In what can only be called a full court press in order to manipulate the markets, members of the ECB yapped it up…promising this, that and the other thing. Of course, this, that and the other thing…means the printing of money. Names like Draghi, Monti, Merkel and even the ultra-socialist Hollande all promised that things would get done…blah blah blah…and markets love it. To give you an idea of how much markets love it, in the 3 pm casino hour on Tuesday, the Dow was down over 200 and quite ugly when a timely article came out stating that the Fed was ready to print again…and of course, 100 points to the upside quickly. HMMMM!Thursday morning, futures were down…Draghi yaps…futures reverse and open the market almost 250 Dow points. Draghi and friends yap Friday lifting the market and to put the whipped cream and cherry on top, midday, they make a quasi announcement of bond buying, rate cuts and all kinds of steroids that haven’t worked in the past…except on the market. Next up is the Dean of bubbles, Big Ben…and memo to Ben, do not disapoint as markets are now expecting.
Technically, just a few changes.
Leading the market continues to be all the defensive areas mentioned in this report including food, drugs, beverages, tobacco, household products, utilities, telcom utilities and reits. It is amazing to watch some companies with 0% growth or down quarters go up in price but that’s what makes a market. I would add that biotech is also showing good strength.
On top of that, the worst areas of the market have come off the floor. When the floor lifts, the market goes higher. This include all the commodity areas…where I am actually seeing some oil names coming to the fore for the first time in many months.
Financials also held support and are teasing a break above resistance. Nothing bad happens if the financials move higher.
The dow and S&P, which were teasing breaks to the downside Tuesday, have now gone topside moving above support. But other major indices have not. In order for the market to continue up, the nasdaq, ndx and russell will need to also move above resistance at 2987,2663 and 820 respectively.
Recent action has been saw-tooth and a pain in the rear. Too much interference has created gaps to the upside and gaps to the downside. I continue to believe this is not going to be easy but if the world continues to conjure up money, anything is possible. My biggest issue is that this two day move could be nothing more than a news-induced, end of month window dressing festival. Should be another interesting week as we now get Mr. Bubble on Wednesday.
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.