Market Sector Tracker - Gary Kaltbaum Analysis

Last Updated: October 16, 2025

📅 THURSDAY, OCTOBER 16, 2025 - REGIONAL BANK CRISIS

Market Action - Volatility Continues

Dow: -300 points to 45,952
S&P 500: Down (specific close not mentioned)
Volatility: Big wild swings continue since last Friday

Adam (Guest Host): "Typically, when you see big wild swings, that shows investors are getting nervous. It doesn't mean a big sell-off is coming or a crash, but volatility has picked up."

🚨 MAJOR STORY: Regional Banks Crushed on Credit Concerns

Two Banks Collapse Double Digits

Zion's Bancorp (ZION): Down double digits on bad loan news Western Alliance Bank (WAL): Down double digits

The Problem:

Bad loans discovered, possibly fraud
One bank: Collateral client used "wasn't there"
Other bank: $50 million issue

Broader Banking Weakness

KRE (Regional Bank ETF): Broke below 200-day moving average on ginormous volume

XLF (Big Banks ETF):

Broke 50-day MA few days ago
Rallied back, hit resistance
Collapsed today heading toward 200-day MA

Jefferies (JEF):

Not a regional bank but down hard
Broke 200-day MA ~8 trading days ago
Breaking down more, heading back to April lows

Adam's Take: "There's a concern here about the health of the economy and about the banks, the loans. We'll see if this spreads and gets worse."

🟢 LEADING SECTORS

Tech, AI & Semiconductors - Still Strong

Money continuing to flow into these areas
"Areas to look at that are working for now"

Oracle - Big Intraday Move

Oracle (ORCL):

Huge jump mid-day on analyst meeting
Cloud numbers up, good news
Had ginormous 35-36% gap up Sept 10 on earnings
Made Larry Ellison richer than Elon Musk
Been consolidating since

Data Storage

Money flowing in

🔴 LAGGING SECTORS

Financials - MAJOR CONCERN

Regional Banks:

Zion's (ZION), Western Alliance (WAL) crushed
KRE broke 200-day MA on huge volume
Credit quality concerns

Big Banks:

XLF heading toward 200-day MA
Jefferies breaking down

Gary's Morning Report - "What is NOT?" (Areas to Avoid)

Insurance - In downtrends

Housing - Distribution showing

Travel Group:

Airlines - Weak
Cruise lines - Weak
Hotels - Weak
Booking.com (BKNG) - Weak

Retail - "Good amount" weak, some bounced but overall not good

Auto Dealers - Avoid

Private Equity - Weak

Consumer:

Food, beverage, tobacco - Weak
Household products - Weak
Alcohol - Weak

Restaurants - "Just got mowed down"

Casinos - "Look to have topped"

Exchanges - Weak

Waste Management - Weak

Healthcare:

"Still plenty of medicals not in good shape"
Managed care: UNH better since crash but still under pressure

🚀 LEADING STOCKS

Tech & AI Names

Semiconductor stocks
AI-related names
Data storage companies

Oracle (ORCL)

Big jump on cloud news
Consolidating after massive Sept 10 gap up

📉 LAGGING STOCKS

Regional Banks - CRISIS

Zion's Bancorp (ZION): Down double digits on bad loans
Western Alliance (WAL): Down double digits on credit issues
Jefferies (JEF): Heading back to April lows

Big Banks

Struggling across the board

Attempted Breakout Failed

Google: Tried to break out at $256.70 (Sept high), got to $257.58 but sold off with market

⚠️ GOLD WARNING - Don't Chase

Gold Going Vertical

GLD:

17% above its 50-day moving average (huge for big ETF)
"Super, super, super extended"
Most extended move in decades (since 2011)
At new all-time high

Adam's Take: "My opinion, not right now. Let it consolidate. I don't like buying things after a big move up. If you chase, which is buying gold up here in my opinion, it doesn't end well over a long enough period of time."

"I'm expecting once this move pops, we can get just as quick on the way down - easily get a pullback into the 21-day moving average or into the 50-day."

💰 GARY'S POSITIONING

Gary is out today, but his morning report emphasized avoiding the weak sectors listed above and focusing on tech/AI/semiconductor areas that are working.

🎯 CRASH/CORRECTION OUTLOOK

Adam's Assessment: Market seeing heightened volatility after big move up - "normal and healthy to see the market pause, consolidate, digest, pullback." Regional bank credit concerns could spread (contagion risk from 2008), but Fed meeting soon with expected rate cuts which is typically bullish. Market pulled into 50-day MA earlier this week and bounced. Adam taking "a little bit more defensive stance" but not predicting crash - just preparing for possibilities. If regional bank situation spreads, could see more distribution and breaking below 50-day MA. However, Fed cuts near all-time highs typically = bullish tailwind.

💡 ADAM'S KEY ADVICE - EXTENSIVE TRADING PSYCHOLOGY

Historical Context - Market Growth Over Decades

Adam's Long-Term Perspective:

1990 Dow: 2,300 → Today: 45,000
1990 S&P 500: 294 → Today: 6,600
1990 NASDAQ: 322 → Today: 22,540
Late 90s Dow: 4,000-5,000 range

"If you would have told me when I started trading in the 90s that the Dow would be where it is today, I'd be like, there's no way that's possible. But the best is yet to come."

Early 1990s Savings & Loan Crisis Parallel

"Back then in the early 90s, there was a savings and loans crisis. It's not the regional bank now - it's the two, Zion and WAL, Western Bank Alliance - they're having trouble today. But there was a whole regional bank crisis in the early 90s, and we survived. We got through it."

Position Sizing - The Critical Element

The Problem with Too-Big Positions: "When you have too big of a position in a stock, it causes you to make more emotional decisions and less rational ones. Even if the stock pulls back just a little bit, fear goes through the roof. And then what happens? Panic itself. It's just a normal pullback, but oh my God, I got so much money. The brain turns into scrambled eggs."

The Doctor Analogy: "Think of a doctor. You don't want them looking at how much money they're making every minute while making the incision. You want them to focus on doing the right thing. But with trading, the scoreboard is literally the right thing - you're literally looking at the money you're making and losing at any given time."

The One-Share Solution: "If you're stumbling or having difficulty pulling the trigger, just buy one share and see if you can do the right thing with one share. It's not going to kill you as long as you have stops and you're protected. Once you realize one share is no big deal, go to five, then slowly increase."

Risk Management - The 5-7% Rule

Stop Loss Placement:

Use 5-7% stops below entry (Adam's preference)
2-3% stops are "too tight" - you just get chopped up
Depends on stock's volatility and normal swings

Know Your Stock's Behavior: "Every stock behaves differently. Some quantum computing stock might be up and down 4-8% in a day multiple times. But Coca-Cola or Pepsi moving 7-8% is abnormally huge for that stock. Know the stock, know the behavior."

The KYC Rule Applied to Stocks: "In finance there's Know Your Customer rule. You've got to know your customer - give them investments suitable for them. Same thing with your stocks. Is a 3% move normal or is 1% big for that stock?"

Planning for All Scenarios

Adam's Approach: "I don't know if the market's going to go up or down a thousand points tomorrow, but I can plan for the possibility of the market having a correction or bear market. And I can plan for the possibility of another leg higher."

Before Entry, Know Your Exit: "I know where I'm going to exit before I enter a position. This way I'm able to protect the capital, protect the portfolio, protect the family. Once you protect the capital, you can grow."

The Win/Loss Math That Matters

Nine Losses, One Win Example: "I lose $1 nine times (minus $9). The 10th trade I make $10. Net net, I'm up $1. The other person has nine wins of $1 each, but the 10th trade loses $10. Net net, they're down $1. But they were right 90% of the time. It doesn't matter. What matters is the bottom line."

Psychological Analysis - Adam's Book

The Third Piece of the Puzzle: "I wrote a book called Psychological Analysis - my contribution to Wall Street. Fundamental and technical analysis are not enough to beat the market in my humble opinion. If they were, everybody would own a few islands in the Caribbean. Something's missing."

What's Covered:

Cognitive biases
Mental walls ("we all have them")
Understanding your relationship with money
Emotional triggers
How to make rational, non-emotional decisions

"Know yourself, know your psyche. What's your relationship with money? Is it a good one or can it be improved?"

Structure vs. Winging It

The Unsuccessful Trader: "If you sit down with me and say, what do I do? Tell me your trading. 'Oh, I just wing it. I trade on my phone as I'm driving to work, sitting in traffic. I just bought it because it's in the news or it's up a lot.' There's no structure, no rules and regs, no procedures."

The Successful Trader: "The ones that are very successful have structure, and they know how to - they have an edge. The investor's edge."

Emotional vs. Logical Trading

The Cookie Analogy: "We're humans. We're emotional creatures. I know I shouldn't be eating a cookie. Guess what? I ate the cookie anyway. Logically it makes no sense, but I did it anyway."

People Buy What They Like: "People buy stocks, for the most part, they like. I don't know anyone that has discretion over their trading that buys a stock they hate. Don't marry your stocks. Date them."

The Optimist's Mindset

Adam's Philosophy: "Success is a decision. Happiness is a decision. The best is yet to come. Having an optimistic outlook is something I've noticed a lot of successful people have."

Being in Harmony with the Market: "I want to be in harmony with the market. I used to fight the market for a long time. I'm bearish, the market's bullish. Argh! I'd make emotional decisions and get stuck in my head."

The Elevator Analogy - Missing Trades

"I've missed moves because I was not in a good head space or had some external event. And that's okay. It's just like an elevator in a building. There's always another elevator coming. I'm not going to hop in and get angry. Just wait, turn around. Same thing with stocks. There's always another move coming. There's always another monster stock coming."

On Current Market Action

Short-Term Caution: "There's a possibility the market has some backing and filling here. It could break the 50. It could start getting some more distribution, especially if this regional bank situation spreads."

Fed Support Coming: "The Fed is meeting soon and they're expected to cut rates. Typically when the Fed cuts rates, that's bullish for the market. It's a tailwind and it's a strong one."

📊 THE BIG PICTURE

Credit Concerns Emerging: Regional banks showing cracks with bad loans/fraud, reminiscent of early 1990s savings & loan crisis

Volatility Signal: After huge move up since April, big wild swings signal investor nervousness

Fed Support Coming: Rate cuts expected = potential tailwind despite credit concerns

Sector Bifurcation Continues: Tech/AI/semis strong while most other areas weak/bearish

Friday, October 17, 2025

REGIONAL BANK CRISIS