Kerplunk Goes the Market!

Kerplunk:

The object: try not to lose your marbles. A long-time favorite, Ker-Plunk takes a steady hand, as you skillfully remove the sticks from the marble-filled tube. A clear plastic tube is filled with marbles, which are supported by crisscrossing sticks inserted through the tube. Each player takes a turn removing a stick from the tube, trying to dislodge as few marbles as possible. As the game progresses and fewer sticks remain, it gets harder to keep the marbles from going ker-plunk! Play continues until all the marbles have fallen. The player with the fewest marbles in his compartment wins! For two to four players.

Kerplunk, the stock market…it’s all the same. Well, almost. Kerplunk is a game, The stock market is about your hard earned dollars.

In the stock market, think of the marbles as the major indices. Think of the sticks as all the sectors and all the stocks that make up the market. As more and more sticks are pulled, the less marbles (leadership) are left until it all (the indices) come down.

This is the exact process we have been telling you about for weeks and months. To be blunt, more sticks are being pulled and more marbles are falling. Just in the past week or so, the market has lost the almighty Apple, lost Disney (both stocks in the Dow), lost the whole media complex on the Disney cable news and now we are starting to lose the biotechs and the glamour leadership that has held up so well. All that is left is the financials and they are close.

It is also instructive that money has been flowing into the recession-resistant, defensive areas like food, drugs, beverage, tobacco and household products. WHEN THE MARKET GETS DEFENSIVE, IT GOES DEFENSIVE.

We have outlined vital and important support levels for the major indices. We are getting to the point where you had better be watching closely as the topping part of the process is getting late in the game. After the topping comes the downtrend.

Keep in mind, if markets cave, there will be no chance of a “ceremonial” rate hike by the maniacs at the fed and if things get real icky, expect some noise out of one or two fedheads about QE4. Not kidding! That may or may not help things.

We will have our usual award winning, over-the-top weekend market report for you on Sunday.