GOLD STOCKS BREAKING OUT

On Friday, I told you Gold stocks were poised to break out of a long range. On cue, they are moving out today. Just one glance at the GDX tells the tale.

Other names are moving out of range. My dilemma is buying the underlying stocks while the metal is so extended. One has to ask what happens if the metal pulls in. Is this the stocks playing catch-up or are the stocks looking to suck you in before failing. Well, I guess we will know in the days ahead but right now, they are on the move.

 

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.

 

STILL STRETCHED AND EXTENDED

The DOW is at 10,817 with the 50 day moving average at 12,000.

The S&P is at 1123 with the 50 day moving average at 1275.

The NASDAQ is at 2341 with the 50 day moving average at 2680.

The NDX is at 2038 with the 50 day moving average at 2275.

The TRANSPORTS are at 4221 with the 50 day moving average at 5100.

The markets remain stretched and extended from the norm…and of course…to the downside. Just like when markets are stretched and extended to the upside, they eventually revert back to the norm, so will stretched and extended to the downside revert back to the norm. How? Typically, things will meet in the middle. This means the 50 day moving average will continue to decline while price bounces up to meet it. Occasionally, markets are so weak, price will just sit as the 50 day keeps coming down…but typically, the bet is on the former.

Bounces/rallies will happen from anywhere and at any time. Only when I see a confirming follow through day do I give the market a chance to have put in a bottom. Please remember how I outlined the 1998 double bottom as a possible template to turn this market back up. Major averages have retested the lows but have not undercut. Maybe this will be a successful retest, maybe not.

Futures are up strong this morning. Libya is the given reason why. Nah…it’s just the market is in no man’s land and was hit hard past couple of days. Can’t go further than that just yet…but always hopeful.

 

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.

SOME RELIEF

After another nauseating high volume sell-off, the market is getting some relief. As I write this, the Dow is up 80 and the Nasdaq up over 30. It did not start too well as futures were way down. The market is in the midst of testing the recent lows of last week. I just urge you to remember, the market remains in a downtrend. I could not blame you for trying to catch some longs. In fact, some of the higher beta, growth names are covering some territory to the upside. Again, just remember the market is in a downtrend. This means rallies tend to be sharp, quick, make you feel good, suck you in but then ultimately disappoint as those rallies are fleeting. Eventually, we will get playable rallies that last weeks. This is a characteristic in bear markets. Markets will typically first have a follow through day that gets things going. I am not sure we are there yet. Regardless, this market is going to remain a tough enterprise to navigate even for the best of stock market operators.

Just a couple of sector notes:

I am seeing the Auto parts retailers starting to bubble up. This group has done well in the past when markets are defensive as it has turned into a defensive group. Maybe something to watch.

Also, you do recall I thought Gold was going to put in a double top. As soon as it broke the highs again, I knew I was wrong. Since, I have been amazed how lackluster gold stocks have performed in comparison. I am letting you know that the gold stock group, as a whole, may be completing a loooong base to possibly play off of. I am still not sure but if the group indeed breaks out, could be something to look at. The GDX is a good proxy for gold stocks.

 

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.

THE MARKET DOES NOT THINK THE MARKET IS CHEAP

As I have been telling you, in spite of all the talk about markets being cheap, everything I have been seeing defines a bear market. Again, bear markets are made up of high volume drops, low volume bounces, hope that the bounces are the bottom, calls of the market being cheap…only to disappoint those calls soonafter.

I do not know how today finishes. I just know nothing has changed…and today we walk into a monstrous opening gap to the downside. The recent bounce was nothing more than that…a bounce. I must add that this down move has looked like and felt like the beginning months of serious bear markets…and not garden-variety bear markets. I wish I could tell you differently. You know where I have stood and you know where I stand. The market has finally flushed out all my worries…the answer to massive debt and massive spending is not more massive debt and massive spending. Will keep you apprised but leave no doubt, this is not a correction like last year that just bottomed and turned back up. And I say this knowing QE3,QE4 and QE5 will be on the way soon.

 

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.

Image: Idea go / FreeDigitalPhotos.net

IT’S THE BIG PICTURE THAT MATTERS MOST!

Whenever markets have an up day, I get the same question:

Have we seen the lows?

I don’t usually get those questions on down days. Could that be it for the downside? I understand psychology. I understand about being swayed by movement. I have news for you. We are all swayed. The answer is…anything is possible. We live in not normal times. We live in a time of zero interest rates, the printing of money in order to send our currency lower and a specific goal of the Fed to have markets go higher. This is because the Fed’s actions have done nothing to help the job’s picture so they look to do something else. Anything can happen.

It is important to not get swayed by a few days but to look at the big picture. As of now, we have had a monstrous high volume drop, a violent few days that did a lot of washing out…forming a near-term low…and a move back up on lighter volume. These are not opinions. I am just stating facts. On top of this, except for GOLD, everything is still trading below the longer-term 200 day moving average…and I mean everything. Of course, there are a few stocks that continue to show strength…but I can count them on 2 hands.

Regardless of what some say, I have seen markets do V-shaped moves up…so it is not out of the question that the recent lows are the lows. But I would like to see some characteristics that define bull markets…not characteristics that define oversold bounces….before I get all excited. I have been one of the most bearish on the street for quite a while but you need to know, there isn’t a day that goes by that I am looking for clues that the market has indeed turned. So far, I have not seen them. I will know a lot more as we head into resistance. And if you want a potentially bullish template, go back to 1998 when the market had a violent move down, a V-shaped move up about half the way back…but then a violent retest that undercut the first low and then off to the races. I don’t predict that…but I am always analyzing previous market cycles.

 

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.

Image: scottchan / FreeDigitalPhotos.net

 

Here’s What I Said About Warren Buffett On Fox Business Network Tues. 8/17/2011

Hi:

I was Fox Business Network with Neil Cavuto, on Tuesday 8/16 discussing my comments on Warren Buffett. Click here to my original article that generated all the buzz.

Here’s the video:

httpv://www.youtube.com/watch?v=2PUuqRm7TV4

Here’s the link to Fox if you have trouble viewing the video on my site:

http://video.foxbusiness.com/v/1113277542001/if-us-were-a-company-would buffett-invest/?playlist_id=87185

Gary

I will be on Fox Business Network in the 6-7 pm hour witrh Neil Cavuto discussing my comments on warren buffett

“WARREN WOULD NEVER INVEST IN THIS COMPANY” and “”WHY IS EVERYONE SO BULLISH?”

Imagine Warren Buffett getting a call from a company who asked Warren to invest $2 billion in that company.

This company then went on to tell Warren that the $2 billion had already been spent and that they could not account for how well that $2 billion was spent. Therefore, that $2 billion would be of no help to the future of the company. This company went on to tell Warren that there was massive fraud and waste in the company and that the people that ran the company get payoffs in order to make decisions to help those doing the paying off. They also told Warren that their company was running massive deficits. In fact, total deficits ran 8x the amount of revenue and that the company was doing nothing in order to stop those deficits. On top of that, those deficits continue to grow leaps and bounds with no end in sight. May I also add that most of the people running the company had never run any companies prior to running this company. Bottom line: THERE IS NO WAY IN THIS LIFETIME THAT WARREN WOULD INVEST A DIME IN THIS COMPANY. So…Warren…please stop telling others that they need to.

Why is everyone so bullish? I am not kidding. Barrons runs a front cover titled “Bet ON the Bull!” A certain financial channel brings back a certain wayward technician calling for a bottom. Bullish sentiment figures that I follow haven’t budged. The talk of “cheap” and “value” pervade the air. Let me give you some facts:

The market JUST completed a major league, 5 month top.

FINANCIALS continue to lead down.

All major indices are waaaay below long-term moving averages. Ditto for all foreign markets.

Volume coming down was huge. Volume in the past few days has contracted.

There are no bases to buy off of.

There is very little in the way of leadership.

The only bull market is in GOLD.

The economic numbers remain suspect…and that is being nice.

Nothing is being done about the massive deficits.

The President is campaigning and not leading. In fact, all he is doing is blaming everything under the sun…but himself and his policies.

The Mets are back under .500.

Had to throw that last one in. Let me remind you. Everything you need to know about the markets are in the markets and the facts they give out. Big drops on heavy volume with smaller bounces on lighter volume are signs of bearish phases, not bullish phases. It is imperative you learn to take clues from the market and not from opinion. Wall Street is always bullish…no matter what. I do not think we are out of the ugly just yet.

 

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.

 

Special Announcement from Gary Kaltbaum

To All My Friends and Followers:

I’m excited to announce that I’ve relocated my site GaryK.com to a powerful, new web host. I made this move to provide you with new heavy-hitting content that you’ve never seen before. Plus, I’ll be updating you continuously through each market day about my latest insights on the market, the economy…and your money.

Stay tuned. We’re be working at a fast pace over the next few hours, days, and weeks to adding articles, links to my radio show, and much, much more!

Gary Kaltbaum
President, Kaltbaum Capital Management
Host Of Nationally Syndicated Investors Edge Radio Show
Fox News Business Contributor

Feel free to contact me with your questions and comment by clicking here.