JUST LETTING YOU KNOW
Lots of Red
I don’t like the way Europe is trading. I follow the German DAX very closely and it was down 160 today and it was very poor action. Not the mention the CAC out of France, and the FTSE in London. Very bad.
As you know, yesterday the Fed opened their mouths and talked about “this, that and the other thing,” and that hit the dollar hard and the market rallied up big. I reported that we had a little intervention from Fed. Guess what happened today? The market took over and did what it wanted to do in the first place, it looks like. The dollar strengthened as the Euro weakened. Bond yields in places like Spain have hit new highs and…the worry is out there again.
But for me, I watch stocks. Anything I’ve done recently has been VERY small positioning. And everything else has been right on the day.
So let’s go through a few things:
- The Financials. Yesterday, I said on my radio show that if you look at the Exchange Traded Funds (ETFs) for the Financials which are IYF and XLF, the nicely bounced off their 50-day moving averages. Today? Not so nice. It was a very bad day and there is now a chance that they’ll break below that all-important 50-day as they reacted to the numbers of Wells Fargo and JP Morgan. Next week will be Citigroup I think on Monday. Keycorp, BankAmerica and a few others. I told you that the XLF couldn’t make it above resistance. There’s a chance now that it’s going to make a lower high. That means you rallied, could not make it back up to the old high and you start going down again. That would not look good on a resume.
- The Transports. As you know I have been telling you they’ve been a lagging group. They have been mostly range bound for the better part of four months. Rallied up into the 50-day moving average and sold off today. Remember the thought process here. Nothing good can happen under the 50-day moving average.
- The Semiconductors. From yesterday’s action, rallied back up into the 50-day and came right back down today – when the Fed didn’t say anything. I know Bernanke had some sort of meeting today, but he stayed away from talking about the present.
So the Transports and Semiconductors rallied up into the 50-day underneath it and sold off. And the Financials rallied up into a lower high. A break below it’s 50-day would be a STARK NEGATIVE to add to these other things.
So that’s for starters. Have I thrilled you yet? These moving averages are a place where they get sold or defended. I guess you could call it the point of no return.
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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.