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
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The last paragraph of Monday's report:
"You should take this time to compare major indices today to
last April. It is uncanny. Add in the overwhelming fact that no one is used to a
correction. Add in that everyone is leaning bullish. Add in a Fed that continues
to say we live in a perfect world. Add in the fact the WORLD MARKETS are
ridiculously above moving averages and due for a sharp correction...and it may
be time to take out the umbrellas. You will know if support is broke at DOW
12536 and then 12431...S&P 1431 and then 1416. If these support levels
hold...well...not sure they hold at this point but will be watching."
Not only were the first lines of support taken out, they were
blasted through. Instead of an umbrella, you may need Kevlar suits. Here is my
take:
Odds favor that THE MARKET HAS TOPPED. THE MARKET HAS TOPPED.
THE MARKET HAS TOPPED. THE MARKET HAS TOPPED. THE MARKET HAS TOPPED. Those who
do not listen are doomed to lose some buckos. Major indices were down anywhere
between 3 and 4% on HUGE VOLUME. This volume leaves no doubt that institutions
were running for the door. There is no better sign and no better evidence of a
market in trouble. The drop ended the rally that started this past summer with a
late follow-through day.
I make note that 50 day moving averages were breached for the
first time since July 25. I make note that every sector was taken out and shot.
I make note that world markets are leading the way...and on that note, world
markets will be more vulnerable because they are more illiquid than ours. They
go up fast but go down even faster.
Some are asking whether a market can top out of nowhere.
Normally, markets top over time. Good question...but there is precedent. Markets
can top in days...and due to the angle of ascent and due to the fact no one is
prepared, drops can come out of nowhere.
I believe we are going to see some sickly volatility right
here...right now. Expect wild swings both up and down but expect the ultimate
outcome to be lower prices in the week's ahead. The market spoke loud and clear
on Tuesday with the BROKERS giving a great early clue. I am now listening.
Two final points:
You all saw the 250 point plunge in literally a matter of
minutes.
If today's action is an example of the move to electronic
trading, then I want to go backwards to the Flintstone Age. It is now being
called a glitch. I don't want to be around when something real bad happens.
Lastly, there is no doubt in my mind that "the boys" were in
many conference calls today in order to stanch the bleeding. Guess where our
Treasury Secretary came from? Just keep in mind that the boys can save the day
during bull phases. If this is a start of a bear phase, they can push all the
buttons they want. Markets ultimately go lower. Remember, in bear phases,
rallies are strong, swift, suck you in and bury you soon after. It is going to
be an interesting March.
