The Markets are Too Leveraged

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.

Wow...wow...wow. I am not wowing about the continued horrid drop in the market. In fact, the last 30 minutes from Monday were about as gross as I have seen. I am not wowing that as of this writing (about 6:30 AM), futures are up big. Keep in mind, markets are not just out to hurt the bulls right now. They are out to hurt the short-sellers...thus the big gap to the upside. I am wowing about what I am hearing and what I am seeing.

First off, it is never smart to call for recessions or crashes in the market. Why? They just dont happen very often. I have always been amazed by the permabears on both markets and the economy because it is like betting against Tiger Woods or Roger Federer in their respective sports. But I must tell you, if there is any market that could one day decide to crash, it is this one. Why am I saying this? MOUTHS...and a whole lot of mouths. In case you did not know, a gentleman by the name of James Baker caused the crash of 87. Read up on him. He opened his yapper over the weekend before the crash in a market that was already teetering.

I wake up this morning to hear:

Hank Paulson state that everything is strong and everything is fine. How does he know? How does he know where things will be in 6 months? He doesn't know. He is just pandering to investors and the market like Hillary Clinton pandering in Selma, Alabama this past weekend.

Fukio of Japan saying that everything is strong and everything is fine. How does he know? How does he know where things will be in 6 months?

Greenspan AGAIN opening his mouth...clarifying for the third time what he meant the first time.

Strategists paraded out telling everyone to be calm and not to sell. One maniacal host was yelling at the public to "get in there and start buying." One strategist said that if the market keeps going down, it will be good and if it starts to go up, it will be good.

So what is my problem? It is simple. The market doesn't care what any of these people think. Yes, the market doesn't even care what our Treasury Secretary thinks. What if all these people are wrong? What if all these people are just selling you a bill of goods in order to keep the market afloat? What if there is a problem out there that causes the market to go lower? After all, both Bernanke and Greenspan said there wasn't a housing problem...before we all found out there was a problem. Both said subprime lending was fine...before there was a problem. Both have said housing is bottoming in the past few months...which it is not. These people could not hit Mount Everest with a bazooka. The problem is simple. If there is a problem...and these morons continue to jawbone the market into staying up, eventually, the pressure in the market will build up so much, that none of us will know what hit us. These people are making a huge mistake. THEY SHOULD BE LETTING FREE MARKETS...BE FREE MARKETS. Markets should not be held up, kept up, talked up, touted up. If there is a bear market out there. Let it occur naturally. You all know what happens when you boil a pot of water and keep the lid on?

Remember this report. It is predicting nothing but warning about everything. The people in charge right now are much richer than I am...graduated from a better school...but in my opinion, should not be running a fruitstand. They have forgotten what free markets are all about. They have let the system become ridiculously too leveraged in order for themselves to make hundreds of millions of dollars. They have been the creators of the problem and they now want to tell you there isn't any problem even though potential problems are staring us right in the face.

Continue to expect ridiculous volatility to test everyone's nerves. I am playing this right by the book. The market has some proving to do...firstly with a strong follow-through day before it is ok to start wading back in. The market is opening very strong this morning. Just remember how many reversals there have been over the past few years.

Gary Kaltbaum