August 26, 2008
If today proves that headlines don’t mean anything in the short or long-term of the market. I don’t know what would make you believe that news stories are just ways for journalist to describe what is happening. After waking up and going over the news stories of the morning I expected the market to be up big or down big as a lot of action was going on out there.
Of course, when I go to take a look at the US Bourses it became clear that the headlines did little to drive the market anywhere. That should help people realize that it is not the news that drives the market but the market of buyers and sellers that drive the market.
One of the for surest things I thought I would see today with all the active headlines was at least heavy volume. Proving that supply and demand and what institutional funds think is more important even volume remained lower. So basically what I saw today was a very noisy day that seemed to even try to put a positive spin on things so the market can rally higher.
Another disturbing thing I saw as soon as I turned on CNBC which is something I rarely ever do is that I head the word “buy” so many times that I was very upset at CNBC by the time I had enough of this waste of airtime. Telling mom and pops to buy stocks on the way down post 1999 is such a disturbing and is such poor advice that I can not believe “mom” and “pop” still don’t get it.
I see Cramer out there with a weak performance in this Action Alert Plus account yet CNBC does all it can to promote Cramer while at the same time it does NOTHING TO EVEN MENTION THE IBD 100 OR IBD 85-85 INDEX. I guess this is because to buy a stock, then watch it to see if it goes up or down, and then to actually have to cut your loss if it does not go higher must be too hard for “mom” and “pop.”
Well I am one of those people that not only get insulted by the lack of IBD index mentions but how silly that channel is as it expects that we are too stupid to buy high and ride a stock higher. No, instead on CNBC, for about two hours today all I heard was if you some would go “short FNM or FRE” or if they would buy “this or that stock on the pullback.” Never mind that this time the pullback is on VERY HEAVY VOLUME and is clear distribution and not a nice pullback that will lead to institutions supporting the stock.
Right now, in this market where the summer doldrums is shown via the extremely low volume on the indexes I want to really stress to those that are taking the time to better their life by reading my blog to NOT BUY ON THE PULBACKS. YOU SHOULD ONLY BUY WHEN THE INDEXES ARE GOING UP ON STRONG VOLUME (NOT THE BELOW AVERAGE VOLUME WE HAVE NOW) AND THE MEDIA IS TELLING YOU TO BE AFRAID OF STOCKS. When the media is telling you to buy stocks now and telling you to do it while the indexes are on the way down, the bottom line is, CNBC must be totally clueless to how the greatest investors make the most money.
Jesse Livermore, William O’Neil, Geral Loeb, Nic Darvas, David Ryan, Lee Firestone, Bernard Baruch, James DePorre, and many of the other greatest trades that ever lived KNOW THAT YOU BUY STOCKS IN A MARKET THAT IS TRENDING UP WITH THE 50 DMA ABOVE THE 200 DMA. AND WHEN THE MARKET IS GOING DOWN (OR SIDEWAYS LIKE NOW) THEY KNEW IT WAS BEST TO BE IN CASH OR SHORT (OR IN OUR CASE WHERE THE MARKET IS GOING COMPLETELY SIDEWAYS, ONLY CASH IS THE SAFE PLACE TO BE) ESPECIALLY WITH THE INDEX PRICES TRENDING BELOW THE 50 DMA. The bottom line, right now, it is not safe to be long stocks.
From November to January we made good money going short stocks. How were we able to do that? Easily. The market fell over 20% during that time. Since January the market has barely moved 10% up or down and that has caused the past seven months to be very difficult as CASH HAS BEEN KING. IT STILL IS and until the trend breaks out upwards or breaksdown downwards, there is nothing INTELLIGENT TO DO. There should be 10-20 HOT!!! charts right now if we were about to have a bull market. But right now we barely have two. Same thing with shorts. If this market was ready to breakdown hard, we would have excellent setups right at the 50 and 200 DMA that would be breaking down on heavy volume. So this is a wait and see market. It is easy for me to chill out and wait for perfect charts. But for those that do NOT know their history and/or are here to get rich quick…this is where the game KNOCKS YOU OUT. This is why there are so many great stocks during bull markets. I can show you my hotties all day long because SADLY 90% probably will not be here in three years. This is why Jesse Livermore says this will always work.
Human emotions NEVER CHANGE. Greed and fear drive all humans. And since we as a culture HATE to study history. Those that do study history are guaranteed to make a fortune EVENTUALLY!!!! Aloha and I will see you tomorrow. Don’t forget gold/platinum members that I have a Tuesday Market Wrap video with some charts of stocks that look good and don’t look good. So enjoy that gold and platinum members. I know you guys are loving the videos. AND I LOVE MAKING THEM!!!! ALOHA!!!
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