. Now... let me be clear. Since I believe the market is smarter than most, if the retailers,transports,housing and others roll over again, I reserve the right to get right back onto the dark side. By no means am I bullish right now... I just do not want to be in a crowded room.

As far as the market itself, the good news is that the DOW experienced a follow through day on Friday. More on that in a second. On Friday morning, I wrote that I saw major rotation coming. This after I said on TV and radio earlier in the week that GOLD had topped and possibly the rest of the COMMODITIES. Well, that was prescient as COMMODITIES were crushed. With COMMODITIES smoked, my thesis on rotation was in full bloom Friday as COMMODITIES stayed down... but anything that benefited by lower commodities went up. I have no idea how long this lasts or how far it goes... but it is clear to me that the "commodities leading the market" play has ended for now. If the market heads higher, I would suggest to underweight this area for this second. I do believe the commodities are longer term bullish... but right now, I am shorter term bearish... notwithstanding anticipated bounces.

A follow through day means one thing... the market now has a chance. But while every bull market has started with one... not every follow through day has led to one. In this bear market, I believe two have failed already. The one thing still missing is great looking and great acting growth stocks ready to break out. I can count on one hand the names I like... names like Mastercard top my list. If this is for real, it is going to take time to set up. You do need to know last week's move was on the back of the financial's who got the save.

Do not for a second think this is going to be easy. I am expecting more "losses" out of the financial's. Of course, the fed will take care of that. I do expect more crazy action. Just look at the past week as the end of the world was supposed to hit Monday... the 400 point gain Tuesday... the 300 point loss Wednesday... and to cap the wildness... a strong Friday. Take your time... protect capital when wrong... and recognize we are going to continue to see a lot of noise from the boys and a lot of wild action. And then we head into earnings in a couple of weeks... yummy!