KALTBAUM ON THE MARKETS

 

 

Before I get into the technical condition of the market, I just wanted to repeat what I have been telling you…and that is worse is better. It is my continued contention that much of the rally we have been seeing for quite a while is on an injection of steroids…namely the massive printing of money which started here under the maniacal Ben Bernanke followed by Europe, Japan and other countries. That’s how you get markets continuing to rally while earnings and sales are going nowhere, unemployment figures stink and GDP figures is blah! So when 7.9% was announced…which by the way, would have been worse if not for another couple hundred thousand people supposedly leaving the workforce, the market still rallied. The market recognizes that Mr. Bubble will print and print and print as long as the unemployment rate is above 6.5%. Just to be fair, I do believe GDP will be better this quarter…yippeee! I will continue to keep my fingers crossed that the people who caused other bubbles that burst…are not in the midst of another one.

 

As far as the market, my only complaint is that everyone is now bullish. But sentiment is a secondary indicator. The primary indicators remain in very good shape.

 

For starters, all major indices remain above short and long term moving averages. The NDX and to a lesser extent, the NASDAQ, remain laggards as Apple continues to weigh them down. But the Russell and mid-cap indices are at all time highs with the Dow knocking on the door and the S&P closely behind.

 

On top of that, FINANCIALS continue to act very well. As I have told you for years, not much bad ever happens when financials are doing well. In fact, it was this report’s identifying the financials as lagging badly that led us out of the market in late 07.

 

New highs have expanded as many names have broken out of range. The same goes for many sectors. World markets continue to be strong. Places like Japan are crushing their currency on purpose…helping markets soar.

 

Shorter term, markets remain stretched, extended and overbought…but I could have said that the past couple of weeks. This condition can last a while as momentum builds. Just keep in mind, eventually markets will revert back to the norm and that is pulling into their rising moving averages. Until distribution rears its ugly head, it is very tough to go against what we are seeing.