DETERIORATION, INTERVENTION AND DETERIORATION

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Market remains in corrective mode. Last week’s report was titled “DETERIORATION!” Until the Fed intervened, the market was getting in more trouble. How did they intervene? They sent three fedheads out to tell everyone that more QE is on the table, leading to Thursday’s sharp move. But that didn’t last long. You see, the fed now thinks they can move markets just by yapping. Maybe in the short run…not so sure after that.

The deterioration simply means the tailwinds are gone…and headwinds have appeared. It means it gets tougher to make money on the long side. It means there are fewer set-ups on the long side. It means you continue to keep a list of those stocks that refuse to buckle while the market corrects. Those that hold up or even go higher…are your strength…but I warn…in corrections, you never know what will be hit. Even the almighty Apple was sold off this week.

As far as corrections go…I HAVE NO IDEA HOW LONG ONE WILL LAST OR HOW FAR IT GOES. They can last days, weeks or months. It is in the actual action where we figure that out.

Picking it apart, we are now seeing just about every major index rally up into the 10 week/50 day moving average and selling off. This is not good news. As of this second, we are seeing it in the dow, russell,small cap 600, nyse, midcap 400, the sox, industrials, materials and others. It is never good when things trade below this all-important area.

On top of this, Europe continues to act horrid as Germany, France and the U.K. break below support.

The better areas are no great shakes as the S&P is now wedging at the 50 day with the nasdaq and ndx still above…but I warn you, a lot of the nasdaq has been the aapl…

So…I would continue to be cautious here. There is no reason to play just for the sake of playing. Fewer and fewer things are working. We need to let this run its course. If I had to guess, I highly doubt we get a bear as the election year will take precedent as the corrupt politicians will continue to spend and print money in order to prop things up. I do believe we can go lower and will be watching this past week’s lows. A break below will take you down to the next level of support which is a good few percent lower. If the financialsf break down out of the bad patterns they are in, it would be a lock.

Now…that all said…a couple thousand reports come out in the next 3 weeks so a lot of playing fields will change. Stay tuned.

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.