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VIDEOIf Politicians Don't Stop Deficit Spending, the Markets Will Stop Them
By
Gary Kaltbaum
Aug 04, 2011 11:50 am
Politicians around the globe kept taunting the markets with their out-of-control spending; we may now be seeing the outcome.
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The markets put them out of business.
As far as the markets, I have been saying for months that there was a good chance we were in a big topping process. But nothing bad happens until the 50-day gets taken out. It was taken out. I then said that if the 200-day gets taken out, it would invite heavy selling, indicating the market was giving up. It was taken out, and as you can see, it invited heavy selling -- with hardly any let-up. I have also said that I expected a 15-20% drop from the highs akin to what happened last year, but would re-evaluate if we get there. We are getting there. I must now say that due to the market having a bull phase of over two years, that just may be it for the cycle and a "Wall Street" bear market will occur. For me, a bear market starts when indices break the 200-day. Most of Wall Street use the 20% threshold. No thanks.
The tape is a mess. Except for gold, everything has turned down -- and turned down badly. Again, at any moment's notice, the market will experience violent bounces, some last hours, some lasting days. We saw one yesterday. Be very wary of those calling the bottom on every up day. They did it in the last bear, and they will do the same again. The market will decide when it wants to turn back up -- not someone's opinion.
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No positions in stocks mentioned.
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