The correction has deepened…simple as that. The only question is how much farther it has to go…but so far, in spite of oversold conditions, the market has not been able to bounce.
All major indices are now below the longer-term 200 day average…with the S&P just below. Remember, nothing good happens below the 200 day moving average. To make matters worse, the NASDAQ/NDX are leading down and are trading way below the 200 day. These two major indices have led the market both up and down for years.
We continue to see big blow-ups in stocks off of earnings. This does not happen in bull phases…only bear phases.
The UTILITY index has imploded…another negative sign. Utilities top out a few months in advance of a bear.
The “glamour” growth stocks have been shelled. These stocks along with the leading growth names are key to the market. Apple is sticking out as it continues to be sold by the big money crowd but it is not even close to being the only one.
Fewer and fewer stocks and sectors are working as more and more names break support/moving averages.
For 3 years, every announcement of more money printing by Mr. Bubble sent the market ahead. This time, the market was juiced for a day before turning down.
I would love to list the positives but the only positive is that sentiment has turned bearish…which is good news…and markets are clearly oversold and due to bounce. But keep in mind the short term is the trees. The fact is the forest is the whole market which continues to come under pressure. Maybe the upcoming seasonally strong period helps but that does not mean markets cannot stay bearish during this time. Major averages are now trading in the range carved out back in the May/July period. It will be important to watch if those months act as support or gets sliced through.
Lastly, I couldn’t help but write some more about the fiscal cliff con game.
It is an absolute con game to make Americans think that raising taxes on the “privileged few” will help pay down the monstrous debt. This is the same B.S. that politicians have been spewing since the beginning of time. They sell it based on the lie about how the rich do not pay their fair share when in reality, the problem has always been about and continues to be the over-the top, corrupt, cronyistic government spending. The blame is on the politicians and not the people. No matter how much the rich pay in taxes, it’s never going to be enough. Amazingly, my President won an election running on raising taxes a few percentage points. Of course, no one does the numbers. Those few percentage points will raise about 3-5 days of of our daily deficits/year. So…WHO ARE THEY TRYING TO KID? Answer: the electorate. I promise you, if rates are allowed to rise, it will only be the first of a few as we head back to a minimum 50% tax rate…the main goal of a government-centric administration.
Raising taxes does nothing for no one. California should know it but they still voted in another tax increase in that backwards a– state. Higher taxes only lowers economic growth because government never spends money efficiently. They do not care about the bottom line. They do not allocate capital in the best way possible. Only the private sector spends money to make money. Taking money away from the private sector and investors does nothing but provide headwinds and never lets economies reach their full potential. The dummies do not want to understand that if you increase tax rates, the government earns less revenue, not more. But that doesn’t matter as my President has been a main culprit who has done more to cripple this economy than any other in our history. It is amazing to watch the victory laps over 7.9%…oops…11% unemployment. It is amazing to watch my Prez tell us all how much he cares about the debt when he ran up an unprecedented amount in his first term…but hey, he won.
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.