Saturday, October 04, 2008

Nice Bounce But Too Bad It Was On Lower Volume; Bulls Show No Conviction In Buying As Volume Comes In Lower Across The Board

We are living in the middle of a breakdown of the markets due to corrupt lending practices with greedy executives and uninformed people getting involved in business they never should have. This is never good for stocks and I don't care what anyone says. Shooting down that bill was the right idea. Let wall street battle it out. They screwed up and the tax payers should not be bailed out. At the same time capping CEO pay at $500,000 for running a bank is psychotic and shows NOTHING of a FREE market system.

However, I must admit the system is/was broken. When I left NYC in 2000 I knew there was more than what the .com bubble had. But I had no clue that it would ever get like this in real estate. I used to date a real estate broker in Maui and I used to tell her that this was going to end up destroying the economy one day. I kept saying it and when Ken Heebner got out of housing stocks and the biggest real estate investor sold all of his holdings in 2006, I KNEW it was over. The calamities to come however. No one could have known. Until this year that is. That is when it became apparent (well it was before that for those "in the know") that loans were given to people who had NO BUSINESS EVER receiving the financing they did. This was all done on a "bet" that "housing would continue to rise." How asinine is that??? Unbelievable greed at its finest. This is what is sick about my favorite, and the only form of rule that can make poor people wealthy, form of government. Capitalism.

The fact is we are headed down a road of socialism and I don't know what that will do with all my stocks. But all I am praying for is that the companies that were stupid and greedy enough to do these things will just have to take the beatings. I know it sucks but giving a $500,000 loan to someone without checking on their get what you deserve.

I want the market to solve this and the government to stay the F out. I don't want them to touch this market and I want the strong to survive this wreck and the weak to leave. If we elect the Socialist Obama (which is looking more likelier) it is doubtful that we will be moving "forward" any time soon.

For now I continue to preach cash unless you were smart and went short with me when I went short. No one says when I go short 300 shares that you do too. You guys realize that commissions are $1 per 100 shares nowadays. You can go long 3 shares of AAPL short and enjoy the gains with me. The fact is that the money was laying on the floor this morning and in a lot of my shorts up over 25% in under a month I did take around 1/2 the money off the table in profits. I am now around 90% cash and will continue to monitor the market. However, I don't expect the market to rally higher.

In fact, I believe the market is just starting a long selloff and believe that the market has a long PROLONGED period of underperformance. However, I am a great stock picker and stocks like NCIT and LPHI, when you look at the fundamentals, you have to know in the future, when the market is ready to trend up, stocks "like those" (I AM NOT SAYING THOSE TWO ARE FOR SURE, Obviously) will do well. We will have a better market to choose from and some of these HORRIBLE mutual, hedge, pension, lending funds deserve and need to go out of business to have the honest and respectable investors take over a market hobbled by a bunch of regulatory BS.

Also the ban on short selling is the most ridiculous thing I have ever seen and I believe it is a sham and a scam to the American people once again. Any time you blame the short sellers, you send off a HUGE RED FLAG TO ME that their is real problems. So the fact that they think it is necessary to halt the short sells of like 900 stocks is a sign of massive problems and unlike 1987 I don't think our plunge on Monday was the last one. I believe, by looking and reading my charts (you know, crazy voodoo tactics), that there is a lot more pain in store. The leaders just cracked apart. They have a LONG way to fall. I know so many buying them at the top. That is GREED my friends. Greed destroys capitalism. Everyone gets what they deserve. If you buy AAPL at 170 and you don't cut your loss then you deserve to feed my family as it falls to $20 and I am short. Dumb money moves to the smart. It always has and it always will.

However, for the first time in a long time I am starting to believe a lot of the stuff Ron Paul has to say is starting to make a lot of damn sense. You know the Congress is MESSED UP when you hear that from me. I think the Fed should not DARE inject more liquidity and if it takes 11 years to return to the 2000 Nasdaq highs then so be it. During that time, I will find hidden gems that will do better with less market greedy psychotics trading my stocks. From 1996-the top in 2000 it was easy. It was easy in 2003 and basically 2004. Since then making money has been hard. But this is the hardest environment I have EVER seen. Way harder than 2000-2002. Why? It is hard to short because perfect short setups are not forming like they did in 2000 and obviously beautiful charts like that from 1999 and 2003 will not be showing up till at least 2009 if not 2010. Reality must be looked at here. Those that LOVE THE STOCK MARKET, like me, will still be around. Will you. I hope so.

I hope everyone feels a little better that the market did not fall apart today. I am glad some people used rational behavior and made a market for stocks today. Things are very bad (in fact darn right horrible) and I do expect a recession. However recessions set us up for new and exciting companies. The only thing that can destroy this country is spending too much via Congress (so far they are bringing us closer to our deaths) and complete greed/corruption ruining great markets in the greatest country that creates some of the greatest inventions the world has ever seen. The railroads, the airplane, landing on the moon, the TV, and the computer. You know that the spending on baby boomers will rise as they get older. Healthcare, Medical, and Biotech stocks should do OK during this rough market and if we can get the averages above the 50 and 200 day moving average with the 50 leading the 200 I am sure we will see other great longs. Just like ANCI was. I am still long this stock and enjoy a nice 91% gain in three months despite the worst market we have seen since 1987.

I can not wait till my max green charts loaded with strong accumulation with a huge surge of volume on the breakout come back. Everyone told me after 2000 that I would never see the charts I saw with my own eyes and that I have posted in my PAST BIG WINNERS section for longs ever again. 2003 proved them wrong and the future will prove those that think they will not show up again wrong. Never short America. We have had other bouts with socialism and many great stocks still appeared during those times. Don't worry I will find your needles in the haystack. Charts like LMLP in 1999 and EPIC/HIL in 2003 will setup again. Trust me. History always repeats itself. At Big Wave Trading, with me, Market Speculator, and Author Ego you will always be long uptrends and in cash or short downtrends. There will never be an unexpected crash that kills and wipes out our gains. I know how to read the market, I know how to actively invest in the market, and I LOVE DOING IT. I started doing this at 16. The goal is to make at least 96 to make it 80 years of trading. I'll be here the whole way.

Aloha and remember better times to go long WILL come again. For those that were trapped and lost a lot of money, try a subscription to the BWT site for a month. What do you go to lose. A cost of my subsciption was probably lost by more than 1,000,000 active traders. A full year sub was probably lost 10x over by a lot of people yesterday. Be wise with your money and even wiser with your money in the market. Aloha and I will see you tomorrow around 7AM HST.

By the way, for those that care, I saw the biggest turtle in my life today snorkeling after surfing. Pretty crazy after 8+ years here and many snorkeling trips that I finally saw a turtle as big as me. My friends it was huge. I wonder how old he was? Surfing and snorkeling. Sure beats this market. Unless you are 400% short.

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