The Closing Look

Stock Market Commentary:

Stocks ended higher on Tuesday after the government said Q3 GDP rose by 2%, topping estimates for 1.9%. In other economic news, the National Association of Realtors said existing home sales plunged -10.5% in November to an annualized rate of 4.760 million. This greatly missed the Street’s estimate for 5.32 million. Elsewhere, energy and material stocks bounced sharply from deeply oversold levels. Overall, the action on Wall Street remains less than thrilling.

Gary’s Thoughts:  Quite surprising that in this mark-up season, the worst areas, the weakest areas led the day. Cannot take too much out of it as volume remains weaker than weak and still, no leadership whatsoever.

GARY’S 2015 YEAR-IN-REVIEW WEBCAST!

The webcast is available On-Demand!
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Gary will tell you everything you need to know about 2015 and what you need to know as we enter 2016!

  • All proceeds will be donated to the Boy’s And Girl’s Club Of Central Florida.
  • Market Overview: What happened in 2015
  • Leading Sectors- Find out what sectors and industry groups are leading now
  • Leading Stocks – Gary will show the strongest stocks that continue to lead at this point in time
  • Narrrow Leadership- Gary will go through the narrow areas of the market that are leading right now
  • Laggards- Gary will show you the many areas that are still not acting well
  • Key trends on Wall Street and how to find leading stocks
  • Where we go from here…

Sign Up Here

The Morning Look

Stock Market Overview:

As of this writing (7:45 am)U.S. stock futures are up nominally as investors await the final reading on Q3 GDP which is expected to increase by 1.9% (released at 8:30 am). Nike (NKE) will report earnings after the bell. Otherwise, the economic calendar remains relatively light during this shortened holiday week. In observance of the Christmas holiday, stocks in the U.S. will close at 1pm EST on Thursday (Christmas Eve) and all U.S. markets and banks will be closed on Friday.
Gary’s Thoughts: Going to get quieter and quieter but upward bias looks to be here for the holidays.

Economic Data:

  • GDP 8:30 AM ET
  • Corporate Profits 8:30 AM ET
  • Redbook 8:55 AM ET
  • FHFA House Price Index 9:00 AM ET
  • Existing Home Sales 10:00 AM ET
  • Richmond Fed Manufacturing Index 10:00 AM ET

 

Highlights Of The Day:

    • Oil halts decline after China said it intends to provide “flexible” monetary policy and “forceful” spending
      Gary’s Thoughts: Oil remains in bear…can bounce at any time.
    • ‘Ford Applies for Record Number of Patents as CEO Eyes Innovation
    •  Gary’s Thoughts: If you do not innovate, you fall behind.
    • SpaceX Falcon blasts off…and nails landing in first reusable rocket.
      Gary’s Thoughts: MSK…MSK…MSK!
    • The CDC Investigates new E. coli strain at Chipotle (CMG)
      Gary’s Thoughts: Poor Chipotle. Cannot catch a break. They really need to get their arms around this.

The Closing Look

Stock Market Commentary:

Stocks ended higher on Monday as oil prices fell. Stocks opened higher then briefly dipped into negative territory before a late day rally in the final hour helped the Dow Jones Industrial Average finish up 124 points. Overnight, China’s Central Bank announced new #EasyMoney measures to stimulate their slowing economy. The People’s Bank of China, is entertaining the notion of removing its benchmark deposit and lending rates. Instead, the Central Bank, will create an “interest-rate corridor” to guide borrowing costs after policymakers scrapped a deposit-rate ceiling in October. As you can see, it’s never a dull moment in Central Bank land.

Gary’s Thoughts: The more China and the rest keep easing, the more markets worry something is really wrong. If 0% rates forever, printing of trillions and negative rates haven’t done the trick…As far as today, what the heck was that in the final few minutes. Just the pressing of a button for a 100 point move before you can come back from the bathroom. Low volume bounce off of oversold conditions in a shortened holiday week. 

The Morning Look

Stock Market Overview:

U.S. stock futures are up triple digits before Monday’s open as the Christmas countdown continues. The economic calendar will be light during this shortened holiday week. The big data point will be the final reading of Q3 gross domestic product (GDP) (8:30 am  Tuesday). In observance of the Christmas holiday. Stocks in the U.S. will close at 1pm EST on Thursday (Chirstmas Eve) and all U.S. markets and banks will be closed on Friday.
Gary’s Thoughts: The holiday rally off of oversold conditions on cue.

Economic Data:

  • Chicago Fed National Activity Index 8:30  AM EST

Gary’s Thoughts: No biggie!

Highlights Of The Day:

    • Report Card: Clinton Still Leader of the Democratic Pack
      Gary’s Thoughts: Leader of none!
    • Trump Predicts U.S. Economic ‘Bubble’ could soon burst
      Gary’s Thoughts:Must be reading our reports!
    • ‘Star Wars’ Smashes Box Office Records
      Gary’s Thoughts:LOVED IT…LOVED IT…LOVED IT.
    • U.S. Gasoline falls below $2/gallon for the first time in 6 years
      Gary’s Thoughts: LOVE IT! But where is the spending from it.

JANET YELLEN IS WAY BEHIND THE CURVE

We have posted an end of year webcast. All proceeds will go to the Boys and Girls Clubs of Central Florida. To receive the link, sign up at garyk.com. The webcast describes and defines the year 2015 and goes through all the bearish action we are seeing while showing all the calls we made on all the bear market areas that showed up this year. Do not miss it.   

 

“JANET YELLEN IS WAY BEHIND THE CURVE”

December 20,2015
By Gary Kaltbaum
@GaryKaltbaum
garyk.com
Fox News Business Contributor
“The first thing that Americans should realize is that the Fed’s decision today reflects our confidence in the U.S. economy!”
We were amazed. We could not believe it.  After months and months of teasing, after months and months of going back and forth, after months and months of saying maybe, possibly, could be, Janet Yellen takes this time to announce that she is finally confident in the U.S. economy. Why amazed? It’s because while Ms Yellen has become her most bullish on the economy, markets are their most bearish on the economy. This simply reminds us of Mr. Bubble Bernanke and all his protestations in 07 that housing was fine, the economy was sound and subprime issues were contained.

Let us be clear on this: WE BELIEVE THE MARKET IS A LOT SMARTER THAN ALL OF US. THAT INCLUDES YOU, ME AND JANET YELLEN. Unfortunately, Ms. Yellen depends on her “data dependency” which simply means ” we really don’t know but when the numbers finally come in, we will let you know!” The problem with that is by the time the numbers come in, it is usually too late.

While Ms. Yellen is now an economic bull:

For 18 months, we have been telling you commodities of all stripes were in a bear market indicating a worldwide slowdown in demand. This is no longer a garden variety bear market. This is the definition of a deflationary bear market.

For the better part of a year, we have been telling you that the average stock had topped out, indicating a narrowing of the market.

For nine months, we have been telling you that the advance/decline figures in the market had topped out.

For six months, we have been telling you that retail was now in a bear market. For lack of a better word, retail stocks are crashing. Something is not right when so many retail names are down 30-50%!

For 10 months, we have been telling you that the Transports had topped out and are now in a bear market. They continue to melt down even though oil prices continue to melt down. Transports should be benefitting from lower oil prices.

For nine months, we have been telling you that the junk-bond market had topped out and have now entered a bear market indicating the bubble had popped. Easy credit conditions are now not so easy. We had been telling you for two years that the biggest central-bank distortion was in this area.

For seven months, we have told you that the China bubble had popped as the last move up was a classic climactic move. China continues to try and keep markets up by threatening, manipulating and actually arresting those who do not follow the script.

We can go on and on. The fact is the market is speaking loudly and clearly about the shape of things to come while NOW Janet gets bullish on the economy. There is just no way to spin what we are seeing in important areas like the Transports and Retail and square them with a strong economy. Over 70% of the market is already in a bear market. Bear market areas are commodities, air freight, rails, truckers, farm machinery, industrials, everything retail, construction, machinery, autos, hotels, housing, everything healthcare, metals, mining, steel, copper, aluminum, coal, manufacturing, fertilizers, finance, leisure products, restaurants, drug stores, gaming, electronics, investment banking, media, broadcasting, apparel, utilties, agriculture and many others. We did not even come close to mentioning all the bear market areas nor the bear market countries.

We do not pretend to be Milton Friedman but we are damn good at understanding what markets are telling us. We believe the markets are telling us the economy has topped. We believe the markets around the globe are saying the same thing. On top of that, we believe sales and earnings will continue to head south and be suspect. We believe valuations are too high. We believe aggressive accounting and too many buy backs have made things better than they really are. We believe deficits are out of hand. We believe government spending is a joke. We believe there are problems that are rotting underneath the surface but Janet is now bullish. With any and all due respect, we believe Ms. Yellen is totally behind the curve about what markets are saying. We do not think it mattered much, if at all,  that she raised rates but think it matters that markets are sniffing out that they do not have much of a clue and are now losing control of asset prices.

Our big worry has always been that these maniacs at the central banks are great at two things…creating bubbles…and creating meltdowns which are the outcome of bubbles. We are worried that each Fed bubble is bigger than the previous as they have to continue to cover their arses…and the pop of the bubble worse than the last. We are worried with so many areas deflating, it’s just a matter of time before the bubbled up asset prices do the same. What has been a somewhat stealthy bear market may be getting very close to making itself more apparent. All it would take now is for the major indices being held up to break down…and late last week, they started that process.

Watch these levels: S&P 1993, NASDAQ 4870, RUSSELL 1108…all last week’s lows. A break below leads to more ugly.
                                                        Market Internals
Small caps and to a lesser extent, mid caps continue to woefully underperform the large caps. This has been going on for a while.
The narrowness continues to remind us of the “nifty-fifty” 72-73 market and not unlike 1999 and 2007. Narrow markets are not bullish.
We have not had a decent bear market since 08. This is too long between bear markets telling you how much influence 0% rates and the printing of trillions has. The longevity of the bull has caused excessive froth and speculation, too many IPOs and secondaries, assinine mergers and of course, too much leverage and debt.
The Transports are actually at closing yearly lows.
There are hardly any sectors that remain in good shape. Recent strength has been in defensive areas like beverages, household products, water utilities and the like. These are the recession-resistant areas.  Excited?
New high/new low figures have been horrendous. When the NDX was in new highs recently, there were over 300 new lows. As we stated, we are not sure we have ever seen such a divergence.
Financials are starting to roll over badly. This is to be watched closely. If they go, market goes.
We are starting to see some toppy action in the narrow names that have led. If they go, market goes. We are talking the Amazon, Google, Netflix and all that stuff.
We are now heading square into the holiday with markets somewhat oversold after the past couple days nauseating drop. Bounces can happen at any time during this supposed seasonally strong period. But with so much damage being done, we expect any rally to be at best, a “C” rally! Our bigger interest lies with January.

Listen up! The market is speaking up!

Our award winning weekend report will be out on Monday but first:

70% of the market remains bearish.

Yellen said she is confident in the economy just as economies are rolling over.

Earnings growth blah. Sales growth down.

We are not kidding! Beware.

The Morning Look

Stock Market Overview:

U.S. stock futures are lower ahead of Friday’s open as oil prices continue to hit fresh multi-year lows. Today is known as quadruple witching day which means a series of options are expiring today. Typically, that leads to increased volume near the close. Today is also the last trading day of the week so it is important to see where stocks close today. So far, this has been another volatile week on Wall Street: stocks rallied Mon-Wednesday, then fell sharply on Thursday. The Fed raised rates by a quarter point on Wednesday but said future rate hikes will be “gradual” (which is there way of saying, the #EasyMoney is here to stay). Nothing much has changed, leadership remains very narrow and most of the market continues acting poorly.

Gary’s Thoughts: Narrow markets are bearish. Narrow markets are bearish. The Fed does not have control. The Fed does not have control.

Economic Data:

  • PMI Services Flash 9:45 AM ET
  • Atlanta Fed Business Inflation Expectations 10:00 AM ET
  • Kansas City Fed Manufacturing Index 11:00 AM ET
  • Jeffrey Lacker Speaks 12:30 PM ET
  • Baker-Hughes Rig Count 1:00 PM ET

Gary’s Thoughts: We expect economic numbers to head south just as Yellen says she is confident in the economy.

Highlights Of The Day:

    • The Bank Of Japan (BOJ) Extended Their QE Program (Print More Money) and Unveiled a $2.5 Billion ETF Buying Boost, but Markets Shrug.
      Gary’s Thoughts: Government run markets!
    • More bad news for Russia: Ukraine Defaults on $3 Billion Bond to Russia
      Gary’s Thoughts: Debt is a bad thing.
    • Qihoo to Be Taken Private for $9.3 Billion Including Debt
      Gary’s Thoughts: So why dont I own any?
    • China Beige Book Shows ‘Disturbing’ Economic Deterioration
      Gary’s Thoughts: As we have been saying…China is a lot less than meets the eyes.

The Closing Look

Stock Market Commentary:
Stocks fell on Thursday and gave back most of Wednesday’s gains as the U.S. dollar rallied and investors digested the first Fed hike since 2006. The weak action we are seeing on Wall Street highlights what we have been telling you all year: The market looks toppy up here as fewer and fewer stocks are acting well. 
 
Gary’s Thoughts: The force is not with the market. If Monday’s lows get taken out…call Hans Solo! Narrow markets are easier to sell off…and this is the definition of narrow.

The Morning Look

Stock Market Overview:

U.S. stock futures are up before Thursday’s open as investors digest the first Fed rate hike since June 2006. Stocks rallied nicely after the Fed meeting because even though the Fed raise rates by a quarter point they still maintain a very dovish (a.k.a #EasyMoney) stance.

Gary’s Thoughts:   Europe strong…Asia strong…we continue up on the open. Lots of resistance again but end of year action is here.

Economic Data:

  • Jobless Claims 8:30 AM ET
  • Philadelphia Fed Business Outlook Survey8:30 AM ET
  • Current Account 8:30 AM ET
  • Bloomberg Consumer Comfort Index 9:45 AM ET
  • Leading Indicators10:00 AM ET
  • EIA Natural Gas Report 10:30 AM ET
  • Fed Balance Sheet 4:30 PM ET
  • Money Supply 4:30 PM ET

Gary’s Thoughts: Not sure any of this trumps the big event from yeaterday but we will we watching for reactions.

Highlights Of The Day:

    • Here are a few stocks reporting earnings today: Accenture, General Mills, Rite Aid and Winnebago (before the bell) and Red Hat is among companies set to report after the bell.
      Gary’s Thoughts: Earnings season begins in a month. Nothing earth shaking here.
    • Shkreli, CEO Reviled for Drug Price Gouging, Arrested on Securities Fraud Charges 26 minutes ago Share on Facebook Share on Twitter
      Gary’s Thoughts: Very suspect dude!
    • AstraZeneca to Buy Acerta for $4 Billion, Adding Cancer Drug
      Gary’s Thoughts: You mean another buyout? Companies not growing so they grow buy purchasing or merging with others.