Yuck Markets!

Here is the good news! On a near-term basis, markets are extremely oversold so bounces could be in order. Not sure there is much more in the way of good news because:

The DOW was up 200 Wednesday and gave it all back and more. Leading the DOW up early was the worst ares as the dollar plunged…lifting all the commodity-types. But when the DOW was up 200, for a change, the leading Nasdaq-types could not budge, indicating possible trouble for them. When the DOW came in, those Nasdaq-types were yonked.

At the very least, it is imperative to recognize that leadership remains narrow. At the very least, you must continue to recognize that too much of the market remains bearish…keeping a cap on further rallies. At the very least, you must recognize with so much underneath-the-surface weakness, it is easier to take the market down.

Easy big fella! Take your time and be patient here as narrow markets usually lead to trouble.

Near-term oversold but…

Many of the areas that have been hit hard past couple of days are near-term oversold so suspect some bouncing soon but the big picture has not change. In fact, the diverging narrowness (not sure what that means) worsens. While the Dow was down over 160, while commodities got whipped again…while advance/declines were again horrid…while 540 new yearly lows swamped the measly 40 new yearly highs, the market refuses to sell of the glamour growth names that continue to hold up best. We do not need to repeat those names today.

We continue to worry about the deterioration in important areas. Even with oil prices plunging, transports continue to break badly. This cannot be good news. W e are also noticing regional banks rolling over after showing some decent relative strength recently.

We continue to worry about the ultimate outcome of all this narrowness as it looks very familiar…from the 72-73, 2000 and the 2007 period. That’s not to say markets have to be destroyed like they were in those instances but if the bad does not turn, it is only a matter of time until the good finally rolls over.  We suspect this will not happen in December but January?

Next week is the Fed…yippeee!

Vertigo Yet?

Up 168…down 158…down 252…up 370…down 117 after being down over 200. Welcome to the nonsense. But for us, these recent wild swings are less important than the big picture and that remains the narrowness in the market, that if not broadened out, will eventually come back to haunt the market as it always does.

Nothing changed on Monday. The bad got badder again while most of the good pulled in. We have to make note of the misery in energy which should teach all of you a lesson. Many famous hedge funds have been rocked because of the energy crash as they have held on believing eventually things would turn. If there is anything we have learned through our years in markets is that low can go much lower and high and go much higher. Those who argue with this mantra will eventually get run over.

Mid-caps and especially small-caps continue to underperform badly while the new highs vs new lows continue to be a horror show. A the close of today, there were a whopping 509 new yearly lows on the NYSE and NASDAQ and only 90 new yearly highs. Granted, a lot of the new lows are commodity-based but they all count.




Less Than Meets the Eye

December 7, 2015
By Gary Kaltbaum
Fox News Business Contributor 

Our trusty Abacus tells us that the S&P 500 was up a whopping 1.58 points this past week. If you were asleep for the whole week, you would’ve thought nothing happened. Not true. On Tuesday the Dow was up 168 points…on Wednesday, it sold off 158 points…on Thursday, the Dow had a major tanking of 252 points and just when you thought the market was in trouble a huge 370 point rally on Friday.  We can talk about all the nausea coming out of the central banks which are causing these moves but instead we would love to give you the big picture. The big picture is simple. Amazingly, not much has changed.

For starters, rallies continue to remain very selective. This seems to have been going on forever. As we scan a few thousand stocks almost every day, we continue to see about two thirds of the market in poor shape with the other one third in various stages of what we would call good shape. We call this less than meets the eye and we continue to be worried about the outcome of this narrow market. To show you exactly what we are talking about, despite the 370 point gain on Friday, the new highs versus the new lows continue to be horrendous. How about 41 new highs and 188 new lows on the NYSE and 59 new highs and 109 new lows on the NASDAQ?. This is not normal and it’s certainly not bullish regardless of the strength in the bigger indices.

As we stated, only about one third of stocks that we follow are in good shape. This is not the kind the number that leads to long-lasting rallies and frankly this continues to remind us of the nifty-fifty days back in the early 70s.  As we have told you, back in the early 70s, a select few stocks continued to do well while l the market and the average stock continued to top out. Back then, it was Kodak, Xerox IBM Polaroid and a few others.  Now it is Google, Amazon, Facebook and a few others. Only the characters have changed. Needless to say, back then, once the nifty-fifty topped out, the weak underlying internals made it easy for the market to get hit. Time will tell what’s in store this time around but let us be clear, if things do not change,with the internals of the market so poor, eventually there’s going to be heck to pay.

And then we have our sector scans. Simply put, sectors in poor shape continue to swamp the good shape.

In good shape are regional banks, beverages-both alcoholic and soft drink, home-improvement retail, housing products, tobacco, Internet retail, defense and exchanges.  After that, not much else.

On the negative front: Energy, metals and mining, steel, copper, aluminum, coal, truckers, rails, cruise lines, drug stores, fertilizers, agriculture, investment banking and brokerage, solar, paper, media, real estate, construction machinery, farm equipment, shippers, biotech, hospitals, managed care, disk drives, restaurants, hotels, most retail, utilities, junk bonds, russia, china, emerging markets…

We will also be watching very closely the big financials as they remain range bound but near the old highs. A break above will continue the rally into the end of the year. Keep in mind, it is December and we continue to be told the market has to be up during this month.

Lastly, the maniacal central-bank led by Mrs. bubble will be making a move or not in the next week or so. We repeat. It is overblown drivel. Going from 0-1/4% to 1/4% is meaningless. Keep in mind, at the same time that Mrs. bubble may raise rates, Europe is adding to the printed money as well as lowering rates even more into the negative abyss.

Well…that was gross!

We would like to put lipstick on this pig but can’t. As we entered today’s action, not much had changed. 65%-plus of the market continued to be bearish while the markets had rallied up. Amazingly over the past few days, new yearly lows were equal to or more than new yearly highs. That tells you everything you need to know about the type of narrow market this has been. And as we have stated on many occasions, when markets are narrow, they are easier to take down when sellers do show up. Today, sellers showed up. Simply put, the bad got badder and the good either topped out or pulled back.

We have been told December had to be an up month. Time will tell. Regardless, rallies continued to be less than meets the eye. If the good really top out, we suggest look out…and it looked like a lot may have topped out today. Of course, we now wait with bated breath for Yellen to NOT raise rates even though they have teased it again and everyone now says it is a lock..

We will have a comprehensive report on the markets over the weekend as well as more commentary on the farce that we call Central banks. The stuff we heard out of Draghi and Yellen this week could make Saturday Night Live’s show this weekend if they weren’t so boring.

UPDATE #3…That’s what you get with Government run markets!

The European Central Bank cut its deposit rate to a maniacal -0.3%. The cut means banks in effect must pay more for the ECB to hold their money.

Futures market s here have given up their earlier huge gains…but don’t blink. As we write this, the German Dax is down 340 points.

Ladies and gentlemen, these people are insane. They know not what they dom and they certainly do not know the outcomes. We just know all precedent shows at the end of the road of assinine monetary policy is a not so good outcome.

The numbers will change by the open. Have fun!

So what changed?


By Gary Kaltbaum
December 3, 2015
Fox News Business Contributor
So let’s presume Janet Yellen makes the gargantuan move of taking the fed funds rates from 0-1/4% to 1/4%.
When we wake up the next day:
We will still be at 1/4% fed funds. We will still have printed over $4 trillion. We will still be at the easiest monetary policy in our history with Yellen saying we will stay that way for a long time.
Europe will still be printing and easing.
The UK will still be printing.
China will still be printing, easing and faking their economic numbers.
Japan will still be printing for the ——- year . You fill in the blank!
Sweden…yes Sweden, will still be printing.
0% interest rates will still pervade the globe.
Negative interest rates will still pervade the globe.
Savers will still be screwed.
Markets will still be distorted.
Markets will continue to be GRMs. (government run markets)
0% rates will continue to enable companies to borrow a crapload to buy back stock.
0% rates will continue to hold up  asset prices…until markets decide otherwise. (We used to say goose asset prices but right now, they seem to be just holding up)
So what changed?

And Thursday morning:

Monday sells off during market hours.

Tuesday gaps up getting back all of Monday’s losses.

Wednesday sells off during market hours.

Thursday gaps up getting back all of Wednesday’s losses.

See a pattern?

Yesterday, Yellen blah blah blah!

Today… Europe will again maniacally ease with lower rates and more printing of money. There is your answer.

But nothing has changed. The good gets gooder.  The bad gets badder.

A not so fine 2nd day of December. The bad got badder!

Today’s title is the opposite of yesterday’s title. This is just more of the same. What’s bad remains bad and what’s good remains good. When the market goes up, the good leads and the bad bounces a wee bit. When the market goes down, the bad gets yonked and the good mostly sit.

Of note:

Forget them oils trying to set up again into resistance. This bear market area looks like it is now rolling over again after an ugly Tuesday. Oil prices are on the verge of breaking the August lows…amazingly!

Big financials that have also been setting up at the highs, went pull back.

Gross action remains in the all-important transports, retail and to our count, about 65% of the market. Remember what we have said about narrow markets. When they sell em, they more easily go down.

And by the way, there is almost double the new lows than new highs on the NYSE as of this writing. And that’s with the latest rally.

Lastly, Yellen was front and center on Tuesday. We will have a lot more to say on that nonsense in the next day or so as we now await the latest end-all-be-all, supposed rate hike in December.Yippee!

A fine beginning to December. The good got gooder.

Good start to what we are told is supposed to be a good month. We have been told there has been only 5 down Decembers since 1988…so away we go.

The same names and the same areas had a good day as the worst areas bounced.

We make note of the SOX moving above resistance as well as the financials poised to move out. A good percentage of new highs are the small banks/s&ls that do not trade a lot of volume.

Keep in mind and for the hundredth time, this remains a narrow tape. Just stick with the narrow.