How about that Europe!

We will have a regular weekly market report, a report taking issue with the many articles on the Fed and the impending raising of rates, Mark Cuban’s thoughts on a bubble and probably throw in one of our “just wondering” reports on the weekend. You can tell football season is over.

Have you seen the Dax? Have you seen the CAC? Have you seen the FTSE? Have you seen the Euro. The Euro crashes and those markets skyrocket.  All of this because of the decision by the ECB to print a trillion or two. It remains amazing that the decision of one man can manipulate their stock markets up and their currencies down. We would have thought that there would be a point where markets ignore moves by people who caused the problems in the first place…but as of now…nothing doing. So the equity bubble continues.

To be brief…mostly a sitting week with a pullback off of Monday’s highs. With the sitting, there was fireworks in the land of biotech as PCYC gets bought and in sympathy, others get juiced. Besides that, a lot of sitting.

Keep in mind, nothing has changed with what is not working. We have successfully alerted you to stay away from a myriad of areas that remain bearish including energy,oil &gas, gaming and others. If anything changes, we will let you know.

 

 

 

The market continues to pull in…but as of this second…no biggie.

We have simple tactics right now as the market works off the recent up move. We keep a list of the strongest names that are pulling into support/moving averages for primary or secondary buy points. When we see a slew of them start to move off these levels, we look to attack. Of course, there are some names that refuse to pull back and just sit tight. These will tend to be the strongest of the strong.

If the pullback turns into something worse, initial support levels for the strongest names will just be taken out. We then look for the next level…usually around the 10 week/50 day moving average. Keep in mind, it takes more than 2 days for this to play out.

Strength remains in many biotechs, semiconductors, medical and other tech-type names. Lastly, pay attention to names that recently gapped up on volume because of earnings. Some of the symbols to pay attention to are ROST,MNST,VRX and HAR. None are buyable here but the strength of the gaps put them into play if they set up again. Strength begets strength most often in the markets.

 

Pullbacks preferable!

In order for markets to continue higher, pullbacks are preferable. They work off overbought conditions. They wipe the smiles off bulls faces. They build better bases. Looks like we may be getting one here. Anything is possible but we expect any pullback to be controlled and rotational at this juncture. The one area that pulled in most was the SEMIS as the group was juiced on a big buyout. The groups still looks fine.

For a change, really didn’t see any changes that stuck out today so nothing to report.  With the fake employment number coming up Friday, we do expect some jello moving on the plate.

NASDAQ 5000-YIPPEE!

                                              NASDAQ 5000-YIPPEE!
By Gary Kaltbaum
March 2,2015
Ahhh…the last time the NASDAQ hit 5,000. We remember it like it was yesterday. After all, it is not often where stocks break out of bases and go up 5-fold in 3-4 months. After all, it is not often a major index goes climactic with many stocks doubling in days. Thus a few thoughts on the similarities and the differences between today and 99-00. Ok…we are hard pressed to find any similarities but we sure can find differences…some good and one not so good.
On the good side, valuations are not even close. This is good news but keep in mind, it took 15 years to get here. It took many names without earnings to go to zero. It took many big caps like the Microsofts and Intels to go from 100x earnings down to single digits. For sure, there are still plenty of names with obscene valuations but they are fewer and far between. The one area that is out there is BIOTECH. Many names have no sales but still have market caps of $250 million up to $5 billion. That is a disaster waiting to happen.
The NASDAQ is only 4% from its recent breakout. Back then, the NASDAQ broke out on October 29,1999 at 2924 and made an almost straight shot until the top on March 10, 2000. In other words, the market had a huge move into 5000 back then.
Where’s the insane reactions? Those that remember know how noisy and crazy it was back in 99. We remember people coming into our office telling us if we can’t guarantee 30%/year, they would not hire us. We remember being fired by a lady whose money we doubled in 6 months. We remember one elderly doctor F-bomb us because we sold his Oracle after we made him 4-fold on his money.
We are not seeing any outrageous predictions! Back then, books were being written about Dow 36,000. How about the Dow 100,000? Ain’t happening yet. In fact, we continue to mostly hear about the end of the world talk.
We are not full of ourselves yet. Back then, we thought we were geniuses. We still remember many in our industry saying Warren Buffett sucks and he was not being flexible enough with his investing. Of course, our favorite Warren Buffett line is ” Only when the tide goes out do you discover who is swimming naked!” There were quite a few naked swimmers come 2000-2003.
On the not so good side…and it is a biggie! Everything you are seeing in the market and in the economy is off of $14 trillion of printed money, 0% interest rates, and in some cases negative rates…and the promise to continue this barrage of unprecedented easy money that has caused every bubble throughout history which has led to every crash throughout history. There is very little doubt in our minds that at the end of this road lies the same. But this time, these ex-tenured professors that have their fingers on the buttons that conjure  up trillions of dollars out of thin air…have taken easy money to lengths no one could fathom in the past…thus potentially elongating market moves. Until markets decide against these moves, it is tough to fight it.
Our tactics are simple. Try to play whatever is in front of us as much as it is worth. We do not predict…we interpret but it is in our file manager for the potential and hope for some sort of climactic action.(Lots of cake to make!) We highly doubt we will ever see again what occurred back in 99-00 but with $14 trillion sloshing around and 0% rates around the globe, one never knows. Keep in mind, regardless of the indices, this remains a 60-40 market where 40% of the market just ain’t happening.

60-40 Market feeling a little tired!

 

After a darn good move, this 60-40 market is now feeling a little tired. A 60-40 market simply means about 6 out of 10 stocks remain in shape while 4 out of 10 just ain’t happening. Looking farther out, these numbers do not thrill but as long as the major indices stay above their respective 50 day average and as long as the 60% keeps working, no sweat.

So to be repetitive, we remain bearish on a long list of areas…some we have been bearish for quite a long time:

ENERGY/OIL & GAS…except for REFINERS.

STEEL, COPPER, ALUMINUM, COAL and all that stuff.

GAMING

METALS/MINING

UTILITIES, REITS as BONDS have topped. Near term , bonds may have put in a low.

RAILS

MACHINERY

We are also starting to see tops in AIRLINES which with the RAILS have held back the TRANSPORTS recently.

Our favorites:

Remains a long list of MEDICAL,MEDICAL PRODUCTS, BIOTECH, MANAGED CARE and GENERICS.

RETAIL-(DISCOUNT,HOME IMPROVEMENT, DEPARTMENT STORES, DRUG STORES, SUPERMARKETS , APPAREL)

SEMICONDUCTORS

RESTAURANTS

A few other notes:

FINANCIALS are mostly mixed. Not much there.

GOLD had been emerging but is now still in pullback mode.

HOUSING is the latest group that has emerged on the upside. This group had been dormant for a while.

What not to be in!

As usual, we will have a comprehensive market report over the weekend…but…with the market hanging tight, lots of stuff working underneath but the areas we have pointed out to you to avoid have not really changed. Here are a few.

We would continue to avoid anything energy (except for refiners). We believe the recent rally/bounce is just that. The same goes for natural gas which seems to be breaking down here.

On top of that, most all commodity areas seem to have also hit the wall after bouncing in their downtrend. Again, no leadership here.

Recently, we told you on Feb 6 that we thought the bond market and many interest rate sensitive areas had topped for now. That stance has not changed as reits and utilities coninue to act poorly here.

We would not continue to avoid most gaming…especially the ones with exposure to Macau.

We will have a few other areas over the weekend as it is easier to isolate weakness when the market is strong.

 

Stunning statistics!

We are optimists here. Ok…optimists on us…but not on the miscreants in DC. But we do worry as the fed makes the rich richer and leave the middle class dead by their maniacal 0% policy. But the real worry is in some of the statistics that have recently come out…and they are stunning! These numbers must get better!

#1 According to a survey that was just released, 24 percent of all Americans have more credit card debt than emergency savings.

#2 That same survey discovered that an additional 13 percent of all Americans do not have any credit card debt, but they do not have a single penny of emergency savings either.

#3 At this point, approximately 62 percent of all Americans are living paycheck to paycheck.

#4 Adults under the age of 35 in the United States currently have a savings rate of negative 2 percent.

#5 More than half of all students in U.S. public schools come from families that are poor enough to qualify for school lunch subsidies.

#6 A study that was conducted last year found that more than one out of every three adults in the United States has an unpaid debt that is “in collections“.

#7 One survey discovered that 52 percent of all Americans really cannot even financially afford the homes that they are living in right now.

#8 According to research conducted by Atif Mian of Princeton University and Amir Sufi of the University of Chicago Booth School of Business, 40 percent of Americans could not come up with $2000 right now without borrowing it.

#9 That same study found that 60 percent of Americans could not say yes to the following question…

“Do you have 3 months emergency funds to cover expenses in case of sickness, job loss, economic downturn?”

#10 A different study discovered that less than one out of every four Americans has enough money stored away to cover six months of expenses.

#11 Today, the average American household is carrying a grand total of 203,163 dollars of debt.

#12 It is estimated that less than 10 percent of the entire U.S. population owns any gold or silver for investment purposes.

#13 48 percent of all Americans do not have any emergency supplies in their homes whatsoever.

#14 53 percent of all Americans do not even have a minimum three day supply of nonperishable food and water in their homes.

Not much to add!

There are times where there is just not much to add. This is one of those times. Markets continue to inch higher with decent action underneath. We love quieter markets but this one is a little overdue for a little shake. Doesn’t mean it has to happen but paying attention.

Less is more today. We are sure we will see something emerging or submerging soon but not today.

The Knicks are 10-45….that’s 10-45. Next up, our frustrating Mets…though we really like their pitching staff this year.

 

Major indices continue to break out!

First off, the NASDAQ,NDX and the mid-caps have cleanly broke above range. With Friday’s late move, the S&P and DOW have edged above range and even the small caps have edged above. The only major index to stay in range is the TRANSPORTS as higher oil has impacted a few names. These moves simply bring a good amount of names either breaking out or setting up to break out.We suspect a pullback could happen at any time but the improvement we are seeing should contain any downside.

For us, the most important part of the equation is the great action in growthland as many names have come to the fore in sectors like RETAIL, RESTAURANTS, TECH, MEDICAL and BIOTECH. We absolutely love markets when growth is leading.

Unless recent breakouts fail, we have very little to complain about.

But  to cover the negative side:

Our thoughts on the interest-rate sensitive areas of the markets has not changed as we believe a decent top was put in place on Friday the 6th in bonds, utilities and reits.

We suspected there was a further move to the upside in the commodity complex…namely the down and out energy. This continued throughout the week but now it gets a little trickier as the moves start to get more random…and remains longer term bearish.

But clearly there has been improvement with the only thought here is maybe markets are due for some pulling in. A pullback here would be normal and just fine. And lastly, as we thought, Greece would get an extension of the extension as Europe cannot afford the massive writedowns and capital raise that would occur if Greece went bye bye. Longer term, the massive debt that is building across the globe will eventually come home to roost. It always does. But the massive printing of money and extensions just put off the inevitable.

No complaints!

No complaints just yet. Market is due for a little stall or pullback but no biggie as of yet. In fact, we love quieter markets after a move up and that is exactly what we are getting so far.

Our only other words are STAY WARM! We will have big market report over the weekend.