The Trend Was My Friend (Down). Was It Yours?

September 3, 2008

I am hoping that a lot of people have realized that the bull market we have had from 2003-to the last day in October was “the bull market.” The facts remain that we are in a downtrend with an overall sideways bias that has made it very hard to make money since January. But now something feels bad and the market feels real heavy.

Not only that, I see charts breaking down from very early topping positions, and I have ag, gold, oil, and other stocks like steel stock breaking down from key breakdown pattern that usually mean the stock is not coming back higher any time soon. This is the time when Wall Street comes out on CNBC and tells you which stocks you should buy so that they may have a market to sell into.

I turned on CNBC for 10 seconds today and saw a guy mention two stocks breaking down with one HEAVILY BREAKING DOWN like his fund was selling to EVERYONE who wanted to buy. The first “buy” recommendation was for HAL. Has anyone noticed that HAL has risen around 400% as a very large cap stock since 2002 till the top that came right after it announced a split. A split is usually a last desperate hope of a big-cap corporation to have small investors find interest in the stock so that they may sell into that crowd. Since that SPLIT the stock is DOWN 36%. During that time the past two months, XSI has risen 85%. Sometimes those you see on TV are not trying to help you AT ALL. There only job is to drum up demand so that they can sell there shares that have topped.

The last recommendation was to “buy” NOV. This stock topped with the rest of the oil stocks around June to July but it held up better than the rest. The only problem was while the stock was holding up it was slowly rolling over below the 50 DMA and the 200 DMA on strong volume. The distribution days are clearly visible on a zoom 5 chart that makes those big red volume distribution bars stick out. Then when I saw it breaking down today below the 50 DMA and 200 DMA on very strong volume I could completely tell that this guy was trying to save his behind in this stock. I am not sure if he was long this ugly stock but if he was not someone he knew was and he was trying to help them. There is NO possible way an intelligent person would be buying a stock that was breaking down on heavy volume after rolling over both key moving average. He had to be on the air to lie to people. After hearing that recommendation, I immediately turned off CNBC and never turned it back on again. When am I going to learn that watching that garbage is nothing but a reinforcement to my Investors Business Daily CANSLIM methodology which continues to crush most analyst gains when they come on air.

Before I go, because you can now get all of my market commentary in video form at youtube. I must say I am shocked at how many people can turn bullish besides the trends being clearly down. I am just a little shocked that so many average people love to buy stocks hitting new lows as they feel they are getting bargains. Folks, if you fail to learn from history, the stock market will eventually wipe you out. I have NEVER been wiped out and I NEVER will be because I cut my losses and only AVERAGE UP when I buy a stock and NEVER average down which is a losing strategy. I just hope you folks are learning a lot right now so that when the bull market does come back. Which it always does you will be ready to score the 100% to 2,800% winners like I was able to do during EVERY uptrend the stock market had from 1998-2008. If the trend of the market is up then your chances of making money increases a lot.

Also another note about the videos. I know the video clarity is not that great but you have to understand gold and platinum users get camtasia versions that come across the computer VERY CLEAR AND PERFECT. The charts are large and everything is clearly legible to read. The small YouTube clip is what you get for free. You get what you pay for and that is why some people are long a lot of cash, like me, avoiding the crumbling to go-nowhere market. And at the same time going decently long stocks like XSI that is up 85% in a little over two months. Some things in life NEVER change. The stock market is one of them. It may act differently and plain “Ol’ Stupid” sometimes but you know what? Every bull market will give you one or two stocks up 1000% and around 10 up 100-300%. We just need a real bull market. Study all my past big winners and you will learn quickly enough how well this methodology works compared to the value guys. I still have not met a value guy who has consistently during EVERY bull market period had a 100% winner much less a stock up 500%. Stick with the CANSLIM system in a bull market and remember to stay in cash in a bear market and you will increase your odds of making money by 50%. Each thing you can add in your favor you should do in a game so unlike the 1980s and 1990s. Boy-oh-boy do I miss those times in the market. That was back when CSCO went up 90,000% from 1990-2000. I miss those days so much.

Have a great day and I hope you a very profitable Wednesday trading session.