12/14/2012: GARY ON NATIONALLY SYNDICATED INVESTORS EDGE RADIO BROADCAST

https://archives.warpradio.com/btr/InvestorsEdge/121418.mp3

JUST LETTING YOU KNOW

Friday December 14, 2012

Friday December 14, 2012 is a date we are going to remember for a very long time. I’m sure you have heard the devastating news of a school in Connecticut where an act occurred that can only be described as unimaginable.

In case you don’t know, at Sandy Hook Elementary School, in Newton Connecticut, 20 children are among 28 people that have died. A gunman made the decision to kill his mother and then go to the school and shoot up his mother’s class, as well as teachers and the principal.

I don’t even know where to go with this.

Many years ago, the Columbine incident occurred and that day on show, toward the end, I buckled and I said, “Just go home and hug your children.”

It just came out. And I kept saying it for a couple weeks. And I continued to get more emails on that than anything else. So I never stopped saying, “When you get home, don’t forget to hug your children.”

This is one of those times.

Unfortunately, it takes tragedies like this…unimaginable acts of evil like this to put things in perspective a lot better than they were before. We are already hearing stories of bravery. Lives being saved because of courageous acts of others. We are already seeing what I consider to be clowns trying to take advantage of a tragedy.

The Market

We’ve got a little pull back going on here. Next week is pre-Christmas week. Last year, that week went up 4.1%. We’re getting to end of the month, end of the quarter, and of the year…and the holiday season. Just keep that in mind.

I don’t recall markets getting trashed during that time. I only recall markets, for the most part, being bid to a certain extent.

Is the market in a technical position to have a good week or two?

Yes. Rallied into resistance.  Normal pullback. Holding moving averages…except the Nasdaq and Nasdaq-100, and there’s a reason.

Apple

Apple today was down another 20. I just want to be repetitive. As you know, I read an email to you from somebody accusing me of trying to talk down Apple. I got news for you. Apple is most widely held tradable stock out there. Nothing I say or do can move that stock in any way shape or form. What I have told you on Apple is that we don’t know where it’s going. But what we do know as of now is that every characteristic of every stock that has topped after gargantuan runs that show up in that stock, has so far shown up in Apple.

Big, great stocks top in two ways.

1. A major league climax run OR
2. A major big, gigantic wide and loose top type action.

I believe Apple’s doing the latter right now. So let’s go over it again. All of this is written up in How to Make Money in Stocks by William O’Neal.

1. Every great stock throughout history has finally topped out because of any number of reasons such as competition, obsolescence, stupid moves, death, margin squeeze, cultures changes, etc.
2. Great stocks also top out because of the law of large numbers. This means that the company has gotten so big that the growth must slow just because. And if big stocks work just because of the fact they have accelerating growth and all of the sudden, that growth is decelerating – the market will usually react to that.
3. These great stocks become over-loved, over-owned…almost omnipotent to the people on Wall Street. As I mentioned to you the other day, there were a couple guys on television that could not fathom anything could possibly go wrong with Apple. But it can. I have news of all of you: They make a phone. And they make a tablet. And something you can you listen to music with. Nokia did also. As did Motorola and Research in Motion. Apple kicked their rear ends. Who’s say somebody doesn’t come around and kick Apple’s rear end. We’ll we’re getting some of that. I was at the Who concert and I’m using my new iPhone video and it was terrible. Another person had an Android and the video was perfect. I’m already wanting to get an Android. When it’s over-loved and over-owned, it means that everybody that wanted to buy has already bought. And when things turn South, there’s only one thing left to do and that’s to sell.
4. One the way down, nobody believes it. Analysts defend it to the death. They rationalize. They rationalized with Intel, Dell, Citigroup, BankAmerica, Merrill Lynch, Worldcom, Lucent, Nokia, Countryside Financial, Baidu (recently), Netflix (recently), Green Mountain Coffee (recently), and Monster Beverage (recently). But Apple is the mother of all of them. Well it broke the 50-day and couldn’t get back above it. Broke the 200-day, rallied into it and failed miserably and continues, by definition, to show big volume selling by the big money crowd which is typically in-the-know. It was down 20 today on another big increase in volume. That is not Aunt Mary and Uncle Bob selling. It’s the Big Boys and let me tell you – they probably know something. We already know that earnings and revenues have decelerated. We already know that competition has really picked up. We already know that Steve Jobs, unfortunately passed away. The stock broke below the 520 level pretty easily.

So we’re not telling you want to do. But we’ve been tell you since 650, when it broke the 50-day, that maybe something’s up. As of this second, it’s under major league gargantuan distribution. 

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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.