KALTBAUM ON NASDAQ/NDX- READ THIS!

From our September 8th report:

“Leave no doubt, the over-owned, over-loved and over-leveraged “TECH” areas are now under serious pressure. As we have been reporting for weeks, the chasm between “TECH” and the rest of the market was the widest we had seen since 1999. We will now see that chasm narrow. To what extent? We shall just let more cards come out of the deck. We do want to make note that a ton of “TECH” have already broke below the important 50 day average while the NASDAQ/NDX have not. This is because none of the big names have been taken out. Leave no doubt, it would not be good news if those biggies follow suit and get taken out. They have a gargantuan influence not only on the indices but on the many names that make up “TECH!”

For quite the while, we were calling for a TECH melt-up of unknown price and time. But on September 4th, we thought everything had changed. Before that day, the NASDAQ 100 was a whopping 1,450 points above the 50 day moving average. (It’s norm!) If that wasn’t a record, it was close. Before that day, the NASDAQ 100 was a whopping 900 points above the stronger 21 day moving average. Again, we stated that the chasm between NASDAQ-types and the rest of the market was the widest we had seen since 1999. We had been telling you how a few gigantic names were doing the lion share of the gains.The outcome is always for this chasm to eventually narrow. One just does not know when. We just thought the narrowing had started. We now think the chasm narrowing is going to gain teeth.

Over the past few days, they finally started coming after the Amazon, Google, Microsoft, Netflix and many others. All have broke near-term support. Other names like Apple, Facebook and other important names are close. Over the past few days, we have seen nothing more than “mystery” gaps to the upside in the Nasdaq, only to reverse to the downside. This is the definition of distribution by the big institutions. This morning, the NASDAQ/NDX, instead of gapping up…will be gapping down. We have no idea how today finishes but the NASDAQ/NDX will open up BELOW support. If it sticks, big institutions will recognize that an important area of support is giving up. This will lead to more selling in these areas of TECH/SOFTWARE/INTERNET and the like.

Just remember, this was and is way overdue. Corrections do happen. They are supposed to be a normal course of business in the market. But the constant interference from central banks have stopped that normal ebb and flow, thus the moves becoming more outlandish without corrections. This also means the moves to the downside are much worse because of how one-sided the trade had become.Today, without a doubt, will need a goal line stand.

Lastly…Jay Powell actually said these words yesterday: “I would say it was notable for the lack of the emergence of some sort of a financial bubble, the popping of which could threaten the expansion. That didn’t happen.”
Really Jay. On a day where an IPO called Snowflake opens up with a $90 billion market cap with only $400 million of revenues and get this…on that $400 million of revenues, lost $300 million. At the highs of the day, it was only trading at a measly 225x sales. It still closed at 175x sales. On that same day, Powell says there are no financial bubbles? And you want to know why we worry so much about long term. This is just one example of the nonsense that has been going on. In case you didn’t know, one of the hottest areas of the market are blind pools. Yes…entities with nothing in them with a promise to merge with a company down the road are sizzling. Yes…no bubbles. The most powerful man on earth that can create trillions of dollars out of thin air says there are no bubbles as the bubbles stare him in the face.