JUST LETTING YOU KNOW…
To Be Avoided
It’s easiest to isolate weakness when the market is strong. It’s easiest to isolate strength, when the market is weak.
So when the market is being strong, I must make note of a few things, which for the most part, are to be avoided.
The commodities areas continue to way underperform the rest of the market. They’ve had little fits and starts here and there, but whenever the market has a down day, they lead down.
Gold and Silver are in bad shape.
Aluminum, copper, steel, and coal are weak.
Now some machinery stocks, like Caterpillar, which bounced up off the 50-day moving average a few days ago, have broken below it, which to me is a short-term signal of potentially lower prices ahead.
Anything which has broken below the 50-day moving average should be up for definitive review. That’s the way I’m looking at things right now.
As I did my scans after the close today, I found a lot of oils stocks breaking below the 50-day moving average. Things like:
- Baker Hughes (BHI). When you have a chance, look at the chart. That’s what a bear market looks like.
- Schlumberger (SLB), acting awful here.
- Halliburton (HAL), acting awful here.
- Hess (HES), pretty much acting awful.
- Rowan (RDC), broke below the 50-day badly. Same for Cameron International (CAM) and Occidental Petroleum (OXY)
- Pioneer Natural Resources (PXD) which looked like it was acting ok when it held above the 50-day, has now broken below it.
- Anadarko Petroleum, broke the 50-day today.
So I’m just letting you know what I am seeing.
And it’s surprising because it’s not very often that you see a bull phase, with the commodity areas being part of the move.
When you have a chance, just take a look at the XME, (the Metals and Mining ETF) and then next to it, put a chart of the SPY. You will see a huge underperformance. Same goes for the most part with the SLX (Steel), KOL (Coal), and now the OIH (Oil) starting to rollover a bit here.
I could just go through a bunch of names that are all giving it up here.
The market itself has not had a correction of more than a couple of days since around 12/20/2011 and I believe that was the Follow-Through Day. We had a nasty one-day action a couple weeks ago. I think in January we had maybe two days down.
I just want to make a promise to each and every one of you. We are going to get a correction that lasts several weeks. From where? And how and when? Beats the heck out of me. I just want to make sure you know that.
That is not a bearish statement.
What markets try to do is get you use to things, until they change.
So just be careful. There’s going to be secondary opportunities and secondary buy points within any correction.
And let me be clear. I have no clue when it starts and from what day or from where.
I’m just making the point, that we will get a one.
6-7 pm EST
Best of Investor’s Edge
Saturdays 1-2 am EST
Gary Kaltbaum owns Kaltbaum Capital Management, LLC (“KCM”), an investment adviser registered with the U.S. Securities and Exchange Commission. The opinions expressed herein are those of Mr. Kaltbaum and may not reflect those of KCM. The information offered in this publication is general information that does not take into account the individual circumstances, financial situation or individual needs of an investor. The information herein has been obtained from sources believed to be reliable, but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results.