Monday, August 18, 2008

Nasty Selloff Comes Just As I Expected; I Am Still Waiting For A Huge Up Day On Huge Volume To Confirm This Move Is Real

August 18, 2008

It really is hard for me to find much to pen about here other than “I told you so.” Those that do not learn from history are doomed to repeat its failures and those that have not learned that NOT EVERY FOLLOW-THROUGH DAY LEADS TO A BULL MARKET BUT NO BULL MARKET HAS EVER STARTED WITHOUT ONE are going to have a tough time living through this bear.

The great news, some can say, is that volume was much smaller than what I would like to see on such a nasty day. Now, this could be good news or bad news. It could be good news as that the weak volume selloffs could be met by higher volume accumulation. However, I doubt this will happen since the rally that preceded the 200 DMA breakout on the Nasdaq was on lower volume. So it just remains a big choppy low volume range bound market to me.

The negative is that a lot of times in history low volume selling has started off some major declines and only after the selling becomes apparent and painful does the heavy volume selling hit the market. So that is something to think about as the stock market indexes come upon failed breakouts and tough resistance.

A reason I believe our low volume selling can start of low and pickup the selling and we will not rally has to deal with an index chart somewhere far away from the USA. I know we are two different countries but there is no doubt the Chinese stock market is the leading stock market. Those that do not have access to a chart (SSEC-X on TCNet) may not know but the index is ONCE AGAIN, for the fifth time at least since the November top, rolling over to new 52-week lows. Now this index is not just barely making new lows. This index is dropping hard. Dropping another 5.33% after earlier dropping 4.47% and 5.2% in back to back bloodbath sessions. Since the top in November, the SSEC-X (Shanghai Se Composite Index) has dropped an incredible 58%!!

This was the leading index during the previous bull market of 2003 to 2007 and now it is leading us lower. The USA I would assume is going to follow this index down, until the Chinese index turns around. NOW, this does not mean I expect us to lose 58%. But I wouldn’t think the January, March, and July lows are safe either. I have no pretty charts, I have no CANSLIM stocks setting up in proper bases, and I see absolutely NO new leadership outside medical. You tell me how we will have a bull market from that.

I have recently created a few videos that help show you this market compared to the REAL BOTTOMS of 2002 and 2003. Those that watch the video and listen closely and watch the follow up videos and study all those PAST BIG WINNERS that have such green charts it should become clear as day that our market is far from over from the pain that losses can inflict on one’s portfolio.

I still am hearing horror story of traders trying to trade this market. I am sick of saying it but STOP IT! STOP TRADING. CASH IS KING in a market where the Nasdaq has moved a WHOLE -0.03% from January 15, 2008 to August 18, 2008. How do you expect to make money going long or going short ANY amount of time frame in a market that is moving nowhere.

Some like to say “but Joshua, what if I shorted FNM or FRE.” Good for you! Go for it! I am a disciplined trader and I do not adapt my style that has worked for me since 1996 and super successfully since 1999. I lived through early 2002 to October 2002 and that was a very hard time to make money. But I have to admit the NON-ACTION in the market has made it the MOST DIFFICULT year for me. However, it has also been the most mentally rewarding because I have learned that I can recognize all market conditions and adapt accordingly without losing money.

I have lived through 1999, 2003, and 2004 and have made BIG MONEY during each year so I know how to act in market where I have to go all-in. But I recognize flat and dangerous markets and that is what we have RIGHT NOW. This could change now. Hopefully we can start a trend down. “But Joshua, why not up?” Because the charts are UGLY. You can NOT start an uptrend from this kind of setup.

I have posted three test videos with two on follow-through days and one on MPWR and how so many of you could have gone long such a ridiculous chart compared to a winner like XSI. There will be other videos that I will make comparing today’s “leading stocks” (which are not much of leaders at all) compared to how the “leading” stocks of 2002/2003 looked. I think subscribers will learn VERY FAST that bull market look COMPLETELY different than markets now.

Those that are telling you to buy the dips have a vested interest in the Wall Street crowd. I used to work for a website that only tollerated those that toed the Cramer line. I refuse to do that. I still believe he is harmful for the average individual investor and I want to personally thank everyone that reads this and that can see through the lies on CNBC and now exposed 8/10’s of the time on a site I once LOVED and worked for. Sad times we are living in. I have never seen so many “smart” people tell people to buy such clearly falling stocks. Bad medicine. But as long as they scratch someones back, someone is scratching theirs. I love Capitalism but it is crap like that that helped turn Capitalism into a greed chase. All everyone that subscribes seems to want to do is “MAKE MONEY NOW.”

Folks, now is not the time. I will ask you one more time. Where were you in 1999, 1003, 2004, 2005, 2006, or even early 2007? Now you want to trade stocks after the uptrend has come AND GONE? This is so like 2000. I just PRAY it is not anything like it.

Aloha and I will see all my subscribers in the chat room where hopefully we can make another video for you guys to enjoy! :) ALOHA!

No comments: