HEY, IT’S A STRONG MORNING!

By Gary Kaltbaum- November 26, 2018
Hey…the market is up this morning. Not to throw cold water on any rally but let’s just remember, in just the past 9.5 days, from peak to trough, major indices have dropped 7-10%. On top of that, the DOW is 900 points BELOW the longer-term 200 day moving average. Hopefully, with bearish sentiment picking up, with stretched and extended conditions and with expectations low for the Trump-Xi meeting…that the worst is over for now. After all, it is way overdue. Do not also forget we are now in the month end, window dressing period as well as heading into December. Just don’t blink! Just don’t forget we get rallies right now because of weakness, not because of strength. Hoping for better days ahead.
And did you watch my Giants just give away a season ending game yesterday?

LOTS MORE NAUSEA

By Gary Kaltbaum- November 25, 2018
-A few thoughts:-
-Don’t you just love how so many are NOW coming out to tell us just how bad the “bitcon” and all those coins are? All it took was a move from almost $20,000 to under $4,000 to finally make them realize what we knew from the very beginning. And for those technicians trying to give us the technical take, here is ours. “Bitcon” and all the other coins are going to as John Vernon said, “0.0!”-
-Are the people of France just now figuring out that all the vacation days and all the free stuff is just not free? The biggest problem with socialism is that socialism does not breathe without the money from capitalism. When you offer too much free stuff, you have to keep raising taxes to pay for the free stuff and therein lies the vicious cycle. AND when socialism overtakes capitalism, you have Venezuela of 5 years ago. AND when capitalism is completely gone, you have the Venezuela of today. Do you hear that Bernie and Bernie followers?-
-NOW we are finally seeing what we told you in advance…that is economies around the globe have topped, with some looking to be in trouble. While we remain the powerhouse of the world, we do not believe we are immune to the economic cycle…and sorry, what happens everywhere else matters to us. Economically sensitive areas topped out many months ago, in advance of what we are starting to see now.-
-Our real big worry is the Eurozone. Imagine…the engine of the area, Germany, contracted last quarter. This happening WHILE THE ECB HAS NEGATIVE RATES AND IS STILL PRINTING MONEY. In other words, absolutely no ammo left.-
-Despite:-
-Sentiment becoming wildly bearish. (contrary indicator)-
-Very very very stretched , extended and oversold conditions to the downside.-
-Seasonal holiday strength-
-The DOW dropped a whopping 4.4%, the S&P 3.8% and the NASDAQ 4.3% in the holiday shortened week. The selling was relentless with horrid closes.-
-Like a broken record:-
-Just about everything and we mean everything…trades below the longer-term 200 day moving average. Again, nothing good can happen when price trades below. It is a physical impossibility. This is not opinion. Some areas and some indices are trading way below. Even the DOW, which always holds up best in bearish markets, finally caved in and is now deeply below.-
-The all-important FINANCIALS remain extremely bearish. REGIONALS are much worse than the biggies.-
-The all-important SEMIS remain extremely bearish.-
-EUROPEAN banks are trading towards the lows of 08.-
-Past leading GROWTH NAMES continue to be bludgeoned. It is never good when the leaders of the prior bull are being shredded. There is still a ton of margin on many of these names.-
-New highs? UTILITIES, a few CONSUMER STAPLES, a few REITS, AUTO PARTS RETAIL and with OIL crashing, AIRLINES are actually setting up well. 1+1 =2. Thrilled yet? Just about everything else is bearish.-
-We wish we had better news but we don’t. Our job is to read price and price to the downside was still not satisfied this past week, a week that normally has a positive bias. And to be blunt, it is not the algos, technicals or the programs that are the cause. It is the big institutional crowd needing and wanting to get out of “risk” areas and buying up “safe” names like Merck, Clorox, Pfizer and Proctor and Gamble. Don’t forget that they are also buying up the 10 year. It is the big institutional crowd speaking loudly with their moves…AND WE NEVER ARGUE. If one wants to blame the drop on algos, technicals and programs…then they should also blame them for 20,000 DOW points to the upside since the lows of 09.-
-Fundamentally, we continue to completely disagree that the economy is going to be fine, earnings are going to be strong and this is just a correction. Markets are looking forward, not backward and nothing about the action speaks garden variety. We have been saying for quite a while that markets around the globe are screaming slowdowns, if not recession. In fact, a few are starting to come around to the reality that all is not right. All is not right when oil prices drop over 30% in 6 weeks. All is not right when Germany, the engine of Europe contracts last quarter and sees growth fall to a 4 year low. All is not right when Japan contracts last quarter. All is not right when we continue to see new yearly lows in everything economically sensitive while the strongest areas are the most defensive, recession resistant areas. All is not right when a few European banks trade near lows not seen since the despair of 08. All is not right when the market smacks the heck out of important RETAIL names in the past couple of weeks while we are being told how strong the holiday season will be.-
-Some have been finally forced to see what the market has been seeing but as usual most of Wall Street always deny what is staring them right in the face…AND THAT IS WORSE THAN EXPECTED GLOBAL GROWTH IS NOW THE NORM.-
-We again tell you that shorter-term, anything is possible. Bounces, even strong bounces can come at any time…but that will in no way change the big picture that again, is staring everyone in the face. Bounces can happen because of the G-20. Bounces can happen because of something Powell does or says. Bounces can happen out of nowhere as the DOW is a whopping 900 points below the 200 day average.-
-We are always asked about if there are any positives that can change the playing field. While price matters most, here are a few things to watch:-
-Oil prices have crashed. While the worry is this move is telegraphing nausea ahead, the fact is if prices just stay here, $5 billion every month DOES NOT go towards the pump. Again, AIRLINES are showing great relative strength because of this.-
-10 year yields have backed down.-

-A ton of bulls have now been converted to the bearish side. (contrary indicator)-
-The G20…we gather the dummies are watching markets closely and maybe, just maybe they see the error of their ways. After all, tariff measures imposed by G20 countries currently cover a nice sized $481 billion, a new record. We also must make note that we think the G20 will also be a quasi-OPEC meeting.-
-Bernanke, Yellen, oops, we mean Powell, will raise rates in December just for credibility sake but thinking the language will change markedly as they are now seeing different data they say they are dependent on. We expect December to be the last rate hike.-
-And lastly, we have that end of year seasonality that is supposed to help but it certainly didn’t help this past holiday week.-
-Wish we had better news but we deal with reality and reality is the price action. It is not just here but it is much worse around the globe. If we see any kind of changes, we will let you know but this past week was another slap in the face as any strength was sold off and sold off into the close. Maybe the relentless selling we have been seeing gets us closer to another A LOW.-
-Hoping for better days ahead.-

GREETINGS FROM THE WARM NORTHEAST

It is a scorching 8 degrees as we write this. Speaking of cold, futures down nicely another day. OIL again ripped. Too much talk of supply issues. We say it is all about demand. Just watch the market. It knows.

We are quite amazed that the institutions could not even wait to sell more until after the holiday. Tells you they are very worried. Do not believe this is about algos, programs, technicals and all those crappy excuses. This is real selling. They never blame the upside on them.

The good news is that all our sentiment numbers have gone very bearish. (contrary indicators) Keep in mind, just because they are bearish, does not guarantee a rally any time soon. Just that sentiment conditions can get one. The big picture is still gross. Also seeing some insider buying picking up…and will give you a list of names next week.

Markets close at 1 pm…don’t know why they are even open today.

 

YESTERDAY’S NAUSEA AND PRE-MARKET

First off, a happy and healthy and fabulous Thanksgiving to all.

We do not want to throw cold water on anything. We are always looking for good lows in bearish markets. After all, markets going up are better than markets going down. But as you know, we deal with the evidence at hand. We deal with the weight of the evidence. We deal with what the market is telling us. We deal with price. We do not deal with opinion. We do not deal with down the road predictions.

Futures are up nicely this morning. As usual, we are already seeing some calling for THE LOW. We hope they are right. We hope the markets put in a low into the holiday and soar from here. But we know hope does not work in the market. We have tried. It doesn’t work.

So before you go out and get excited about today and more than likely Friday’s half day:

In just the past 9 trading days from the high to yesterday’s lows:

The DOW is down 7.25%

The S&P is down 6.53%

The NASDAQ is down 9.81%

The NASDAQ 100 is down 10.6%

APPLE is down 16.2%

AMAZON is down 20.4%

Keep in mind, these numbers are from lower highs, not the all-time highs…and IN JUST 9 TRADING DAYS. Repeat….IN JUST 9 TRADING DAYS.

We also had to mention that the price of OIL is down a whopping 30% in just over 6 weeks. One would think that is also stretched, extended and oversold.

We could list just about every other sector, every other index and every other stock but we gather you get the point. We are seeing some people thrilled this morning calling for an end to the sell-off, thrilled that a few names like Boeing and Amazon reversed nicely yesterday. We just want you to remember, bounces happen in bearish markets. Bounces happen to relieve the very stretched, extended and oversold conditions. Once those conditions are relieved, the bear reasserts itself. The last oversold rally had the DOW rally over 2,000 points in short order. Guess what happened next!?

We actually thought during the day yesterday that the market would have a decent reversal. Instead, we get a gap to the upside today. We gather it holds because of the holiday…but after that? We will just let the cards come out of the deck.

Lastly, the one question we get asked the most is about trade. We expect some sort of something. Not sure what it will be but gotta believe the administration is watching markets. We also make note of the fact that the administration has put that dude Navarro in a closet and locked the door making us believe we may get a softening of rhetoric as well as softening of threats. As far as market reaction to whatever happens, we will cross that bridge when we get there. But our mantra stands. TARIFFS SUCK!

Again…a happy happy happy Thanksgiving to all.

BITCON AND MORE NAUSEA

“BITCON AND MARKET NAUSEA!”
By Gary Kaltbaum- November 20, 2018

And this was supposed to be a seasonally strong Thanksgiving week! And this was supposed to be a week where we didn’t have to write more than once. At least the Giants won two in a row. 
Let us start off by saying that as we drove into work, we were flipping the channels when we heard another “Bitcon” jackass on another certain financial channel saying that “Bitcon” is still a long term fundamental story. Of course, these same people have been touting this con all the way up and all the way down. We cannot believe they are still allowed to spew their nonsense but welcome to the world. Unfortunately or fortunately, the “Bitcon” is unwinding again. We took pains in telling you since last December that all these coins would turn to dust. Yes, we used the word “dust.” Let’s just say the emails we received did not wish us a happy holiday or a happy birthday. Of course, a bunch of scammers came out with more and more coins, adding up to about 2,500 coins. You knew there was trouble when the democratic bastion of Venezuela came out with a coin or how that great investor Dennis Rodman came out with the “Potcoin!” No…we did not make this up. Of course, that coin is down about 97% and try selling. Actually, try selling any of these coins.  Most coins are now down in the 90s with a bunch already going bye bye. On top of that, most of  the bull crap companies that changed their names to some sort of crypto are no longer trading. You remember companies that were in the fruit juice, ice cream, cigar and other nonsense changing their names? Kids, this was just another fed-induced con/bubble that was always going to crack. It was just a matter of time. All one had to ask was what economic value did all these coins have. It is not the first con/bubble and won’t be the last. It is your job to recognize it the next time it occurs. As we have said time and time again, these tout artists will put a bid on a leaf from a tree and tell you to buy it. There is no conscience.
Unfortunately, the markets have worsened again. The hope by many pundits and strategists is now starting to dwindle, always an outcome of falling prices.
The biggest problem markets continue to have is the continued meltdown in everything that led the market up for so long. As we open up this morning, the NASDAQ and NASDAQ 100 will open BELOW the lows of almost 4 weeks ago. We cannot begin to tell you how negative this is if it sticks. As we have told you in the past month, bounces can happen at any time, even big bounces(the trees), but the big picture is speaking loud and clear(the forest), and that is as of this second, lower prices have still not satisfied the big money crowd. And to be clear, it is never good when the two leading indices of the prior bull are leading down. The biggest problem continues to be how concentrated the move was at the end of the move, how over-loved, how over-owned and most importantly, how over-leveraged these areas became. We suspect even after this drop, there is still plenty of leverage to work off. Today could be an important near-term day if these two indices open below and reverse. That would stem the tide for now but only in the near-term.
Everything continues to trade BELOW all longer-term support. FOREIGN markets led the way. BEFORE the rest of the market cracked in early October, we were telling you for months how almost half the market was already bearish. It is these narrow markets that are the most vulnerable when the real selling shows up. We are now seeing the outcome.
We are also now seeing what the market telegraphed in advance. Not only are some foreign countries announcing contractions but we are now getting some serious downward guidance out of corporate America. RETAIL is the latest as a few names like Lowes, Best Buy, Kohls and Target getting smoked this morning. We also think the drop in energy prices is also telegraphing a slowing of demand. The possible good news is that THE FED WILL BE DONE IN DECEMBER. The “data they are so dependent on” will force their hand. 
DEFENSIVE areas continue to have the best relative strength while the “RISK” areas continue to sell off. In bearish phases, DOW-types and defensive areas will hold up better but even they will not be immune as we go through the nausea process. We continue to urge caution and to not listen to all the “cheap, value, overdone, capitulation” crowd. Price is much, much, much stronger than opinion and price continues to speak loudly and clearly. In fact, price is now shouting…unfortunately…but HAPPY THANKSGIVING!  
And lastly, memo to President Trump, Kudlow and Mnuchin…if you are going to comment on the markets…just say “corrections do occur and fundamentals longer term are fine”…and then shush!

MARKET AND PRE MARKET

Holiday shortened week where supposedly, markets always go up.

Futures flattish after being down most of the morning.

AAPLE (AAPL) feeling some more pain on supposed cut in IPHONE orders.

Leading groups are utilities, consumer staples, drugs, a few reits,a few healthcare names, exchanges like CME and ICE, and a few DOW names like a MCD, UNH, WBA, JNJ. Recent gaps to the upside in names like DATA, ETSY, PLNT, TWLO have done nothing except pull back into the gap or sit.
EVERYTHING except the DOW and defensive areas trade below the longer-term 200 day average. Some things trade way below. We do not think it a good thing when the DOW has the relative strength as we have told you when markets are defensive, it buys defensive.
GROWTH STOCKS continue to act terribly. Many trade below the 50 day average with a bunch now in no man’s land, below the 200 day average. Just take a look at the NASDAQ…not much to see. Also seeing more blow-ups, the latest being NVDA.
While we have seen some wicked action in the semis, the SOX trades way below everything. We have one strong name in XLNX.
The FINANCIALS continue to trade poorly…below everything with the REGIONALS acting terribly.
The best news is the A LOW call from 3 Wednesdays ago still holds…and possibly a higher low being put in place last week…but to repeat, need to see some leadership elsewhere…and it just aint happening yet.