Monday, November 10, 2008

Selloff On Low Volume Keeps The Bears In The Drivers Seat

Today was another day of a low volume session where the markets open up higher and subsequently selloff all day long. By the end of the day everything was closing near the lows on low volume. The only good news to the session came at the end when a slight bounce helped take the indexes off the lows.

This market might be taxing to a lot of people right now but I have to remind everyone that you can not give up in this market. If you give up in this market environment you can be sure that when the right moment comes and the market turns you will not be there to reap the rewards that the market gives.

Just think back to 2000-2002. I remember after 9/11 when everyone was for sure that rally was the start of a new bull. Heck even I thought it might be. But as the rally went on there were not more and more "hot" stock charts setting up and breaking out. That was the warning that the rally might fail. However, so many people were for sure that was the bottom that soon they were fully invested and after January 2002 were soon losing the money they just put in.

That rollover caused a lot of people to give up and they ended up leaving during the last year of the bear market. What happened after the summer was that heavily accumulated stocks with nice bases started to show up. Some of those included GRMN, UNTD, SSYS, USNA, NTES, SINA, and SOHU. When these green BOP filled, heavily accumulated, low volume pullback stocks started showing up a lot of people were already gone and out of the market. So they missed out on a lot of big gainers from anywhere from 100% to 500% to 2000%.

Then after the initial burst, a pullback on lower volume entered in 2003 and everyone was for sure this was going to be the start of the next leg down. However, more and more stock charts started setting up in proper bases with excellent price and volume action. Soon March of 2003 was here and we were having a powerful follow-through that helped make 2003 one of the best years in my investing life. I know why that rally happened. It is called tax cuts and unless we get a round of tax cuts in this market there will not be another 2003 for a little while.

However, even without a very huge bull market, there will still be stocks for me to go long and make money. Just take the time to review my Past Big Winners in bull and bear markets. You will see I always had some stock making strong gains like QCOR and ANCI now with a 33% and 83% gain respectively, in under a year. Those gains along with all the gains you see in my shorts (look at yesterday's commentary to see the recent returns) are a promise that I will always be able to make money in the stock market no matter how ugly it gets.

This is one of the ugliest markets I have ever seen and is the EXACT opposite of 2003. Hopefully soon we will get some medical stocks to build on their bases (I go over a few in the video tonight) and then we can get a little bullish again. However, for right now, even with the low volume, the trend is down and that means we must operate from the bear side or the cash side.

Cash is still king and there is not one person that should be upset that they missed some great shorts and were in cash. Don't forget earlier this year TONS OF PEOPLE attacked me telling YOU to buy stocks. They were ALL wrong. The bank bulls, the dry bulk shipping bulls, the oil bulls, the gold bulls, and the mining bulls. They all told me I did not know what I was talking about and they were ALL proven wrong. Especially the most insane crazy of those people that went after me. God rest their souls. They need it.

As for me, I will make sure that when the time comes to get long, I will make sure I let you know that way you can become wealthy in the next bull market. There will be another bull market. We survived the 30s and 70s and we will survive the Obama spending and taxing nightmare that will probably infect our markets. I pray that I am wrong and I would love to be wrong but socialism NEVER helps a stock market.

Part One and Part Two of the new videos is available in full size for Gold and Platinum members.

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