This past weekend, I received no less than a couple of dozen emails asking me just about the same question. Should I sell everything in case no deal gets done? Frankly, I don’t blame them for asking. After watching the mainstream media trying to scare the crap out of everyone over the weekend with Armageddon talk, one would have thought the DOW would open down 1000 points.

To be clear, I am not saying the market is not about to top out and head lower. For all I know, the DOW finishes down 300 today. What I am saying is that coming into today, the market has ignored the dire warnings. In fact coming into today, the Nasdaq 100 was in new high ground with many other indices close behind. So before you start to go out and sell everything, why don’t you take a good look at the market first? Do not let others sway you. There is a simple procedure I follow. Watch the 50 day moving average. The market cannot go down if major averages are above it. As of this second, they are all above. If markets break below, then I will look to take action. Currently, the 50 day is about 2-3% below these levels.

Of note:

The market has been improving as of late. Even the worst areas, financials and semiconductors have come off their lows, thought they remain relatively weak.

A few bellwether growth names have actually moved out to new highs. I always like seeing that.

Again, all major averages remain above the 50 day. A break back below the 50 day will be a negative.

On the negative side, there should be no doubt that the internals of the market today are much worse than the last time major averages were at these levels…which eventually will come back to haunt things.

As far as the noise out of Washington, I expect a deal to get done. Why? The last I looked the next election is around the corner. Unless they all want to be looking for jobs come next November, something will get done. But I must say, a deal to raise the debt ceiling without cuts will ultimately have repercussions. Those that follow me know I live by a certain motto when it comes to these charlatans in Washington. It is simple logic. “If they don’t stop, eventually, markets will stop them!” Remember Lehman, Bear,Countrywide, Wachovia and Merrill? They did not go out of business. Markets put them out of business. Why? Too much leverage and debt. Where is the most leverage and debt right now? I will have more on this nonsense in the coming days.


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.