Investor's Edge with Gary Kaltbaum - Trouble Ahead?

Episode Date: September 5, 2023

garyK.com or https://garykaltbaum.com/Considered one of the finest radio shows on the markets, the business world and everything that affects them, Investor’s Edge with Gary Kaltbaum, a Fox News Channel Business Contributor, brings his in-depth take every day. If you want fluff, this is not the place. Gary is a hard hitting and pull-no-punches host especially when it comes to people in power affecting you and your money. His daily in-depth analysis on the markets is second to none.

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Terms apply. Lounge access is subject to change. See Capital One.com for detail. Investor's Edge with Gary Coltbaum. Straight talk about you and your money. Now from the BizTalk Studios, here is Gary Cultbaum. And welcome once again to Investors Edge. In case you're just joining us, I'm Adam Sarhan, in for Gary Kaye, who's out today.

Today is Tuesday, September 5th, 2023, and we've got a great show for you tonight. We want to thank you very much for being here. Hope you enjoyed your weekend, the long weekend, that is, and are you ready to come back and have another great week going forward. Before we dive into the show, we've got a lot to discuss. But as you know, this is a show about you and your money and all the fun points in between. Just as a quick reminder, if you don't get this show in your city, you can go to garyk.com. You can listen live or archive.

If I go fast, I have a tendency to speak fast. A lot that I want to get out in time is very short. So you can go to garykat.com, pause, rewind, fast forward, take notes, you know, do whatever you want to listen to the show as much as you want. all for free on garyk.com you can also email gary ask about his money management services you can follow gary on twitter by just pressing the button or i guess on x now since it's called x it's no longer on twitter and uh you can also subscribe and get gary's morning notes sent directly to your inbox for free each and every day i let's see what else did i want to say if you want his premium service you can go to convictionleaders dot com that's convictionleaders dot com and take a free trial it's 30 days

for free for a month and get Gary's thoughts on the market several times a day. You get basically daily webcasts in depth so you can see what Gary is seeing and a whole lot more. It's really, really a fantastic service. All at convictionleaders.com. So let's do a few things. Let's talk about the market. Let's step back here and just put things in perspective and say, okay, what happened? Where are we? What do we want to pay attention to going forward? You know, What's important? Well, let's talk about right here, right now. Market ended down today. So interestingly, the weakness was primarily in the small cap stocks. You had the Russell 2000 was down about 2%. Now, it closed down about 37 points to 1883. That's the Russell 2000. The NASDAQ was down a fraction of 1.08% so it was down 10 points on the day at 14,020.

and you got the S&P 500 down about 19 points at 4496, and the Dow was down about 195 points or half of 1% at 34-642. Now, if you look under the surface, the action in the major indices so far is not ideal. Now, you had a strong rally. You know, I like looking at the forest, not just the trees. When you step back and look at the big forest, the big picture, the market's up and up nicely this year.

Well, all right, then what? You had a digestion in July into early August. And when you zoom out, look at a monthly chart, you can see a big and bullish cup and handle pattern forming in the S&P 500, forming in the NASDAQ, the NASDAQ composite. You know, it tends to be a bullish pattern. Now, just because it's there doesn't mean it has to confirm and go topside, like Gary likes to say. What it means is, real simply, is that the foundation, is there for the market to break out and go up. Now, that being said, if it breaks down and goes down, then all bullish bets are off the table. So there's a few things that we want to focus on. The first is the 50-day moving average. All things being equal, the market's above the 50. That's a bullish sign. If it's below it, it's not a bullish sign.

And if it's, you know, where the stock is or the market is with respect to the 50, and also the slope of the moving average, if it's a bullish sign, if it's a bullish sign, you know, where the stock is, sloping up, it's bullish. If it's sloping down, it's not bullish. It's typically bearish. And if it's going sideways, it's just a little choppy. So right now, the 50-day moving average is leveled out for the major indices, meaning it's going sideways. The last 50 days, it's been above it and below it, but really now you're just getting a leveling out phase where it's going sideways. And that's going to create some chop. Stepping back on a monthly chart, you have a big handle formally, which is just a digestion.

You know, you had a huge rally from after COVID from 2020, all the way to end of 2021. The market basically doubled. That's extremely strong, borderline on precedent to see the market double in 18 months. I mean, it's happened before borderline unprecedented, but it's not normal to see the market double in 18 months. But that's what happens when you have the Fed throw the kitchen sink and fire its bazookas and other central banks as well after the COVID mess.

Okay. Then you got inflation. Then the Fed had the raise rates to fight inflation. 2022 rolls around. You get a big bear market, especially in growth land and in tech stocks. All right. Then in 2020, you bought them in October of 2022, and then most of this year in 23, you're rallying. I think you've had two down months this year, more or less, in the NASDAQ 100. All right. And then July rolls around the end of July into early August, you start getting a correction or a digestion, a pullback, just to move sideways.

And that's the cup. The cup is that big rally up is a prior up trend. And then that move down in 2022 was the left side of the cup. and then the move up in 2023 is the right side of the cup. Now we're forming a handle. For those of you that aren't familiar with that jargon, all it means is it's going to digest. It's going to go sideways, consolidate. The market had a big run this year. It's earned the right to pause and digest.

Now, if we break out and go up in the major indices in the NASDAQ 100, we break out at 388. Think of that as a round number. That's a July high. That's going to pave the way for us to go back and retest the highs from the end of 2021. which are near 408, 409, somewhere in that area. If we take that out, we're into new all-time high territory.

That's the bullish scenario. If we roll over and go down, and we take out the 50-day moving average, which if you look at the QQ, the NASDAQ-N, is right near 371. And then below that, look at August's low of 354. That's going to be bearish. We break below August low. That's when it's going to get really worrisome, because the next level of support would be the 200-day moving average at 320.

And we close today at 378. So keep that in mind. The 50-day moving average in the NASDAQ 100 is 371. So we're still above the 50 in the NASDAQ. But as I'm going to show you for most of the show, we're going to dive pretty deep into the market here. Look at some sectors. Look at some stocks. Look, you know, peel back the hood, so to speak, or peel back the onion and look under the hood.

You've got some mixed currents. It's not just because you have that bullish couple handle on a monthly basis doesn't mean it's just, hey, we're, you know, smooth. sailing and the animal spirits are out there and the bulls are ripping and and you know things are going bonkers to the upside that's not the case not by a mile right I think Goldman Sachs published a study a few weeks ago or just recently where they looked at the market they looked at all the returns and you take out the seven or the ten biggest stocks by market cap you're left with the big nothing burger and no that's not their term or her technical term but you've got

I think pretty much flat yet for the market, for the S&P. So the vast majority of the gains this year have come from a very small group of Big Cap specifically or mainly tech stocks and that's why the NASDAQ 100s outperformed. But the vast majority of the market hasn't participated. And that's a tale of two tapes. You know, it's like a play on the tail of two cities. In the old days, these have a ticker tapes. Whenever they say the tape is this, the tape is that, they mean the market. The tape is bullish, a tape is bearish. A tail of two tapes is just, it's a bifurcated market, another fancy word, which means that it's a split environment, a split tape.

Some areas are working, and some aren't. And some areas are rolling over. And as the areas that aren't working are rolling, or, you know, they haven't been working. Some of them are coming back to life, like energy stocks. And then the ones that had been working are starting to roll over a little bit, like some of the housing or construction areas. So, I'm going to put all that together for you, but I did want to step back and just say, hey, listen, It's not all just, oh, the market's up today or the market's down today. Under the surface, there's a lot more damage going on,

specifically in the small caps and the mid-cap stocks. So if you look at the IWM, for those of you that follow at home, it's the Russell 2000. That was down 2% today. And not only was it down 2% today, it broke and closed below the 50-day moving average and below its 21-day moving average. No, bueno, like they say.

That's not a good sign. You rallied from really on light volume off the 200 day right into the 50. You got above it for one day and then bam, you close below it and at the lows of the day today for the rustle. That's not a good sign. The midcaps, MDY, rallied off the 200 day, similar situation. A little better volume. But right into the 50, you were up above the 50 for maybe a day, two, maybe three days. And then bam, today you close below it on heavy volume.

Today was definitely a distribution day for the MDY. Not a good sign. And you close below the 50 and you close below the 21 day. And the Russell has 2,000 stocks in it. The mid-cap 400, the MDY, has 400 stocks in it. The leading index is the NASDAQ-100, the QQQ, and that is 100 stocks in it. And that folks is what I mean. Very, very narrow leadership.

Pretty much all year. You've had tech stocks, big-cap tech stocks working. You've got AI work. I had AI working, semiconductors, housing. and maybe one or two other areas, and that's it. The rest of the market was really dormant. But now we're starting to see things rotate a little bit. Gary's done a great job of showing you what's working.

Energy's come back to life. Some news today, I'll go through the news as well. You had China come out with some economic news that was weaker than expected. You had Euro PMI's or some economic data from Europe came out weaker than expected. And the dollar rallied. And then the yield on the 10-year, Watch that one too. That rallied. So up next, I'll help you put all this together.

I've got a lot more to talk about. And we'll talk about some sectors, some stocks, some macro stuff, and a whole lot more. I'm Adam Sarhan, and this is the one and only Investor's Edge. Hi, I'm Gary Kalbaum, hosted a nationally syndicated radio show Investors Edge. We're not just handsome radio people. We manage investors' money for a living, specializing in fee-based discretionary money management. No big commissions, just a fee on the assets that's managed. We also provide a full range of personalized services, including retirement planning, fixed income, and educational needs,

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Terms apply, lounge access is subject to change. See Capital One.com for details. This episode is brought to you by Spreker. The platform responsible for a rapidly spreading condition known as podcast brain. Symptoms include buying microphones you don't need, explaining RSS feeds to confused relatives, and saying things like, sorry, I can't talk right now, I'm editing audio. If this sounds familiar, you're probably already a podcaster. The good news is Spreaker makes the whole process simple.

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Hey, this promises to be fun. Investors Edge. The last bastion of quality programming. With Gary Coltbaum. It doesn't get better than this. And welcome everybody. to Investors Edge. In case you're just joining us or missed any part of the show,

I'm Adam Sarhan filling in for Gary Kay, who's out today. Today's Tuesday, September 5th. Hope you had a great weekend. And more importantly, looking forward to a great week going forward. So we're breaking down the market action for you. Again, if you missed any part of the show, you can go to GaryK.com, rewind, fast forward, pause at your convenience and listen 24-7, all for free.

So we spoke about the dollar. Dollar's been up, I think, seven weeks in a row now. And it gapped up today. again why because you've got this notion that the Fed is going to continue to raise rates because inflation remains stubbornly high and if you look at what the Fed just told us Powell Jackson Hole end of August he said inflation's too high I'm going to be raising rates well the market's responding dollars up and up pretty strong but the markets are forward-looking mechanism we knew that dollars up seven this is the eighth week in a row now the market

just open so it's only the first day of the week. We'll see where we close this week. I wouldn't be surprised to see the dollar fall a little bit. But it's on track to be up. I mean, it was up seven weeks in a row. This is the eighth week now, right? Last year during 2022, the dollar was up really big. And the stock market was down really big.

The other big macro force that was impacting markets for most of 2022 were yields on the 10 year. We're up and up a lot. And then what? stocks were down. Well, right now, after a big rally, the yield in the 10-year has gone sideways since October of last year. It's 11 months. Well, what's happening? You're now retesting those highs. After a big 11-month base, you know, most of this year, since October of last year, really, all the way up until May of this year, the yield was going down and stocks were going up. Stocks kept on going up until July of this year. But since May,

the yield's been going up. All right. If it takes out the high from back last October, that's going to potentially put downward pressure on the stock market, especially if the dollar

continues to rally. Because those were the two big primary factors or the macro forces that impacted stocks last year. Now, it's one thing for the economy to handle or absorb

interest rates going from zero to five and a half percent, which is what the Fed did over the last year and change or two years now. It's a whole other story. And by the way, and not have a recession when interest rates are at three, four, five percent.

It's a whole other story if the Fed is forced to keep raising rates and for the starting point to be five and a half percent where interest rates are now and for them to go up and for the economy to continue to navigate that gracefully. And keep that in mind as you move forward as an investor because those forces impact the stock market. But for now, what I focus on is the price action. You know, we really want to see what the market is doing. Because when you pay attention to what the market actually does and you filter out the noise,

then all of a sudden you're able to really make better decisions because there's a lot of noise out there. And we know it just turn on the news and 24-7, right? It never stops. So what actually matters? That's what we focus on and it's price. Because the price absorbs all the news. And really, the price is what shows up in your statement. Earnings don't show up in your statement. Volume doesn't show up in your statement.

The one thing that shows up in your statement, that's why for me it's primary is price. Everything else is secondary. So a few notes from Gary. The 10-year yield is back to 4.26%. Earlier today, as he wrote this. Let's see here. And they're coming after economically sensitive areas of the market, housing, transportation, stocks. airlines, retail, restaurants, financials, and oil prices were higher today.

And same with yields. Russia, I believe in Saudi Arabia, said they're going to cut production. Oil prices took off. And oil prices have been rattling for weeks now. It's not something new. What does higher energies? Prices mean. Inflation goes up or down.

Up. What does the Fed have to do? Raise rates again. So put all of those pieces together, right? That's important. Again, we spoke about the Russell and the midcaps breaking down below their 50-day moving averages. The internals of the market were not good. The up-down, you look at the stocks that were up versus the stocks that were down.

You had 1,200 stocks up on the NASDAQ and 2,600 down. On the New York, you had 930 that were up, 2,800 that were down. With those kinds of numbers, if they continue, that spells trouble. Those are the notes that I want to be very clear to get across conveyed from Gary to me to you. So that way we've conveyed those, I can go back and give you some more, you know, put some more pieces together for you. Those economically sensitive areas of the market. Well Adam, you know, let's talk about consumer staples.

XLP, breaking down to levels not seen since March. And if it takes out, it close at 71, 53, the XLP, it's an ETF that tracks consumer staples. If it takes out 70, which was a low for March, the next level would be 66, which was the October low. There is a possibility, folks. Now, it's a low probability, but it's a possibility nonetheless that the rally we saw over the last 11 months on Wall Street turns into a big, bare market rally, and it ultimately fails. and we have another leg down. I don't think that's going to happen where we are right now. In fact, I think this is going to create a handle for a few months

and then we break out and go up. But I'm open to anything. There are areas of the market that are rolling over. Interest rate sense of the areas of the market, like the utility stocks, XLU rolling over, taking out a new low for the year. And it closed that 61. the low in October was 60-35.

That's not that far away. Micro-cap stocks, you can look at IWC. I don't trade these, but I look at them. The low in October of last year was 100. It undercut that low in May, went down as low as 98, rallied right into the 200-day moving average just on Friday, and failed. This is below the 50, below the 21-day, and below the 200-day moving average. It closed at 106.

The low from October of last year was 100. The low of this year was 98. If it takes that out, it's probably going to go lower, right? The Russell 2000 didn't really have a big advance off of that October low. And there's 2,000 stocks there. And that, to me, matters a lot more than just 100 stocks in the NASDAQ, 130 stocks in the Dow. And I'm not saying the Dow and the NASDAQ don't matter. In fact, they do matter a lot.

But to me, if I've got 2,000 stocks, participants, and sorry, 2,000 stocks not participating in the rally. And I've got 50 or 100 stocks or even 500 stocks that are. All right. That tells me a lot, right? So the October low in the Russell 2000 and the IWM was 162.50. We right now, we're at 186. That's about 14, 15% somewhere in that range.

We broke below the 50 day moving average today. If we take out August lows, which is 1.8%. right on 181. Yeah, right, 1801, 61. Probably going to head lower. So just be careful out there. That's the big message. Pick your spots and respect risk.

The risk management is so, so important. No. There's our time. Up next, we've got a lot more to discuss. I'm Adam Sarhan, and this is the one and only Investor's Edge. This message is brought to you by the Capital One Venture X card.

Venture X offers the premium benefits you expect, like a $300 annual Capital One travel credit for less than you expect. Elevate your earn with unlimited double miles on every purchase, bringing you one step closer to your next dream destination. Plus, enjoy access to over 1,000 airport lounges worldwide. The Capital One Venture X card. What's in your wallet? Terms apply. Lounge access is subject to change. See Capital One.com for details.

This episode is brought to you by Spreaker. The platform responsible for a rapidly spreading condition known as podcast brain. Symptoms include buying microphones you don't need, explaining RSS feeds to confused relatives, and saying things like, sorry, I can't talk right now, I'm editing audio. If this sounds familiar, you're probably already a podcaster. The good news is Sprinker makes the whole process simple. You record your show, upload it once, and Sprinker distributes it everywhere people listen. Apple Podcasts, Spotify, and about a dozen apps your cousin swears are the next big

thing. Even better, Spreaker helps you monetize your show with ads, meaning your podcast might someday pay for, well, more microphones. Start your show today at spreeker.com. Spreaker, because if you're going to talk to yourself for an hour, you might as well publish it. This message is brought to you by the Capital One Venture X card. Venture X offers the premium benefits you expect, like a $300 annual Capital One travel credit for less than you expect. Elevate your earn with unlimited double miles on every purchase, bringing you one step closer to your next dream destination. Plus, enjoy access to over 1,000 airport lounges worldwide. The Capital One Venture X card. What's in your wallet?

Terms apply, lounge access is subject to change. See Capital One.com for details. You're listening to. America is talking. Investors Edge. He's got to be pleased with that. The crowd is just on his feet here. He's a Cinderella boy. With Gary Coltbaum. highly recommended. You're going to feel better if you talk to. And welcome everyone to Investors Edge. I'm Adam Sarhan in for Gary Kay today.

Today's the 5th of September. In case you're just joining us or missed any part of the show, please go to GaryK.com. You can listen live or archive and rewind. Fast forward. Do anything you want to do on GaryKK.com with the shows. It's really good to pause, rewind it, take notes, and go back. Sometimes I relisten to things that Gary mentions several times because why not? It doesn't cost anything and it's available on any device and it's important to dive in deep. I mean, it's one thing. It's just from a retention standpoint, right?

So we spoke about there's some trouble ahead. You know, that's the big message here that I want to convey. It's actually the title for today's show is trouble ahead. Okay, if things are great, that's one thing. But when things get choppy, which is the environment we're in now and the market pulling back, building that big handle, it's really important. It behooves all of us to dive in and roll up our sleeves, so to speak, and do that work because it's really easy to tune out or zone out or just look away and get involved in some other shiny object. But the pullbacks,

most pullbacks end, and then they're followed by the uptrend resuming. It's just the way the market works. I don't make the rules. But if you look at it. throughout history, it's normal and healthy to see the markets pull back several times to the 50-day moving average over the course of a year. And even undercut it for a little bit, and then take off and hit new highs by the end of the year. And that's why I'm saying even now, with this chopping environment we're seeing where the small caps really aren't participating, the IWM, the mid-caps aren't really participating. They are, for some extent, but not participating in a broad sense. They're lagging. The Dow is sitting right on its 50-day moving average and closes a hair below it.

The 50-day moving average was 347-53 and you close it 340705. The S&P 500 closed just above its 50, and that's the leading area. And the QQQ, the NADD-100, closed above its 50-day moving average today. Let me give you some numbers here. Yeah. So just again, putting things in perspective. When you have to rustle down 2% today and close below the 50, that tells you a lot. The midcaps, same thing, closes below the 50 and down today tells you a lot. So because if the generals, the leaders, roll over, what's going to happen to the market? Good night, Irene, right? You have a possibility for a big crack and a big leg down.

So we spoke about some areas of the market. We spoke about the utility stocks or breaking down to new lows for the year. we spoke about the staples that are important to watch. A few other areas I want to share with you. The transportation stocks, IYT, they look bad. Really simple. They look bad. They rallied up until July, topped out, broke the 50,

day moving average in the middle of August, lived below the 50 since then, never got back above the 50. In fact, it rallied into the 50 at the end of August, hit a wall and then rolled over today and did on some pretty heavy volume. That's the IYT. If it takes out August low,

it's about a point away from here, close at 244.96, the low was 243, 69. You're in for a test to the 200D moving average, which is down to 233. Those are the transportation stocks. Why does that matter? Because if the economy's slowing down, guess what's going to happen to earnings?

Are they going to go up or down? You got it. They're going to go down, all things being equal. We saw, we already, we're seeing in real time, China's economy slowing down, Europe's economy slowing down, and the Fed still raising rates. And we're seeing inflation go up because energy prices are going up. So be very, very careful putting all these pieces together. Because if the market cracks wide open here, it's important for us to, you know, you see something, say something like this TSA says at the airports, right? All right, we see something. We're saying something.

Because in real time, we're saying it. Not after, it's easy to be Monday morning quarterback. Could it would have should. Oh, yeah, 2008. It was so clear. Bub, blah, blah, blah. Yeah, okay, where were you in 2008 saying it? I know where I was.

I know where Gary was. Saying, get out of the way. It's here now. Same thing. Okay, we're seeing, not get out of the way, go to cash, and that's not what we're saying here. No, we're saying there's some areas that are working, and we want to be in those areas,

big cap tech, some semiconductor stocks, so on and so forth. But there's many other areas that are not working. These transportation stocks look like they're rolling over. The financial stocks, you can look at the XLF broke below its 50-day moving average today. XLF is an ETF that tracks the basket of big-cap financials. All right, not the end of the world, it's still forming a handle, somewhat of a couple handle kind of pattern here. If it takes out 3357, the XLF, that's not going to be a good sign.

The KRE, which is the small-cap and regional banks, rallied into its 50, trying to get above it, hit a wall, and then rolled over today. And it's still been below its 200-day moving average since March. All year it has not participated. It's just been lagging really, really badly. All right.

By the way, that's why the Russell and the midcaps are down so much because a lot of these areas, the financials, these transports, that's where they tend to be smaller cap stocks, like the KRE stocks, the regional banks. They're not big-cap stocks. I mean, they're regional banks, right? So other areas I want to show you that are important. The XLB, which are material stocks, they broke below their 50-day moving average today and did it on some pretty heavy volume.

Well, heavier volume in the prior session, so it's a distribution day. Not a good sign. Still in the middle of a range. If it breaks below 80, that's going to be bearish. But not good to see it below the 50 and kind of roll over here. Right? Just be careful. And again, I'm pointing out areas that are not acting well.

Why? Because the areas that are acting well, sure, semiconductors, they're acting well. Look at the SMH. That's great. Easy to see that. No problem. But when you're in the areas that are not acting well and you're not paying attention to it because the market's pulling back because you're busy or kids start at school or enter any

other reason you want, that's where the trouble comes. So if you can mitigate the risk, keep those losses really small, You're way ahead of the game, right? So again, semiconductors are acting well, the KQQ, the NASDAQ100 is acting well. You've got the home builders, XHB, walloped today. And you've got a flurry of distribution days, which are just heavy volume cell days in the last several weeks show up. Could be a big top forming in these housing stocks. Finally, these mortgages are getting to the point where it's too cost prohibitive.

I was with friends over the weekend. We went to the beach, hung out, had a great time. It's a family. three young kids, 11, 7, and 5, guy wants to buy a house. He sold his house after COVID, made a bunch of money, and now he's been renting since. He wants to buy a house, but the mortgage rates are too high.

So he's waiting, and I'm sure he's not the only one. Housing stocks coming down today, XHB. All right? Remember the yield on the 10-year, watch that because it determines the mortgages, the rates on the mortgages, and watch the dollar. Other things that I want to share with you, The consumer discretionary stocks, X-L-Y, sitting right in the 50. All right in the middle of a big base between 177 and 160.

The brakes below 160, that's not good. Breaks above 177, that'll be bullish. But it's right in the middle of that big trading range. Steel stocks are acting fine for now. They're above the 50, but watch them because they're in the lower half of this sideways base over the last several months between 71 and 64. They close at 67 today and change. If it breaks below 64, that's not going to be bullish.

going to be bullish. The S&P, we mentioned that, it's above the 50. Transportation stocks. Be real careful there, folks. If it breaks down below the low from just a few weeks ago, below 243, it can crack wide open here and go down to the 200 day near 233, and you close a 245-ish with the IYT. Oil stocks had a big run recently. Gary's been all over for you. OIH, the XOP, all acting fine. The XOP closed lower today. but again, oil stocks are acting fine fine there as well. Then you've got other areas that are important to watch, right? Look at the rest of the world.

Germany, EWG. That broke, it's not only broke it's 50, but it broke its 200-day moving average. It's got a big base here for the last several months. It's about the break support near 27-23. And if it takes out that low of 27-23, you're probably going to go much lower. It's below its 200-day moving average. that's not a good sign that's the EWG

look at the industrial sector XLI that broke down below its 50 day moving average and it did on heavier volume than the day before not the end of the world folks but I'm just showing you that's one by one there's areas here the big banks in Europe

EUFN sitting on its 200 day and about the breakdown there just be real careful and pick your spots. Be real careful. Pick your spots. Spock of, well, all right, there's a time. Up next, we have a lot more to discuss. I'm Adam Sarhan. This is the one and only investor's edge.

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I'm Adam Sarhan, in for Gary Kay, who's out today. In case you're just joining you. I missed any part of the show. and big picture here is that there's a changing of the guard. You know, trouble may be lying ahead. A lot of areas under the market under the surface are kind of rolling over here. And the major indices could be holding the market up for a little bit, but be careful. Mind your stops, respect risk, and pay real close attention to if you need to play defense and when you want to play defense because there's a time to play offense and the time to play defense.

If it was only offense all the time, then everybody, and everybody get rich and own a few islands in the Caribbean. That's how it would work. Great. That's fantasy land. If that's a case, then why even work, right? There's a lot more to it. So, spoke about the areas, gave you a lot of the areas. Let's keep going through a few sectors here and then we can kind of, we'll have to wrap up. The retail stocks, XRT, broke the 50-day moving average in August, rallied right into them on light volume, into the 50, and then gap down today and closed below the 200-day moving average on heavy volume. Not a good sign. These are retail stocks, folks, XRT. The metals and mining, XME, could be forming a bullish cup and handle here. A breakout above 54 would be bullish,

and right now we're at 525050. Gold broke its 50-day moving average day, ticker symbol GLD, big ETF there, but it's been going sideways since May. 191 would be resistance and then support it be 175-ish or 174 and change. It closed at 178. If it breaks down below 174, that's going to be bearish. If it breaks out above, maybe even 184, that'd be bullish, then really 191. Until then, just I'm expecting range bound. You've got the emerging markets, EEM, breaking below their 200-day moving average today.

Not a good sign, right? JNK, another ETAF that's widely followed. All right, 92, 91 is. resistance, near-term resistance or mid-level resistance. I think it resistance like a ceiling and support would be a floor. And 90 would be an area of support. All right, you're at 91-45, but you close below the 50 and below the 200-day moving average day. Why a junk bond is important to watch? Because they serve as an appetite for risk. H-YG, which are high-yield corporate debt, same kind of fiscal situation, high-yield ETF. All right, it broke below its 50-day and 200-day moving average state. Not a good sign.

Spoke about the financials already. They broke below their 50-day moving average state. average. Let's see here. China's below its 50-day moving average and below its 200-day moving average. Healthcare stocks, XLV, broke below the 50 and the 200-day moving average today on volume. Not a good sign. Biotex rallied right into the 50 and then hit a wall and fell today. And the XBI are, their biotechs are below the 50 and below the 200. And the 50s below the 200, which is not a good sign. They just haven't participated. Spoke about the ex-LP, the staples. they were breaking down today, the utility stocks, XLU breaking down today, and then the solar stocks, which just really are not getting any love at all.

And that's tan, TAN, blow the 50, blow the 200, blow to 21, just really, really weak action. And that's it for now, because I want to talk about a few things that are working and help you focus on leadership and why leading stocks are so important. That's a broad view of the market, spent most of the show going through the sectors and giving you a real good play-by-play about what's working and what's not. So in the areas that are working, you can look at the QQQQ,

for example. All right. Let's look at those big caps tech stocks. Apple, AAPL. Setting up here, a nice little cup is forming little handle, more like the right side of a cup. It's above its 50-day moving average. AAPL. We'll see if it can go up. If it can break down below the 50, that's not going to be good. But if it can break out and go higher, 198 was resistance recently before earnings. That would be somewhat of a bullish sign. But Apple's important to watch because it's a big-cap tech stock, one of the biggest stocks, I think the biggest stock in the market right now. And it's weighted. Remember, folks, a lot of these stocks are a lot of the indices like the NASDAQ, the S&P, the Dow, the Russell, the midcaps. A lot of them are market cap weighted. So the bigger the market cap,

the bigger the weighting, the bigger the weighting, the bigger the impact on the actual underlying index. Not all of them, but a lot of them are. So Microsoft MSFT, getting back above its 50-day moving average today, which is somewhat of a good sign. Adobe, ADBE broke out last week. and follow through the upside today. Somewhat of a good sign, but volume was really, really light. Google or alphabet, G-O-O-G. By the way, Adobe's tickers, AD-B-E. Google or alphabet, G-O-O-G is a ticker, G-O-O-G,

whichever one you want to trade. And that broke out last week and sitting nicely here. No complaints whatsoever in the way that it's acting. Let's see. What else I want to show you? Oracle, ORCL, broke out, looks good. the gut above the 50, big long sideways digestion forming here, coming up the right side. Good action there. Celsius, CELH, broke out big breakaway gap on earnings back in August and rallied

nicely since. New highs today and it's extended, but really, really good action. When you want to see, if you have time, take a look at the CELH, it's a good case study, post-a-child of what you want to see from these leading stocks or these growth stocks. Big gap up in May on earnings. hug the 21 day all the way up, pulled back into the 50 on life volume, ahead of earnings in August, then another breakaway gap on heavy volume in August, and then just sat tight for about two, three weeks

as the market went down, and then just broke out and went up. That's a good, that's strong. Big institutional accumulation, and very little selling. And earnings are expected to grow and grow nicely. So, I'll give you a few more. Z-scaler, Z-S,

reported earnings after the bell today, they're up about 2%. Nothing crazy, but up about 2%. Airbnb, AB&B, was added to the S&P 500. Volume was really heavy today. And then BX, Blackstone, also added to the S&P 500. I believe those two, and there might have been some other announcements, but those are the two that I caught my attention today, ticker symbol BX or Blackstone.

And both of them were up today. All right, just because the stocks added to the index doesn't mean it has to go up, but you tend to get some kind of buying because a lot of these passive funds have to buy the stocks that are in the index, so they rebalance. They sell the ones that are dropped out of the index, and they buy the ones, short term at least, that are added to the index. But that's it. I mean, that high level, that's the picture for today. Could be more trouble ahead. Be vigilant, be patient, mind your stops, respect risk, and understand that it's still early. It's just Tuesday. Let's see where the market closes on Friday, right?

So is there a chance the market can rally from here? Absolutely. There's areas that are working. I've got, by the way, a lot more leading stocks. But I just want to show you some really focus on the things that aren't working because if you can mitigate that risk, you're way ahead of the game. So I know we're running short on time. I want to thank everybody for being here.

This is an absolute delight, an absolute pleasure. Gary, I hope he has a fantastic trip. And as always, this is the one and only investors. This has been Investors' Edge with Gary Cult Bomb on BizTalk. To listen to past episodes or to get in contact with Gary, go to Garykay.com. That's GaryKK.com.