THE REALIZATION PHASE
“THE REALIZATION PHASE”
By Gary Kaltbaum
garyk.com
@GaryKaltbaum
Fox News Business Contributor
The tops of bull markets leading into bear markets go through several phases. There is the initial topping out of the prior bull market phase. As we have told you many times, this can last a long while as sector after sector, stock by stock, top out. The last legs of the topping out process has the market leadership getting narrower and narrower until under the weight of all of the weakness, the indices finally break. This leads to the first leg of the bear market. During this leg, there is disbelief. Many are still calling it just a correction of the prior bull but little do they know, the market is on borrowed time. The first leg’s ugly action finally ends and a bear market rally begins. It is at this point the masses breathe a big sigh of relief. All is well. But something goes awry. Instead of the rally continuing, heavy sellers show up again. But this is still not enough for the masses to believe markets are in big trouble. After all, during bull markets, vicious corrections are normal before the bull market continues higher.
But then the popular indices melt down. On top of that, the strongest and the most popular names of the previous bull market give way. It is at this point that the masses have a holy #%@% moment. It is at this point, all the pundits and strategists that had been fighting the nascent bear…now start to really worry. They start to “realize” something is amiss. We believe we may be at or near that inflection point…the realization phase!
On January 20th, we thought we had seen the start of another bear market rally. Bear market rallies usually last 4-10 weeks. But this latest rally has been anemic at best and looks short-lived. While the Dow and S&P are still above the Jan 20th lows as money has flowed into some of the worst areas of the market, the Nasdaq, Ndx and the Russell are already breaking down out of bearish flag action. The big leaders of last year (FANG anyone) are now being torn apart.
To be brief, we believe that soon you will be hearing most start to admit what we have been telling you since the topping phase and that is that we were going into and are into a bear market of consequence. It just took the major averages and now the glamour types to get hit to move us into that phase…and if the Dow and S&P now join the Nasdaq, Ndx and the Russell, look out below. And frankly, we are already in a look out below moment!
Lastly, we continue to believe some time during this year, Yellen and friends will have to turn tail. We are not so sure market will care any more.
We are still in sync with 08 with regards to the S&P and NDX, but if NDX @ 4000 doesn’t hold this Feb/today we would be in a worse trend then 08.
Thanks Gary.
Ok, this is now out of sync with 08 and I am in the camp that this worse than 08 in terms of volatile fluctuations at least. I wonder what real elephants are lurking about? For me it’s not China, they are just a symptom, not the cause.
Gary
Thank You for the information. I always look forward to the 10:00 info. I had fb and sold it at 110.00$ and
I would like to get back in a little bit at a time. I’m thinking about 95.00$ or should
I wait for lower price? Thank You Gary. I appreciate your opinion.
Gary, I finally had a chance to meet you in Scottsdale this past fall along with Steve Zurich. I first started listening to you on KFNN Phoenix back in 2008, during the last bear market. Your insight back then helped me minimize the damage and to gain a clear understanding of what was going on at the time. I’ve been tuned in ever since. You’ve done an excellent job warning everyone of the recent market troubles, which has kept me out of trouble again. Thanks again for your insight and I find you to be one of the most truly knowledgeable and honest people in the business. Keep up the great work and thanks for sharing your insight!