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THE UGLY CLOSE

ByGary Kaltbaum

Before today:

It was a 60-40 market with 60% of the market in good shape while 40% (retail, energy,autos…) was in bad shape. This is a piss poor number for indices that keep going higher but indices have been acting well nevertheless.

In the past 3 weeks, we have seen a ton of earnings blow-ups. In fact, it got us to say recently that these type and number of blow-ups usually happen in bear markets, not bull markets.

Complacency has been off the charts with some measurements at 30 year highs. Everyone on their comfy couch passively investing thinking bearish markets never happen.

New highs vs new lows have been pitiful with indices working so well.

Small caps continue to under-perform large caps.

Transports acting like the Mets…just holding on to the long term 200 day average.

Growth has been working well. Notwithstanding the recent gaps to the dowsnide in AMZN, GOOGL, PCLN and a few others, growth has been working.

Real good action in a bunch of DOW names led by the moonshot in BA.

Semiconductors had a monstrous run but lately trading in a wide and loose range…which is not a bad thing unless….

Strong emerging markets.

Strong action in China. Weak action in Germany but world markets remaining if darn good shape.

But the past couple days and particularly today:

Junk bonds cracking badly. (We have been yelling the biggest bubble is here! Tesla able to do a junk bond at 5.25%!)

BIOTECH tops.

SEMIS break the 50 day.

INDUSTRIALS break the 50 day.

The TRANSPORTS finish below the long term 200 day.

HEALTHCARE breaks the 50 day.

REGIONAL BANKS roll over and break the 200 day.

The S&P, NASDAQ, NDX finish below the 50 day.

EMERGING MARKETS look like they are topping.

RUSSELL 2000 all the way down to the 200 day.

A bunch more blow-ups.

Growth/beta was smoked today. For the most part, it was acting just fine.

The VIX skyrocketed. Of course it did.

Just a smidge off of highs, new highs in the market…70…new lows…273. That rates a big wow.

Oh…and GOLD popped up a bit.

We are just reporting the news. What was a leaky market that had termites even though major indices were at highs, weakened a lot today. Many saying this is all because of North Korea. We think the termites were already eating away. North Korea was just the catalyst. Stay tuned.