JUST LETTING YOU KNOW
Right now we are in the midst of earnings season and there is a lot of jello moving on the plate. But I will make one little blanket statement today on the market overall. And as always, my friends, you get to decide what you want to do. I have a certain mantra when the market is getting a little iffy:
Anything breaking the 10-week/50-day moving average is basically a sell at that point in time. Sometimes, I’ll give a day or two and see what happens. But typically there is a reason.
In the past 3 weeks, the market has had distribution and basically what that means is that you are getting heavier volume on the sell side. We’re getting an inability of the market to rally and I say this letting you know that the Nasdaq’s down 4% and change. The NYSE is down 4%. The Russell 2000 is down a little bit more…about 6% and change.
So it’s no biggie. But it we always want to be careful for it to turn into a biggie. And what we do–knowing there’s so much intervention and manipulation and so much government caca on a daily basis that can move things– is just look at pictures of what things look like:
- Before they tend to go lower and
- Before they tend to go higher
….knowing that it’s not 100% correct, especially when you’re dealing with so much intervention and interference.
We use the two words “odds favor.” We think odds favor. And then we let it play out, know there is nothing written in stone. Knowing we are dealing without outside influences on a daily basis. We have to worry about Spain bond auctions! And, of course we’re in the middle of the election year.
I’ve got some main themes:
- The tailwinds are gone on the whole for the market. Headwinds are definitively within certain areas.
- To repeat, all the Commodity areas remain with headwinds. They continue to be unbelievably, amazingly over-the-top underperforming. And I say that because typically, in bull phases the Commodities will go along for the ride and, in this case, they did not. So that has not changed a bit. And that goes for Gold and Silver also. They are “avoids.”
- We’ve talked to you recently above a high in financials, a high in semiconductors, but that doesn’t mean the end of the world is coming. But they started pulling back. Two very important areas.
Going into more and more earnings, I’m just letting you know: They probably better not break the lows of the past couple of weeks.
That’s all I’m saying. We look for setups in the markets. We look for:
- Bullish wedges
- Bearish wedges
And just so you know, these are not just turns, but they are the measure of fear and greed in the market. The wedges that are being traced out in a lot areas had better not be resolved to the downside. They had better not resolve themselves, breaking the past couple of week’s lows.
And that’s it. If they hold…good. If they don’t, we will get some more legs down and we’ll probably in the realm of a high single digits, low teens corrective type phase.
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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.