JUST LETTING YOU KNOW
A Wake-Up Call
Very simply, what we do here is interpret markets by looking at the underlying action and then when something occurs, we react to it and let you know about it.
Sometime when we put in lows in the market, it’s sometimes short-term, sometimes intermediate-term and sometimes longer-term. When we put in highs, they are just sometimes short-term pullbacks and sometimes they are more than that.
You never know. You just deal with it as it comes.
And recently, I have simply telling a couple things.
- As long as the recent breakout holds – good news.
- But on the other end of the spectrum, you have the awful action in the Transports and the Semiconductor index. And we have to weary if Distribution starts to rear its ugly head. The definition of Distribution is a “heavier volume down day.” And typically the worse the down day is, the worse the distribution is. And you never know when and at what price it’s going to come from.
Now markets usually do not top out badly on one Distribution day. There’s usually a few and there’s usually a little bit of churning in which the market trades with no progress. And then, you fall below near-term support levels.
And then you see what comes next.
Today is one day.
Shorter-term support – I’m talking very short-term support – was kinda taken out today on the downside, with volume, indicating a Distribution Day in the market.
Let me define that for you and I: A Wake Up Call.
They’re starting to distribute the market here a bit. I use the term “market” because that’s what they did.
The other part of the equation is, we know for a fact, why the market has recently gone up. It’s because there’s been a direct correlation on the big up days with the announcement or the actual printing of money by our Federal Reserve, European Central Backs, Japanese Central Banks, China and India and all these other countries. Easing.
And we’ve told you, we’re not so sure that’s good long-term, but we’ll let the market decide. So to put it in headlines:
- Distribution Day for the Market
- Wake Up Call
You probably you want to take a little step back and should be looking to more than likely cull weakness. If you have stocks that have not participated, I’d review. If you have stocks that are actually breaking down here. I’d review. You want to own the best of the best and the stuff with the strongest relative strength in the market.
I’m just stating the facts. Distribution day and, near-term the market may have hit a little wall. Notwithstanding the Fed may announce another $trillion tomorrow in money printing.
That’s the take.
- Now underneath the surface is another story.
- As we have told you, the Transports have acted like the Mets bullpen.
- For a while now, many Semiconductors including Intel (INTC) have been acting terribly.
- The Commodity areas were rolling over again.
So underneath the surface, we already started to see some issues that I told you about.
So at this point, the best way I can put it to you is, now we’re find out in the day ahead, what this little churning and today’s Distribution means to the market.
And that’s it.
Me? I’m going to step back. I’ll cull weakness and I’ll start thinking about anything I think that could potentially be on the sell side. That’s me. It doesn’t mean it you. Decide for yourself.
I just know these markets have been waves, fits and starts and you never know what’s next. Keep in mind we have the end of the quarter. We’re 40 or so days from the election. In October, we have a massive earnings season. I do not believe it’s going to be good. That does not mean that market gets hit on that as there are other things working on the market.
But just keep it in your file manager.
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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.