MIDDAY NAUSEA NOTES

-By Gary Kaltbaum- Midday December 6, 2018-

-OK…it’s a long day but how about a potential positive for a change…BUT JUST FOR THE NEAR TERM!-
-Since we are being asked…a couple hours ago we noted how strong TECH/INTERNET/GROWTH/BETA was in relation to the DOW being down 700. As we write this, the DOW is still down a whopping 500 points but the NASDAQ has come all the way back to only down 50. We always watch beta when markets are in trouble. If beta can show relative strength, there is potential for the “market” to follow. After all, we just dropped 1,500 Dow points in less than 2 days. Of course, if the DOW rolls back over today…fuggedaboutit!-
-With major indices back near their yearly lows, already very oversold after two nauseating days, with the only index to break the lows (RUSSELL 2000) undercutting and trying to reverse and with most in despair…we predict nothing but if there is any day markets have a chance to wash out, it is this one. It had better!-
-But just to show how the average stock is much weaker than the indices, there are 1,100 new yearly lows today on the NYSE and the NASDAQ with no index below the yearly lows. Just pointing out some potential.-

MARKET NOTES

Tonight, futures are down over 300. The latest:

“A top executive and daughter of the founder of the Chinese tech giant Huawei was arrested on Saturday in Canada at the request of the United States, in a move likely to escalate tensions between the two countries at a delicate moment.” AND…Senator Ben Sasse, a Republican of Nebraska, linked the arrest to the American sanctions against Iran. Huawei, China’s largest telecom equipment maker, has been under investigation into whether it had broken American trade controls to countries including Cuba, Iran, Sudan and Syria. So let us get this straight, at the same time we are trying to cut an important trade deal, this is what we do? Who is running this joint?

But even before tonight:

Last Monday, after a 2,000 point drop in 9.5 days, with 1,100 of those points Thanksgiving week, we thought a low had been put in.  We thought we were about to get the December seasonal strength. And then on Wednesday, “easy money” showed up again in the name of Jay Powell adding 600 points in the afternoon. Then the “whatever” trade deal gapped the market up over 400 points this past Monday. That was 1,600 points in 5 days and a gap. That 1,600 points normally happens in weeks, not days…but the easy money news and the “whatever” had the juices flowing and shorts scrambling. That may have been the December rally. After all, 1,600 Dow points is a lot of territory covered. Monday finished 200 points off the high and then yonk. That WAS the rally to work off the oversold condition. The outcome:

Even though no major index has broke the lows yet, already, there are over 600 STOCKS ALREADY AT NEW YEARLY LOWS. This indicates serious weakness and poor internals.

Even with the move up, only about 30% of stocks were in shape. For those without an abacus, that’s 70% of stocks bearish.

Most everything rallied into the declining 50 day moving average and failed miserably. This in itself is bearish market action.

Citi, Morgan Stanley, Goldman, Suntrust, Capital One, Discovery Financial, Barclays, Deutsche Bank, Regions Financial, Comerica, Allstate, Prudential, AXA, Athene, Lloyds, Bank Montreal, Pacwest, Bank Ozark, Umpqua, Texas Capital, Aegon, Eaton Vance…we can continue. These are all financials at new yearly lows with another 50-100 names within a stone’s throw from the lows. THIS IS NOT GOOD NEWS. In fact, it is terrible news when financials lead down. They hardly rallied in the 1,6000 point move to the upside.

The 10 and 30 year yield are breaking down. We gather you will be hearing the word “inversion” as much as you hear the name “Mueller” on those 2 networks.

The TRANSPORTS were down almost 500 points Tuesday. That does not happen in bull markets. On top of that, the market squashed important names FEDEX and UPS. On top of that, important TRUCKER JB HUNT is at new yearly lows. What’s with that?

The RUSSELL 2000 is already near the lows. In fact, while the DOW went up 1,600 points, it hardly budged. Don’t worry. It is only 2,000 stocks.

Ditto for the MIDCAP 400.

Everything and we mean everything has made lower highs. That’s everything except all the defensive areas we have been telling you were acting best. (Utilities, consumer staples, reits) Risk sold, defense held up!

You already know what we think energy prices are forecasting.

A COUPLE MORE IMPORTANT NOTES.

We are hearing a little too much that every time the market heads lower it is because of the computers, algos, programs and all that crap. Our answer to that: stop it! Are you telling us the 1,600 points to the upside in just over 5 days is real buying but the selling is just fake selling? We call that making excuses.

Lastly…if nothing changes overnight, major indices will be opening near the lows with the RUSSELL probably opening below the lows. This gives the market another big chance to hold but…IF all these major indices break the lows, you will be hearing “bear market” for the major indices.

THE HIGH?

-By Gary Kaltbaum- December 4, 2018-
-The hope that the rally would turn into more than a bearish market rally is now dwindling. The hope that pullbacks would be controlled and rotational just aint happening. We called A LOW last Monday and THE LOW last Wednesday off the Fed…but now think that’s it for the rally. Yesterday’s highs will be THE HIGH for now…with markets heading back to test towards THE LOW…but…something is up and it is not good!-

-As we write this, TRANSPORTS are down over 440 today…and what’s up with FEDEX and UPS? Not bullish! And why is JB Hunt (JBHT) at new yearly lows? Again…not bullish.-
-The 10 year is down to 2.92%…someone is making a certain bet. Not bullish.-
-FINANCIALS are rolling over with a few names at new lows. Have you looked at Goldman? (GS) Not bullish.-
-REGIONAL BANKS acting horribly. Not bullish.-
-MID CAPS and SMALL CAPS hardly budged in this rally off the lows. Not bullish. The RUSSELL 2000 is almost back to its lows. Not bullish.-
-The SEMIS act horrid. Not bullish.-
-RETAIL acts horrid…not bullish.-
-HOUSING gross…not bullish.-
-INVESTMENT MANAGERS near lows. Not bullish.-
-GAMING, AUTOS, DEFENSE, CRUISE LINES, DISCOUNT RETAIL, OIL, COMMODITIES, STEEL, METALS, MINING, INDUSTRIALS…all have very poor patterns, rallying into resistance and selling off badly. They continue to act bearish even though from trough to yesterday’s peak, DOW was up 1,600 points. And this all happening with knowing the Fed is now dovish and supposedly a deal will come with China. Something’s up!-

PRE MARKET

The gap held decently yesterday but you can tell after 1600 Dow point in 5 days and a gap that the move could get pooped out. This morning, we open on a pullback but not as bad as overnight as the administration sends everyone out to tell everyone China deal will be fine. Of course, they do not tell you this administration raised government spending after telling us they would do something about debt and deficits. In other words, another group of political bull—-t artists. Conservatives my a–. Government spending, whether with the taxpayer dollar or taxpayer debt is their power and power they abuse.

Markets are closed tomorrow. We will get more in-depth with a report on the state of the market during the day. Lots of changes as many things coming up the right side because of Bernanke, we mean Powell and a supposed trade deal.

THE OPEN

Market indeed gaps up. Bear market turns into bull market in less than a week off of a major change by the fed and not so major change with China trade.

Normally, we could care less about the news but when the fed is involved, it is more than material.

MARKETS ARE NOW RIDICULOUSLY STRETCHED, EXTENDED AND OVERBOUGHT ON ANOTHER NEWS GAP. We gather many or most believe a pullback has to happen. We are not so sure as we are in December. We do suspect we are going to back and fill just because we are now in the midst of massive overhead resistance…but to be clear, market has already blown through resistance.

More to come. Going to be an interesting day, to say the least.

 

WEEKEND NOTES MARKETS/FED/CHINA

-By Gary Kaltbaum- December 2, 2018-

-Never met the man but more than being the president for 4 years, George H.W. Bush was a great husband, great father, great grandfather and great friend…and that means more than anything. RIP!-
-Last Monday night, we alerted all on tv, radio and in pen that we thought another A LOW was in. To repeat, the thought process was simple…just about everyone turned bearish, markets were ridiculously stretched, extended and oversold to the downside…and we were entering the end-of-month as well as the December period. Just because it is A LOW, it does not mean it is THE LOW. And then who said this in October of 2012?-
-“INVESTORS REALLY DO UNDERSTAND NOW THAT WE WILL BE THERE TO PREVENT SERIOUS LOSSES!”- 
-It was not Greenspan. It was not Bernanke. It was not Yellen. It was a dude named Jay Powell. Yes…that Jay Powell who on Wednesday ,went from being Paul Volcker to being what he said back in 2012…just another easy money, bubble inducing, central bank bubble maker. He appeased the whining Trump and all the whining wall streeters who never see a bearish phase coming and whine all the way down. Yes…with unemployment below 4% and GDP above 3%, another central bank joke could not even stand a measly 2-2.25%, and while Europe and Japan are still negative and printing. But…for us, that confirmed THE LOW. As soon as we saw Powell’s words, we again knew the fed was looking to stop even more serious losses. Remember, every time the market corrected under Bernanke, he eased and eased ever higher. So, just when you thought price discovery would finally be here, the juices get flowing again. Just remember, all these moves continue to enable massive…and we mean massive debt, deficits and leverage…to the tune of $250 trillion of global government debt…but don’t worry because our mantra has always told you everything is fine as long as markets cooperate.-
-And:-
-Now we are told a major breakthrough with China trade has occurred as the president is now putting off more tariffs and promises to continue to talk. We ask what changed? China agreed to buying some things? Trump agrees to not raise tariffs? What day is it?- 
-But:-
-We waited to write this until futures opened up and open up they did. Currencies that were going one way are going the other way. Think yuan! Futures are up 450 Dow points. All problems have been eliminated.-
-We stand fast with our A LOW call this past Monday and upon the latest from Powell, our THE LOW call. It does not take a rocket scientist to tell you if we indeed open hot tomorrow, markets are now ridiculously stretched, extended and overbought, this time to the upside…and in 5 days and a gap. Sell time already? See what central banks will do for you. Until markets act otherwise, never fight an easier fed. –