Heckuva end of quarter!

       “HECKUVA END OF QUARTER ACTION!”

By Gary Kaltbaum-July 5,2016

After two days of absolute nausea, we wrote to you Monday night that we thought a rally was about to start. The thought was simple. We were entering the end of quarter window dressing. We were entering the pre-holiday trading. Bearishness picked up to levels we have not seen in quite a while and to top things off, major indices were about as stretched to the downside as we have seen.

But holy crap! We do not like giving targets but we would have told you that the rally would probably be in the neighborhood of half the drop. That number was covered in less than two days. The rest of the week was a clear absence of sellers, a clear plethora of short covering and of course, a good dose of buying.

Now that the markets got back just about everything the scare tactics of the Brexit took away:

Major indices are now near-term overbought as they have now entered massive resistance but that’s less important than what’s working as sector by sector, there are bull and bear by side.

Gold and silver are en fuego with the stocks remaining stronger than the metals. All extended and all needing pullbacks but leave no doubt…bullish!

Yields continue to crash around the globe. The manipulation, the rigging and the outright buying of bond markets by central banks has done the trick but beware. We have no clue why anyone would lend someone money for no yield for a long period of time, and the insanity of negative yields. Don’t get us started.

Financials continue to lag badly.  Very badly.

The most interest rate sensitive areas continue with the bid, namely utilities and real estate.

The most defensive of issues remain with the bid and the proposal for Hershey did not hurt. Food,drugs,beverage,alcohol,tobacco,household products.

Transports continue to underperform badly.

While the UK market acts better, many other world markets continue to act poorly.

Retail, while the bleeding has stopped, continues to act terrible.

How the hell did the Warriors get Durant?

How the hell do the Knicks keep picking up past/ injured superstars and go no place fast?

Ok…went off script.

Lastly, a potential positive is that mutual fund cash is at a very big number of 11 percent indicating if markets do break out, that cash is going to come off the sidelines.