ICE MEET THINNER

By Gary Kaltbaum- August 28, 2017i

——We have taken pains to report to you in recent weeks how the internals of the market were heading south and needed to be watched. After all, we haven’t even seen a 5 percenter since before the election. We were and are simply way overdue. Nothing we have seen changes our stance that the market’s leadership has been getting more narrow with fewer and fewer areas and stocks working while more and more areas and stocks are turning down. This is how markets top.  Markets top when slowly but surely, the underneath-the-surface weakens. Finally, under all the weight of that weakness, the major indices cave in. So far:—-

—–In the past several weeks, we have gone from a 70-30 market to a 40-60 market even though major indices are just off their highs. ——

—–More new lows than more new highs  almost on a daily basis even though major indices are just off their highs. —–

—-Small caps woefully under-performing…trading below longer term averages.—–

—–Transports acting like the Knicks and Mets put together…trading below longer term averages.—–

—-More and more blow-ups on a daily basis.  As we have told you, we don’t think we have ever seen so many blow-ups without being or going into a bearish phase.—-

—-Leading Chinese ADRs topped.—-

—–Too much bullishness as we have seen froth, speculation and a downright thought process that markets will never go down. The one-sided passive investing trade is gargantuan.—–

—–Bitcoin! Really? That’s not a gigantic bubble?—–

—-GOLD and GOLD STOCKS now breaking out.—-

—–Lastly, something not necessarily about the market but maybe about sentiment.  Janet Yellen had the grapefruits to come out and say last week that the financial system was in great shape and much better than what it was before the 08 debacle. What world is this woman living in? Tens of trillions of debt around the globe including $20 trillion here. That’s a financial system in shape? I hate to see what a bad financial system is. On top of that, the printing of tens of trillions just to keep economies having a pulse…0% rates around the globe and in many cases, maniacal negative rates…the screwing of savers…bond yields that have nothing to do with reality…leverage in asset prices at their highest ever…derivatives (you remember that word) at their highest ever…subprime lending making a huge comeback. All of this because of the assinine largesse of central banks. But don’t worry. Janet says the system is just fine.—–

—-So while the internals head south, it is imperative to keep support levels for the major indices. We say this because when internals are weak, it is easier to take markets down. There is a darn good chance we are now getting close. It would not take much to tip things over.—-

S&P – shorter-term 2417 and more important 2405.

DOW – shorter-term 21,600 and more important 21,200.

NASDAQ – shorter-term 6,177 and more important 6,080.

NDX – shorter-term 5,750

XLF – $24.48