I know. Today was the inauguration of Barack Obama, the 44th President of this great United States of America. It was also Martin Luther King’s birthday. I would love to celebrate also. Seriously…I would. But on this day, $3 billion of new debt was created. On this day, Ben Bernanke printed another $3 billion. On this day, my President promised more of the same…higher taxes, more government and what ever else goes along with it. It was just cloaked in words like “investments, together, collective!” I want to believe. I want to believe that when someone states he or she is determined to do something about $16 trillion, on the way to $22 trillion in debt, I want to believe. But all evidence in is just the opposite. So as I told you 4 years ago, expect more massive government intervention and much more higher taxes. You will be soon hearing the number 50…because that is where we are going in marginal rates…unfortunately. Don’t expect any help from the Republicons. I cannot use the words in this report when describing the leadership of the Grand Old Party.
Now…let’s talk Ben. So why is Ben happy? Because upon QE3, the markets were no longer responding. Markets were reeling as we moved into fall. But Ben got smart. Printing $40-something billion every month was not working. What to do? JUST DOUBLE IT! Ben is now printing $85 billion every month…and markets love it. And it is not just Ben any more. Europe, Japan, Switzerland and others have all gone to Bernanke University as all realize they cannot affect economies. They cannot fix the massive debt they created…SO JUST PRINT MONEY!THE MARKET continues in gear. The disconnect between the real economy,earnings and markets continues. The bond market bubble continues. The rigging of markets with the printing of money continues. But my job as technician is to not rationalize why…just what is. The last time I wrote you, I told you I expected higher prices into the New Year. Near term, markets are extended so a pullback can occur at any time. But as of now, I expect any pullbacks to be controlled and rotational as extended areas pull in while other areas start to lead. This is how a bullish market works. Just keep in mind that this is a value market, a cyclical market and not a growth market. Hopefully, growth shows up. Amazingly, areas that are leading are CHEMICALS,PLASTICS, WOOD, HOSPITALS, MEDICAL DEVICES, AIRLINES, TRUCKERS and HOUSING/HOUSING related areas. FINANCIALS are also in fine shape but some are now pulling back. It is also bullish that foreign markets continue to lead. Even Japan, which has lagged forever…decided to print money in order to crush their currency…leading to higher asset prices. Yes…that’s how it works right now.
Until serious distribution shows up and until major indices start breaking support/moving averages, it is silly to be bearish. Of course, this can occur at any time. But methinks too many are paying attention to the reasons why the market should not go up when they should be realizing the market is lifting on an unprecedented, over-the-top, sea of liquidity provided by numbskulls running central banks around the globe. I gather there will be a day where the markets start looking at the real world again…but as of yet…ain’t happening.
As always, if things change, I will report back to you. Markets do not go up in a straight line and without a doubt, the masses are finally becoming quite bullish.
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.
