Yesterday, we looked at the leaders on my radio show. There is a reason why we do this.

What you need to know about the market is that strength begets strength and weakness begets weakness. And when the market’s really weak, but there’s a slew of stocks that refuse to go down, when the market rights itself, typically, they are going to lead up.

But we also recognize the nasty side of the equation and that is: If the market winds up going into a bear market, meaning bigger legs to the downside, eventually they will get every living leading stock.

Because as you go through a bearish phase, when everything else has been sold, they end up going to the things that have not been sold and they eventually take those down also. So I hope you’re doing some work with these things. There is a rhyme and a reason for it. If you have followed us through the years, and heard the names I’ve mentioned on my radio show, I think you’d probably be to the better.

And on top of that, we don’t let you hang. We also let you know when we think these leaders have broken down. In the past year, Netflix was a leader, but we told you in August of 2011 that that stock looked down. Green Mountain Coffee was a leader. We told you in September and October of 2011 that that stock was done. And I could go on and on.

Markets change. Leaders change. You’ve got to stay in touch with the change.

Today’s Action

There was nothing I liked about today’s action, even though when all was said and done, the Dow finished up. And, of course, the news is fluid. But the most important thing for us is outcome. Even though you’ll hear on the news that the Dow was up 46, there was still less than meets the eye.

What have I taught you on my radio show? It’s good when the market’s down big and finishes up. It’s bad when market is up big and finishes down. And it’s always bad when the Nasdaq is underperforming the Dow. And I noticed throughout the day…mid-day when the Dow was up 115 and Nasdaq was up 12. And then the market came in toward the close and Dow was up 46, The S&P was down a little, the Nasdaq was down almost 14. The Nasdaq-100 was down 11. The Russell 2000 was down 5. The Transports were down 6 AFTER BEING UP 110.

There’s nothing I liked about today. That’s my theme.

There is a heck of a lot of news on a daily basis being thrown at us from Europe, from Washington, and from Bernanke. We watch and read the news. But we pay more attention to the reaction to the news because in bullish phases, the market ignores bad news and ramps up on good news. In bear phases, the market ignores good news and sells of bad news in a big way. So it’s our job to measure the markets, not somebody’s opinion or thought.

Keep watching the markets. They remain in correction right now regardless of the big move we had yesterday. We did not have a Follow-Through Day. And the next day after the big day yesterday, we were up big and the market got distributed into that big up day.

And my favorite growth names, while the market was up big today, weren’t doing a thing. And they sold off toward the end of the day.

My Thoughts On Gold

Something funny happened the other day. I came on my show and Gold had that big move up and I was nonplussed. And I said that the 148 that Gold (GLD) had hit in December held. But let’s not all get crazy yet.

I also said that if we’re going to still follow the template of the late 1970s, you have many more months before Gold really gets going.

And I got all these emails blasting me and some people cursing me.

So yesterday Gold was up and reversed. And today Gold and Gold stocks got hit pretty hard.

So I’m going to repeat myself again. I don’t think there’s much to do there. I do think that 148 level is gonna hold for right now. But let me be clear. A break below 148 and the GLD and…GOOD NIGHT. GOOD ABSOLUTE NIGHT.

That’s all. That’s my take. You get to decide.


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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.


1 reply
  1. Avatar
    Cory Workman says:

    Gold confuses me.

    On one hand, I believe that when the central bank and government spending is forced to stop globally, we will have a bout of global deflation and possibly global depression.

    While deflation is bad for gold, I could also see the world flock to gold if the concept of Fiat money were to begin to collapse. In other words, the value of Fiat currencies may rise in the beginning of the de-leveraging of governments but then collapse suddenly.

    But honestly, it will probably be outlawed to possess it by then anyways.

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