In my last short missive, I told you the market could bounce off of vital long term support. Well, the market had another one day gap to the upside off that support which has looked to have already failed. Major indices are now on the cusp of breaking the long term support this morning as the market is gapping down again. If this support is taken out, my thoughts of a correction akin to last year will come to fruition as I believe sellers could show up as the big boys will recognize the market is not holding. Last year, major indices dropped between 14% and 20% depending on which index you look at. We are still in the end of quarter, window dressing season so hopefully, markets can hold in here for now. But I am thinking there is an eventuality to this.
My bigger problems remain the same. Many this morning are talking about Bernanke saying he had no clue why the economy has softened. I am seeing headlines titled “CLUELESS!” Sorry…this column has been telling you for years that Bernanke has been wrong 90% of the time, causes problems, creates bubbles and when in trouble, his only answer is more leverage and debt to cure a problem of too much leverage and debt. NOW…everyone is figuring this out. Of course, the other problem is the nonsensical economic policies of this administration in which I could write a novel about. Economic numbers remain putrid. I sniffed out a stalling economy about 3 months ago…and now markets are reacting.
I wish I had better news for you…but I deal in facts. The fact is the economy is turning down. The fact is the big money crowd is selling. The only issue now is how bad this could get. I do not rule out a bear market…the one everyone defines by a 20% drop in the major indices. But I don’t need to go there. Just knowing a downtrend is enough. Should be another thrilling day!
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.