3 weeks ago, about 80% of stocks trading above their 10 week/50 day moving average. The guess now is about 55% and that may be generous. This means more and more stocks are not working. This means the market is getting heavier up here…and with multiple distribution days, the market may be ready for some corrective work…unlike we have seen since December 20.
On the negative front:
Foreign markets are already under pressure. The all important German Dax has broke below the 50 day along with France and Britain. Emerging markets are breaking. Etfs like FXI and EWZ are in trouble. We mention this because these areas often lead the U.S.
As we have stated, commodities remain horrible…as they have been breaking down for a while. This includes oil,steel,coal,copper,aluminum, gold, silver, metals, mining, and mining construction. This is surprising as commodities usually go along for the ride on the upside…not this time!
Semiconductors are now trading on the iffy side as many have looked to have topped near term. Readers of this report know how much importance we attach to this group.
Speaking of importance, we are closely monitoring the financials. So far, it’s just a pullback.
A bunch of housing names have now broke the 50 day. This group has been leading.
Because of all this, we have turned to the worrisome side for the first time in a while. The market has become narrower and narrower. When this occurs, it is getting close to correction time. The good news is that the narrowing leadership has led to growth stocks leading the way. As growth stock people, this makes us happy…but knowing that if the correction gets some legs, growth will come in also.
In case you didn’t see, the fake job’s number was blah! As we have stated, add back all the supposed people that have left the labor force…and the unemployment number would still be above 10%. If the job market was really getting better, more people would be entering the labor focre…not the other way around.
Gary Kaltbaum owns Kaltbaum Capital Management, LLC (“KCM”), an investment adviser registered with the U.S. Securities and Exchange Commission. The opinions expressed herein are those of Mr. Kaltbaum and may not reflect those of KCM. The information offered in this publication is general information that does not take into account the individual circumstances, financial situation or individual needs of an investor. The information herein has been obtained from sources believed to be reliable, but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results.