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.

"Federal bank regulators announced a crackdown on loose lending standards on subprime home mortgages as two major lenders struggled to cope with losses and regulatory problems."

Ain't that terrific. As usual, after the problems occur, the police come to the rescue. Where were the regulators when the lenders decided to turn mortgages into a Sunday trip to Rooms-To Go to buy a couch and a cocktail table with no money down and payments deferred to 2010? I'll tell you where they were...asleep at the wheel. Ladies and gentlemen, this is classic. Until there is a problem, there is never a problem. Why? Regulators follow the stock market. Unless people are losing money, everyone is happy. Once people are losing money...then the regulators act. What do you tell Aunt Mary and Uncle Bob who have no money in the bank but were still given a $250,000 interest-only no down payment mortgage on a house that went up 75% in price over a three year period and is now down 10-15% from where they bought it? It is my contention that the lenders are at fault for shirking their fiduciary responsibility to do the right thing in letting unwary people sign into mortgages that Einstein couldn't even figure the paperwork out. And oh yes...a gentleman by the name of Greenspan said just 18 months ago that these types of mortgages were good for the economy.

My stance has not changed. Until we see at least one up day and then a follow-through day, we are in a bear phase of unknown time and price. At this juncture, none of us know whether this will be a correction like last year...which basically turned into half a bear market or a real bear. Normal bear markets, historically, last up to 9 months. The 2000 bear market was one that comes around every generation. My job is to sit back and let the market decide. I do want to make note that any bear market could be stifled by the Fed as there remains no doubt in my mind the Fed will lower rates at thefirst inkling of problems. The problem at that time could be the dollar as it has already been a problem. Should be fun.

Before I get into the technical issues the market faces, there is something definitely eating at me...and that is the almost universal complacency and the "don't worry" attitude by market pundits. It was almost like it is blasphemy for the market to go down...and downright impossible to go through a bear market. This reaction is just a few years removed from the worst bear market in 70 years. Here is just a little taste from last week's move.

Cheap...cheap...value...value...value...overreaction, overdone, overdue, anomaly, buy, buy, buy, buy, buy, buy with both hands, short-term event, should be over in days, healthy, healthy, bottom, bottom, bottom, bottom, selling climax, capitulation, capitulation.

Well...you get the hint. I must say I was quite surprised that except for a couple of permabears calling for the end of the world again, not one person even considered the possibility that this first move to the downside was the shot across the bow that will lead to much lower prices. I am not saying any of these permabulls are wulls are wrong. I am just saying they are going to lose you a heck of a lot of money when a real bear does hit. It is my job first to protect you in bear markets because not many on Wall Street have that interest. It is just more pom-poms.

Technically, the BROKERS did it again. Every time they have topped in recent years, the market followed. I am quite proud we were able to point this out just days before the market gagged...and quite proud of making the call of a top at noon this past Tuesday. So...pick a chart...any chart. We have nothing but high volume tops whether we are talking US, Russia, Taiwan, Emerging Markets... Uptrends have been violated on basically everything...and to be clear, the potential for lower prices is there...in spite of the silly rhetoric by the always-bullish Wall Street. Shorter-term, I would suggest markets are already extended and oversold to the downside but just remember, if this is a bear phase...OVERSOLD CAN BECOME MORE OVERSOLD. Just remember, if this is a bear phase, all the rules have changed. No longer is good news bought up...but sold down. No longer can the crooks on Wall Street try to goose their stocks to the upside by floating a rumor of another buyout. No longer can the tout artists yell and scream at you at this stock and that stock. No longer do calls of a bottom create a bottom. Bottoms are created by themselves. Every leading stock is now getting klonked. Klonked is not a good word. You know where I stand.

Gary Kaltbaum