Before comments on the market, a few notes:

Who are they trying to kid? GREECE will eventually default. Anything the rescuers are doing just puts off the inevitable. Forget opinion. Look at the numbers. As I have read and confirmed, at the end of 2010, the ECB’s equity capital was 10.8 billion Euros. Compare this number to the 48 billion euros in Greek debt on the ECB’s books. Need I say more. This does not include the trouble in other European countries.

Those that have been following me since TARP was announced know I cannot stand anything or anyone that are involved in the nonsense. I do not want to rehash all my complaints of Geithner, Paulson, Bush, Cox, Bernanke, Obama and the rest. I have only hoped things would change, the personalities would change and the strategies would change. Nothing doing. More debt to cure the problem of debt. More spending to cure the problem of too much spending and the same people that brought us to this position are still in power. So…when I heard Obama had announced another committee, I knew we would get the same old…same old. Well, you be the judge. The President announced the very important JOBS and COMPETITIVENESS COUNCIL.  He should have announced it on the Comedy Channel. Who is on the council? Jeffrey Immelt of GE whose stock has dropped over  60-70% over the last decade, not to mention the dumping of over 25,000 jobs over the past decade. Who is on the council? The head of Eastman Kodak. Oops! That stock is only down 90% in the past decade. Back in 2000, Kodak’s number of employees was over 75,000. Last I read, they are down to 18,000. Xerox…has dumped employees to the tune of 33% in the past decade. American Express has cut payrolls by 25%. This is a JOBS COUNCIL? Hahahahahahaha!

I caught a lot of grief several weeks back when I said APPLE stock may be putting in a big top. I am no longer catching grief. All I saw was a stock that was losing relative strength while the market was holding up near highs. Volume was heavy on the down days…light on the up days. This was one of the worries I had for the overall market as APPLE is most definitely an important cog in the wheel.

I am still seeing no positives. Despite stretched, extended and oversold conditions, the market just can’t bounce. I do not consider the past two days, a 100 point DOW gain a bounce as the more important index, the NASDAQ was down 15 points in that same time. It is never good when the DOW is leading and the NASDAQ is lagging as that is the big money selling risk and parking the money in megacap, highly liquid, low beta names. When a market is this oversold and can’t bounce, it is a clear negative and shows equities are still not being supported. Until I see other evidence, it is wise to kick back and not press the issue.

The NASDAQ has been sitting below the all-important, longer-term 200 day moving average. The same for the NDX. The best news is all other major indices are sitting above…but showing no life.

Leading growth names continue to be bludgeoned…a very bad sign. It’s is not just APPLE but names like BIDU,PRICELINE and many others have broken badly. When leading growth names break, get out the umbrella.

The proprietary,over-the-top, in-depth, Kaltbaum indicator says only 25-30% of stocks are now healthy…either still in uptrends or trading above the 50 day moving average. If this doesn’t improve, markets cannot improve.

FINANCIALS still acting like it is 07…lagging when market was going up…leading down when market has corrected. This is happening while Bernanke continues to give them a gift of zero interest rates while screwing the savers.

Market is now not only headed for end of month, but end of quarter window dressing. Typically, the boys do everything they can to keep markets moving up and forestalling downside. Of course, this act of window dressing is illegal so it doesn’t happen.

Wish I had better to tell you. I am just a big believer in using the evidence at hand. We have yet to see anything resembling accumulation in the market. And if the DOW continues to lead and the NASDAQ continues to lag, it will only be a matter of time before another leg down occurs and my thoughts on a move down like last year’s 12-20% drop would come to fruition. Of course, there is a better chance of a full-blown bear this time as the market was much more along in its bull phase before topping out.

Lastly, I am constantly asked, “what if the Fed does QE3? Won’t the market just go up again? I am not sure this time. Remember, bulls are bulls and bears are bears. In bull markets, all news is good, whether good or bad. In bear markets, all news is bad, whether bad or good. Just looking for any light!


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.