Kerplunk Goes the Market!

Kerplunk:

The object: try not to lose your marbles. A long-time favorite, Ker-Plunk takes a steady hand, as you skillfully remove the sticks from the marble-filled tube. A clear plastic tube is filled with marbles, which are supported by crisscrossing sticks inserted through the tube. Each player takes a turn removing a stick from the tube, trying to dislodge as few marbles as possible. As the game progresses and fewer sticks remain, it gets harder to keep the marbles from going ker-plunk! Play continues until all the marbles have fallen. The player with the fewest marbles in his compartment wins! For two to four players.

Kerplunk, the stock market…it’s all the same. Well, almost. Kerplunk is a game, The stock market is about your hard earned dollars.

In the stock market, think of the marbles as the major indices. Think of the sticks as all the sectors and all the stocks that make up the market. As more and more sticks are pulled, the less marbles (leadership) are left until it all (the indices) come down.

This is the exact process we have been telling you about for weeks and months. To be blunt, more sticks are being pulled and more marbles are falling. Just in the past week or so, the market has lost the almighty Apple, lost Disney (both stocks in the Dow), lost the whole media complex on the Disney cable news and now we are starting to lose the biotechs and the glamour leadership that has held up so well. All that is left is the financials and they are close.

It is also instructive that money has been flowing into the recession-resistant, defensive areas like food, drugs, beverage, tobacco and household products. WHEN THE MARKET GETS DEFENSIVE, IT GOES DEFENSIVE.

We have outlined vital and important support levels for the major indices. We are getting to the point where you had better be watching closely as the topping part of the process is getting late in the game. After the topping comes the downtrend.

Keep in mind, if markets cave, there will be no chance of a “ceremonial” rate hike by the maniacs at the fed and if things get real icky, expect some noise out of one or two fedheads about QE4. Not kidding! That may or may not help things.

We will have our usual award winning, over-the-top weekend market report for you on Sunday.

Tonight’s debate!

No one will win the election tonight but many will lose! Tonight is about whittling the numbers down! We have a message for all the candidates.

This debate is not about Donald Trump. It is about the best ideas for the country sold to the country by the best salesman and marketer of themselves. Just because you have good ideas, does not mean you come across as presidential.  When all is said and done, the ultimate winner will still have to face the socialist party.

Those who decide to be cute and use cliches’ are dead. The first person to say “trumped up” is dead. Those who cannot answer simple questions and have a lack of knowledge are dead. Those that talk like “the big valium” Fred Thompson are dead. I gave Fred Thompson that nickname because it seemed he didn’t want to be a part of the debates that he was in. Go youtube what I am talking about.

The candidate had better be passionate, had better back it up with facts, had better smile and be likeable and most importantly, had better look and act presidential or else.

In my business, it is quite often that you will see a stock go higher and higher despite pundits saying it is expensive, not a good company, due to fall. Currently, that is what we are seeing with Donald Trump. Pundits blast him on a daily basis. Not only do they put him down but they laugh at him and make fun of him. In spite of this, his numbers keep going up. These pundits are both from the left and the right. They refuse to see what is in front of them and that is someone who is touching a nerve. The last I looked, Trump did not create $1 of the $18 trillion of debt we have. Donald Trump had nothing to do with Isis growing to the size that it is. Donald Trump did not take us into the Iraq war. Donald Trump did not create the 2008 financial debacle. Donald Trump did not create a failing entitlement system. Donald Trump did none of this yet a man who just wants to help is made fun of. Quite interesting.

That all said, the man on top of the mountain has, by far, the most to lose tonight.

I will be live tweeting my sarcasm and wit during the debate. Join me with your questions and comments at my twitter feed @GaryKaltbaum.

 

Changes!

While major indices continue to disappoint on the upside and downside:

Cable companies are breaking down and breaking down badly. This also includes the many media companies that have already been in bear markets like CBS and VIAB.

Recession-resistant, defensive companies are now showing up all over our screens. Food, drugs, beverages, tobacco and household products are now setting up and breaking out all over the place. One could ask whether this is happening because of a slowing economy.  Keep in mind, there is very little sales and earnings growth in these areas…all mature companies.

Apple continues to be bearish but is waaaay oversold and due to bounce. Instead of support, the $120 level is now resistance. In order to show any strength, the stock would first need to get back above that level.

I will be live tweeting during the debates tonight. Join me at my twitter feed @GaryKaltbaum

Accentuating the positives!

Email from one of my 8 fans:

Gary, is there any way you can write a report accentuating the positives? After all, with all the supposed negatives, the major indices are hardly down from their highs.

Great point but we already do that. In spite of the many negatives, we are always listing the things that are working and the fact that major indices have not even gone into correction mode. Every one of our weekend reports contains those areas that we are bullish on. But in the spirit of cooperation, here ya go.

In spite of Greece, in spite of Puerto Rico, in spite of $18 trillion of debt, in spite of shoddy earnings and sales, in spite of the Semis getting smoked, in spite of the Transports lagging, in spite of a huge bear market in commodities, in spite of huge deficits, in spite of Apple breaking support levels, in spite of 60 percent of the market being bearish, in spite of the too strong dollar, in spite of the killing of the coal industry, in spite of global warming…I mean climate change, in spite of a huge number of new lows and hardly any new highs, in spite of everything negative anyone could think of, the only thing the major indices have done is remain range-bound. Range-bound is not a bad thing as long as the lower end of the range holds. The fact that the major indices refuse to break those levels is important.

This is potentially good news because if you want to take the positive side, we can go back to one of our important mantras. “If they can’t send em down under the worst of conditions and under the worst of news, it has a good chance of going higher.” It is also good news that even though the market leadership is very narrow, that leadership is strong. It is good news that there remains a slew of growth leadership. It is good news that in spite of Apple, the Nasdaq and NDX remain strong. It is good news that Financials continue to have decent relative strength. And of course, it is good news that the world is still printing trillions each year, has 0% rates everywhere and in fact, negative rates in many places. At this juncture, we will now be watching to see If major indices can break to the upside and out of this range…but for now, we remain range-bound.
So there! And the Mets are in first.

 

$70,000 minimum wage. Yeah…that’s the ticket!

I remember the day the news hit that a CEO of Seattle-based company, Gravity Payments, decided to pay everyone who worked for him at least $70,000/year. The thought process was that his people were not making enough money to make ends meet. A quick thought came to mind. It wasn’t a nice thought! It was : “how long until this man is out of business?” The thought process was simple.

Your people who were already making $70,000, who started at lower levels, worked their tails off and EARNED the higher pay would not be happy. New hires would make $70,ooo even though others making the same amount had been there for years. It didn’t matter how long you had been there, how hard you had worked, how many hours you had put in. Here’s $70,000.

Your people who did not have the skill set to earn the $70,000 would no longer have the incentive to learn or work to get that skill set. Those same people who otherwise would make $30,000 were now eating up $40,000 of capital that could have been used better elsewhere.

Your people who may have worked harder to make that $70,000 no longer had the incentive to work harder to make that $70,000.

So what happens?

He lost some of his best employees. He lost some of the customers of his best employees and has now fallen on hard times. It does not take a Sigmund Freud to figure out why. People love to aspire. People love to reach higher. People want to work harder…all in knowing their is something bigger out there for them. When they see that is no longer the case and you are no longer  looked at based on your greatness or lack of greatness and that your pay will be equal to someone that you deem not as qualified as you, you will react. That reaction is usually to move on.

$15 minimum wage anyone?

Case dismissed!

We gather this will not be leading the national news!

SOURCE: http://www.washingtontimes.com/news/2015/aug/3/obamacare-enrollees-less-satisfied-others-survey/

Why Apple is so important!

 

As we have written, Apple has continued to underperform and now, as we write this, has broken some very important technical levels. Just remember, when we use the words “technical levels,” we are talking price, not someone’s opinion. In case you did not know, it is price that counts most.

So…

It is not thrilling to lose arguably, the most important stock in the market.  It is that important because it is the most loved stock in history and the most overowned stock in history.

It is important because of its big weighting on many indices.

It is important because it is a megacap tech company. Megacap tech is what has been leading this market.

It is important because it is representative of growth, of beta and of leadership stocks.

It is important because it influences psychology.

Keep in mind, it typically takes a lot to crack such an important name.  But in real time, it is now happening. Not only has Apple moved below the all-important, longer-term 200 day moving average but it has breached it’s last important breakout to the upside at $120. The stock still has the rest of the week to reverse but so far, ain’t happening.

Please President Obama…more government! We need more government!

SOURCE: http://www.wsj.com/articles/states-should-shun-the-epas-new-power-mandate-1438550971

Don’t worry! There is no bubble! Chapter 327

SOURCE: http://www.bloomberg.com/news/articles/2015-07-30/wharton-grad-s-got-a-tiny-illegal-solution-to-bay-area-housing

You NYC libs voted for Deblasio. You get what you vote for!

SOURCE: http://www.dailymail.co.uk/news/article-3184172/We-repeat-fiasco-1970s-NYPD-Commissioner-Bill-Bratton-calls-crackdown-gun-violence-bloody-weekend-New-York-sees-22-shot-three-killed.html