MOVING TOWARDS RESISTANCE
I am just alerting you that markets are now rallying up into logical resistance areas. In my last couple of missives, I told you I thought we would see short term good news in the market as we had a follow through day and a good reaction to whatever Bernanke said. To my amazement, and maybe not, the move has covered lots of territory in a short period of time. But…please recall that I told you on two separate occasions that it would be normal to rally up into resistance as the markets were stretched away from their norm. Markets are now getting closer to their norm.
I am open for anything. As I have told you, with a Fed that is going to drop another trillion or two real soon…with a President who is going to propose another trillion or two of deficit spending, nothing is off the table. These unprecedented moves have a huge influence on markets. Of course, the ultimate outcome of massive debt will eventually be a huge negative, but in the near-term, anything can happen. Remember, the Fed knows they cannot influence the economy…but they have been able to influence markets…and will continue to try.
Again, this move up is normal. It is what happens into resistance that is going to matter most.
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.
A Future Consumption Tax to Fix Today’s Economy
The man who wrote this op-ed back in 09 was just nominated by President Obama to become the next chairman of the Council of Economic Advisers. I feel much better. Can’t they find anyone who has at least run a lemonade stand? Too many academicians setting policy. They just love your money!
A Future Consumption Tax to Fix Today’s Economy – NYTimes.com
CONTINUED NEAR-TERM GOOD NEWS
To continue with my thoughts on Friday:
For the near term:
It is good news that the NASDAQ showed great relative strength versus all the major indices. As I have told you for years, the NASDAQ is the risk index. It leads up and it leads down. Let’s just hope this continues.
Technically, I think a good low has been carved out…for now. This simply means the recent lows which were retested early last week are going to hold…for now. When I use the term “for now,” it means just that. I have been asked on numerous occasions over the weekend whether we have seen the low…and not a low. I don’t take anything off the table. After all, that was one ugly drop. The good news is that during the week, the market did experience a follow through day. This has occurred before every bull move in history. Unfortunately, not every one of these days led to a bull move. But for now, until big distribution shows up again, we adhere to it.
As far as this burgeoning rally off the recent lows, just remember what I told you. When markets get too extended to the downside, eventually, they will revert to the norm. So as an exercise:
The Dow closed at 11,284 with the declining 50 day at 11,950.
The S&P closed at 1177 with the declining 50 day at 1260.
The Nasdaq closed at 2480 with the declining 50 day at 2660.
The NDX closed at 2162 with the declining 50 day at 2270.
The Transports closed at 4460 with the declining 50 day at 5050.
This is in comparison to what I wrote on August 22. On that day, I told you that eventually price is going to meet the moving averages as markets revert to the norm. It is exactly what we are seeing. We will know a lot more as they start to get closer.
From August 22:
“The DOW is at 10,817 with the 50 day moving average at 12,000.
The S&P is at 1123 with the 50 day moving average at 1275.
The NASDAQ is at 2341 with the 50 day moving average at 2680.
The NDX is at 2038 with the 50 day moving average at 2275.
The TRANSPORTS are at 4221 with the 50 day moving average at 5100.”
Markets opening up strong today as all is now better.
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.
MY 2 CENTS ON BAC and the FED (About as much as the dividend of BAC and what a saver makes off the Fed)
I have read everyone’s opinion on the Bank of America fiasco. Many talked about what a good deal it was for Warren Buffett. No…it was a great deal for Buffett. Many talked about how BAC gave away the store. Many talked about their suspicions about the deal based on a meeting Buffett had with Obama. For me, none of that matters. There is only one thing that mattered to me. The CEO of BAC has now lost the trust of Wall Street. Within a week’s time, the CEO, Brian Moynahan, went from saying they did not need to raise capital to ooops, we are going to raise $5 billion. Yes…raise $5 billion at a 6% yield plus giving an option to buy a ton of stock at today’s prices for 10 years…but you didn’t need to raise capital. Desperation anyone?
For the past few months, I have been telling you that the financials were acting like it was 2007 all over again. They underperformed badly when markets went up and they led down when markets went down. In 2007-2008, the chieftains of most all of the big banks lost investor’s trust by their lies and obfuscations. I think Mr. Moynihan may have just lit that fuse again. Why would anyone believe a word he says going forward? Trust is the #1 intangible on Wall Street. Remember that!
I can be a little shorter on the Fed. Very simply…anyone who believes the Fed is not going to do something more drastic soon…well, I have a few acres of Everglades land for you. Remember what I have told you. Bernanke knows he cannot get the economy going so his only goal now is to get markets moving.
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.
