Stocks sold off heavily Friday finally following-through to the downside after a previous down session. There have been a few times this month that the market looked like it wanted to breakdown hard. However, it was always followed by support from oversold laggards that remained up while C and BAC failed previous supports. However, the lack of leaders in the current rally attempt is finally giving way to a weak market and that is why I have been saying to either quickly take your gains on longs or better yet to safely stay in cash, during this past rally.
The biggest problem I have had the entire rally attempt off the November lows is that leading stocks with leading fundamentals in leading industries were not leading the market higher. Instead it was oversold laggards that have had the living life beaten out of them. The fact that these laggards led the way higher was my clue to tread carefully in this market and not get too excited about a possible rally holding any time soon.
Instead it is the shorts that have continued to hold up (err...down) while this low-volume rally went on the past few months. Well it really wasn't even a rally as the market has gone no where the past three months. Instead, while the market went nowhere, stocks broke down from nice patterns and current shorts continued to trend barely higher on low volume. This was the clearest "tell" that bears were still right, even in the short uptrend and that longs were at best "hopeful" that the rally could last longer than it appears that it is.
The only difficult part about the market right now, for me, is finding anything new to talk about that I have not already gone over thousands of times. Especially, for my subscribers. Anyone reading this that is not a subscriber is obviously only getting around 5% of what this whole website offers in regards to information. Even with this information in hand, you would have known the market topped in October of 2007, to have sold all your mutual funds by November of 2007, and to have been HEAVILY LONG CASH the entire year of 2008 if you were a new investor. I did not tell you once to buy the "bottom" of any of these false rallies and have told experienced investors to go short.
While the last year was a very mixed year between shorts working and shorts not working, the shorts that have worked have worked very well as you can see in the recent update yesterday of my current shorts. I don't expect for those shorts to be losing too many of those gains and do expect them to make more. Especially if the GDP continues to get worse. Remember, everyone, as goes the trend of a nation's GDP so goes the trend of the stock market. Don't believe me? Look it up yourself on Google. :)
The market has been very tough even for the most serious and experienced professional and the great news is that if you survived the 2008 stock market then there is no reason you should not be prepared for the 2009 market. We all know the market looks bad, the US Dollar looks good, Gold Silver and Platinum look good, and that is all you need to know.
Now when it comes to timing those buys, with my past track record, there is no way I can just give those out. However, I think it is safe to say that for everyone a little worried about their retirement funds I wouldn't hesitate to go out there and put SOME of your funds in Gold, Silver, and Platinum if you can. I know it sounds like a bandwagon play but the commodities are re-entering another uptrend and gold looks like it is ready to breakout to new highs. Along with that a lot of Gold stocks are setting up in very bullish chart patterns. When those breakout, you can be 100% sure I will not miss the next ERS up 560% in 5 1/2 months.
Please make sure to watch my videos posted the past week. You will see how I did not get suckered into the rally by the "biased" and "self-interest" filled CNBC. Remember, no matter what a guy who was down 40% tells you, using technical analysis the RIGHT way (it is a windsock, not a crystal ball) will always help you make money than BLINDLY buying based off another man's recommendation.
In this world, it is time to take control of YOUR OWN finances. 30 minutes a day with IBD for a couple of years and some training by professionals that do this for a living and have a track record of making money in bull markets and either MAKING MONEY OR SAVING MONEY in bear markets and YOU CAN AND WILL take control of YOUR OWN financial future. You NEVER EVER need to rely on someone else wants you learn how to read the market like me. So please take your time to learn. It will pay off.
Aloha!
Video 1, 2, and 3 on the general market and commodities, our longs and the longs in our scans, and our shorts and the shorts in our scans will be up by Saturday night in the Gold forums for Platinum and Gold subscribers.
Free Youtube Video:
Saturday, January 31, 2009
Friday, January 30, 2009
General Stock Market Indexes Fail, Once Again, At The 50 Day Moving Averages; Despite The Selloff I Still Have 3 New Longs And 1 New Short, Proving It
There were three new longs and one new short tonight that I really went into detail explaining to my subscribers in the new videos section. I believe they needed to know why these stocks are longs and shorts, how much money they should put in each one, and I also went over the reward/risk ratio aspect of the stocks, making sure they were on point to what I am looking for for a future BIG WINNER. The time I spent with subscribers today going over today's market was a lot of fun but unfortunately I do have a small headache (probably from being on the computer too much) and after all the work I put into the forums, longs, shorts, videos, chat room, and charts I am pretty burned out and am going to skip doing commentary tonight. I don't think I have skipped making one of these in a LONG TIME so I think I deserve a night off. Especially considering the general market is flat-lining the past three months. The free general market video should have enough information in it to have you well prepared for Friday's session.
FREE YOUTUBE VIDEO:
Top shorts with total returns that made me money today: CETV 86% CEDC 77% SDA 77% AAPL 42% POT 51% CPRT 27% RDK 15% LLL 16% SBAC 36% ARB 67% OKE 31% CYT 58% AMX 47% RIMM 44% GGB 57% AMSG 15% CEO 31% PLCE 29% IPHS 26% MOS 58% APD 42% CASY 21% TITN 52% SPG 47%
FREE YOUTUBE VIDEO:
Top shorts with total returns that made me money today: CETV 86% CEDC 77% SDA 77% AAPL 42% POT 51% CPRT 27% RDK 15% LLL 16% SBAC 36% ARB 67% OKE 31% CYT 58% AMX 47% RIMM 44% GGB 57% AMSG 15% CEO 31% PLCE 29% IPHS 26% MOS 58% APD 42% CASY 21% TITN 52% SPG 47%
Saturday, January 24, 2009
Stock Indexes End The Day Mixed But Finish Down On Higher Volume For The Week
A weak start to Friday's session had the feeling of a painful day to come. However, the market found its lows near the opening and managed a nice rally most of the day, until the last couple of hours. All indexes were green at one point in the day but a decent pullback that was followed by a little EOD rally kept the DJIA from closing green. Overall it was yet another bullish session preceded by a negative session.
That has been the pattern since last week when the market broke down away from the 50 day moving average on January 14th. Following that break down, stocks bounced back the next two days on higher volume. This was not was supposed to happen according to textbook stock movements.
Normally, when the market breaks away like that from a key moving average and many "attempted leading" stocks have big reversals, you usually do not see a halt in the decline so quickly. So after those two days of prices holding it then appeared that the market might be able to turn and give us the low volume uptrend we are waiting for so we can load up our shorts when the market fails at the 200 day moving average. So no big deal. We have a new plan.
Then on Tuesday, the market tanks on the inauguration. No big deal now we are only back to being in our confirmed downtrend and now we know the Thursday and Friday support was just temporary and not anything important. With Tuesday's breakdown a more shocking situation occurred; we were given seven clear "get short" signals.
With those seven short signals it now is clear to me the market is ready to break down. Right? Wrong. LOL. Instead the market held in there with a stronger volume rally. But a very important data point occurred on this strong up day. What was it? All of my shorts from the day before held in and not a single one gave me a FULL COVER and only one gave us a PART COVER signal. This indicated to me that the short side was still probably the right side.
That was then confirmed on Thursday with the bearish session the market put in, with my new shorts and old shorts going down along for the ride. And on Friday, thanks to a weak open, stocks did not gain much ground and my shorts continued to look like great money making positions. The other good news to go along with our winning shorts, is that on Wednesday, the day after we got seven short signals, we got two new long signals. One long is up over 4% since our purchase and the other one is hanging in with nice price/volume/BOP characteristics. That good news along with one of our long-term (6 1/2 months) shorts hit the 85% gain mark intraday this week makes this an overall great week for me while the market did nothing.
The interesting part about this week to me though was not necessarily the overall stock market. It was some individual sectors that stuck out. For the first time in a long-time, that I can remember, we got some speculative action on a few stocks related to stem-cells. ASTM, STEM, and especially GERN saw some great price action this week as the work on embryonic stem cells get under way. Another exciting group from a leadership standpoint is the education stocks.
The good news about the education stocks, for the bulls, is that some of these stocks are heavily shorted as hedge funds release info about the number of enrollments at these universities being exaggerated or made-up. Well, I hope these shorts have a lot of money, because if big institutions keep buying them like they have recently there will be a lot of short-squeezing that follows. Stocks like ESI, COCO, LOPE, APOL, CECO, DV, CPLA, and others have very bullish chart patterns. But they don't necessarily have buyable patterns. While I am long one leader in this group already, there are at least three other leading stocks I would love to get long if they setup. However, they have to setup. And as long as the rumor mills keep pumping out deadly short stories during a time when the big boys are loading up on these stocks, you know you got some great money that can be made.
The last sector I want to talk about is a sector that I really love not just for when they setup and breakout but for the long-term till-you-die kind of investing. That is gold/silver. For readers that do not subscribe to my site, you might not be familiar with my love of gold. What is sad is that I have not put my money where my mouth is. But back in 2002, shortly after the 9/11 attacks I had a very blunt conversation with a gold dealer on Maui. I told him "to buy as much inventory as you can now because gold is going to be the "US Dollar" of the future." I told this man (Mike X at Kula Gold) that he should buy gold and lock it in the future for this price and short the dollar as the dollar is no longer the "safe currency" it looked like before 9/11. Post-9/11 I told Mike I believe that Gold would go higher in value as more people found safety in it.
Now when I told Mike this I had NO CLUE that our government would be so inept as to actually give tax cuts WHILE INCREASING SPENDING AT THE SAME TIME!!!! Now the Fed is printing Dollars like it is worthless paper and Obama believes he can spend trillions of worthless Dollars to get us out of this mess. I hate to tell everyone this: THIS IS A GLOBAL ECONOMY NOW. The government is spending money like there is still a bull market of 1999 out there. Where are they going to get this money in the future? Companies are moving to Dubai to avoid the HUGE corporation taxes the USA has on OUR OWN businesses. The government keeps raising our taxes so that we can't put our FREE dollars into the market and have people exchange them for the goods and services that THEY choose to use. Instead our hard earned money is confiscated via the income tax and the people that work hard for their money are FORCED (not willingly allowed to donate to who they want, like most great people do) to give their money to some people who will use it to buy heroin and crack (I am from St. Louis--I am not a blind fool!) with the money our government gives them.
Also how can we be giving tax rebates to people who don't even pay taxes???? Has this country lost its freaking mind? Are we controlled by people who want to take all of our wealth??? To me it looks like it and I tell you what I have about had enough! You can tax me on what I want. But to tax me on WHAT I EARN VIA MY HARD WORK and then take the money and use it on things I DONT WANT MY MONEY USED ON is pure THEFT!
So instead of being a slave to the almighty dollar that WILL lose its value more and more LIKE IT ALREADY HAS SINCE WE WENT OFF THE GOLD STANDARD, I am going to do something about it and begin to put SOME (not all--SOME!) of my IRA money into Gold stocks, Gold mutual funds, Gold coins, Gold bullion (I'll pray for this), or Gold ETFs. I am upset I did not do this in 2002 when I first made this gut call and I am even upset for not doing this two weeks ago when I told all my members in my chat room that I would be doing this. However I am going to make my move now. I have plenty of money to actively invest in the stock market to put into stocks like LMLP, HIL, FMDAY, EGHT, TASR, AAPL, IST, AFSI, HRZ, and many other great past winners I have been blessed to be a part of. So a little bit into gold will be worth it just in case Gold goes from 900 to 9000 in the next so many years. That little bit I have will pay off.
I know stocks can go to zero. I know fiat money printed on paper can go to zero, I know even great mutual funds can go bust and go to near zero...but the last time I have checked, gold has NEVER been worthless and even when it was cheap and looked like it was a bad investment it sure looks like a smart one now. :) This isn't 1999 anymore and it never will be again. I just thank God above that I was blessed to have known the CANSLIM system in early 1999 and had my price bounces-breakouts/volume surges/max green BOP charts down by 1998. This allowed me to be fully ready for both 1999 and late-2002, 2003. 1998, 2004, 2005, and 2006 were good years too but nothing was like 99 and 03. I know 1999 can't happen again as that was a BUBBLE beyond any bubble ever seen in the US stock market COMBINED with the Y2K fear and a flood of money from the Fed. But I do know that 2003 markets come all the time when bear markets turn from a bear market to a bull market you will always see charts go from ugly to beautiful as leaders take control of the market. It just takes time.
Make sure you stay patient with this market and even though in the past three months it has basically gone NOWHERE (from 10/27/08 to 1/23/09 the Nasdaq has moved -1.9% and the NYSE has moved -0.02% during the same time). Take a look at those market moves the past three months and tell me that you don't understand why longs or shorts aren't making a ton of money. Well that isn't too difficult to figure out so let me just get it out of the way.
Three out of four stocks follow the general trend of the market. In this downtrend from the October 2007 highs, it has been around four out of five. So obviously it has been very important to follow the market and do what it wants to do. The only bad thing is that some stocks want to breakdown and produce some big gains, it seems like, but they are just holding in that holding pattern that you are in waiting for it to either break lower or give you that FULL COVER signal. Until the stock tells us what to do, you stay in that pattern and wait to make your big money. If a better faster moving stock shows up, don't hesitate in moving the money from the lame-o stock to one that is working on volume.
FREE YOUTUBE VIDEO:
That has been the pattern since last week when the market broke down away from the 50 day moving average on January 14th. Following that break down, stocks bounced back the next two days on higher volume. This was not was supposed to happen according to textbook stock movements.
Normally, when the market breaks away like that from a key moving average and many "attempted leading" stocks have big reversals, you usually do not see a halt in the decline so quickly. So after those two days of prices holding it then appeared that the market might be able to turn and give us the low volume uptrend we are waiting for so we can load up our shorts when the market fails at the 200 day moving average. So no big deal. We have a new plan.
Then on Tuesday, the market tanks on the inauguration. No big deal now we are only back to being in our confirmed downtrend and now we know the Thursday and Friday support was just temporary and not anything important. With Tuesday's breakdown a more shocking situation occurred; we were given seven clear "get short" signals.
With those seven short signals it now is clear to me the market is ready to break down. Right? Wrong. LOL. Instead the market held in there with a stronger volume rally. But a very important data point occurred on this strong up day. What was it? All of my shorts from the day before held in and not a single one gave me a FULL COVER and only one gave us a PART COVER signal. This indicated to me that the short side was still probably the right side.
That was then confirmed on Thursday with the bearish session the market put in, with my new shorts and old shorts going down along for the ride. And on Friday, thanks to a weak open, stocks did not gain much ground and my shorts continued to look like great money making positions. The other good news to go along with our winning shorts, is that on Wednesday, the day after we got seven short signals, we got two new long signals. One long is up over 4% since our purchase and the other one is hanging in with nice price/volume/BOP characteristics. That good news along with one of our long-term (6 1/2 months) shorts hit the 85% gain mark intraday this week makes this an overall great week for me while the market did nothing.
The interesting part about this week to me though was not necessarily the overall stock market. It was some individual sectors that stuck out. For the first time in a long-time, that I can remember, we got some speculative action on a few stocks related to stem-cells. ASTM, STEM, and especially GERN saw some great price action this week as the work on embryonic stem cells get under way. Another exciting group from a leadership standpoint is the education stocks.
The good news about the education stocks, for the bulls, is that some of these stocks are heavily shorted as hedge funds release info about the number of enrollments at these universities being exaggerated or made-up. Well, I hope these shorts have a lot of money, because if big institutions keep buying them like they have recently there will be a lot of short-squeezing that follows. Stocks like ESI, COCO, LOPE, APOL, CECO, DV, CPLA, and others have very bullish chart patterns. But they don't necessarily have buyable patterns. While I am long one leader in this group already, there are at least three other leading stocks I would love to get long if they setup. However, they have to setup. And as long as the rumor mills keep pumping out deadly short stories during a time when the big boys are loading up on these stocks, you know you got some great money that can be made.
The last sector I want to talk about is a sector that I really love not just for when they setup and breakout but for the long-term till-you-die kind of investing. That is gold/silver. For readers that do not subscribe to my site, you might not be familiar with my love of gold. What is sad is that I have not put my money where my mouth is. But back in 2002, shortly after the 9/11 attacks I had a very blunt conversation with a gold dealer on Maui. I told him "to buy as much inventory as you can now because gold is going to be the "US Dollar" of the future." I told this man (Mike X at Kula Gold) that he should buy gold and lock it in the future for this price and short the dollar as the dollar is no longer the "safe currency" it looked like before 9/11. Post-9/11 I told Mike I believe that Gold would go higher in value as more people found safety in it.
Now when I told Mike this I had NO CLUE that our government would be so inept as to actually give tax cuts WHILE INCREASING SPENDING AT THE SAME TIME!!!! Now the Fed is printing Dollars like it is worthless paper and Obama believes he can spend trillions of worthless Dollars to get us out of this mess. I hate to tell everyone this: THIS IS A GLOBAL ECONOMY NOW. The government is spending money like there is still a bull market of 1999 out there. Where are they going to get this money in the future? Companies are moving to Dubai to avoid the HUGE corporation taxes the USA has on OUR OWN businesses. The government keeps raising our taxes so that we can't put our FREE dollars into the market and have people exchange them for the goods and services that THEY choose to use. Instead our hard earned money is confiscated via the income tax and the people that work hard for their money are FORCED (not willingly allowed to donate to who they want, like most great people do) to give their money to some people who will use it to buy heroin and crack (I am from St. Louis--I am not a blind fool!) with the money our government gives them.
Also how can we be giving tax rebates to people who don't even pay taxes???? Has this country lost its freaking mind? Are we controlled by people who want to take all of our wealth??? To me it looks like it and I tell you what I have about had enough! You can tax me on what I want. But to tax me on WHAT I EARN VIA MY HARD WORK and then take the money and use it on things I DONT WANT MY MONEY USED ON is pure THEFT!
So instead of being a slave to the almighty dollar that WILL lose its value more and more LIKE IT ALREADY HAS SINCE WE WENT OFF THE GOLD STANDARD, I am going to do something about it and begin to put SOME (not all--SOME!) of my IRA money into Gold stocks, Gold mutual funds, Gold coins, Gold bullion (I'll pray for this), or Gold ETFs. I am upset I did not do this in 2002 when I first made this gut call and I am even upset for not doing this two weeks ago when I told all my members in my chat room that I would be doing this. However I am going to make my move now. I have plenty of money to actively invest in the stock market to put into stocks like LMLP, HIL, FMDAY, EGHT, TASR, AAPL, IST, AFSI, HRZ, and many other great past winners I have been blessed to be a part of. So a little bit into gold will be worth it just in case Gold goes from 900 to 9000 in the next so many years. That little bit I have will pay off.
I know stocks can go to zero. I know fiat money printed on paper can go to zero, I know even great mutual funds can go bust and go to near zero...but the last time I have checked, gold has NEVER been worthless and even when it was cheap and looked like it was a bad investment it sure looks like a smart one now. :) This isn't 1999 anymore and it never will be again. I just thank God above that I was blessed to have known the CANSLIM system in early 1999 and had my price bounces-breakouts/volume surges/max green BOP charts down by 1998. This allowed me to be fully ready for both 1999 and late-2002, 2003. 1998, 2004, 2005, and 2006 were good years too but nothing was like 99 and 03. I know 1999 can't happen again as that was a BUBBLE beyond any bubble ever seen in the US stock market COMBINED with the Y2K fear and a flood of money from the Fed. But I do know that 2003 markets come all the time when bear markets turn from a bear market to a bull market you will always see charts go from ugly to beautiful as leaders take control of the market. It just takes time.
Make sure you stay patient with this market and even though in the past three months it has basically gone NOWHERE (from 10/27/08 to 1/23/09 the Nasdaq has moved -1.9% and the NYSE has moved -0.02% during the same time). Take a look at those market moves the past three months and tell me that you don't understand why longs or shorts aren't making a ton of money. Well that isn't too difficult to figure out so let me just get it out of the way.
Three out of four stocks follow the general trend of the market. In this downtrend from the October 2007 highs, it has been around four out of five. So obviously it has been very important to follow the market and do what it wants to do. The only bad thing is that some stocks want to breakdown and produce some big gains, it seems like, but they are just holding in that holding pattern that you are in waiting for it to either break lower or give you that FULL COVER signal. Until the stock tells us what to do, you stay in that pattern and wait to make your big money. If a better faster moving stock shows up, don't hesitate in moving the money from the lame-o stock to one that is working on volume.
FREE YOUTUBE VIDEO:
Thursday, January 22, 2009
Market Gives Back Some Of Yesterday's Gains As The 50 Day Moving Average Continues To Be A Tough Resistance Point For This Market
I think it is fair to say that today was a very wild intraday wild for those that follow the market intraday. The market opened flat on the Nassy and SP 500 but gapped lower for the DJIA setting a negative tone in the AM. That was confirmed as stocks fell, making for an ugly morning, until around noon.
That is when stock roared back and came back to green for the Nassy and SP 500. However, the DJIA was still negative showing its negative divergence. Before the close, sadly for those looking for a bottom, the bulls could not hold on to the gains and the market closed in the red across the board.
While it was not a very bearish session, the damage was still done as the market failed to follow through on yesterday's gains just like on Monday when it failed the attempted reversal on Thursday and Friday. This is not the action that you normally would like to see in a market possibly putting in a low. Instead this is the action of a market ready to continue on its way lower. How can we judge what the markets next move will be? Well we can do that by looking at the index action and current stocks.
If we do that we can see that the market attempted a rally from the November lows that took most indexes up between 20% and 30%. However, this rally came without something that we have seen in most bear market rallies. That is a leading group setting up and breaking out of a hot chart pattern in a few stocks. Sadly, this last rally was full of ONLY stocks that were pulverized in the 2008 downtrend. Any stock down 75%+ from their 2007/2008 highs seemed to get a nice bid during the bounce. Since these lame stocks bounced and leading stocks, at the time, did not do well, it was clear that this bounce would fail faster than the length of time that it would work upward.
That was proven in early January when all of a sudden I had some newly crowned "wise" investors lose their wise heads and start complaining that they felt bad being left out of a rally their friends were in. Then when I find out more I learn that those same friends hooting and hollaring about the rally are the same investors that bought C, BAC, BSC, and LEH all the way down buying the bargains one dollar lower each time. Of course, these guys are going to brag on a small rally!!! They need you to get excited about this market so that they can get you to help bid their stock up. Sadly you can't do that but they like to believe you can.
In a good bear bounce, the IBD 100 and IBD 85-85 will lead the market higher on a % gain basis and should have heavier volume than the 50 day volume aveage. If this is the case, you can normally find a few CANSLIM quality long setups with proper characteristics and then you can sometimes find some "hot and pretty" charts with perfect BOP/volume/price setups in leading sectors. When you see this, yet see low volume on the market general indexes, then you know you have a good bounce. However, without these nice setups, like August to October 2007, we are not going to find APPY "hot and pretty" charts or DRYS "perfect CANSLIM setups" that return 100% in a couple of months. So make sure you check the stock quality during a bear market bounce.
Now, if your rally is coming after a very low volume market downtrend, you can see some max green BOP bases in nice tight price patterns setting up, with some of those having strong CANSLIM traits, you can see some CANSLIM charts setting up and breaking out, and the general market uptrend is coming on higher volume on the follow-through day and the days following, you know you have a bullish market setup showing up. If this beautiful setup happens and more and more green to max green BOP filled charts setup with great price and volume traits get ready to get 100% or 200% to 400% invested on margin if you have it.
Right now, going that long isn't going to happen, but every subscriber should understand that after we were handed seven new short positions we did not have to give A SINGLE ON back up yesterday. That followed by today's turn lower has all seven of our shorts in profitable positions to go along with our other 35 shorts. This should be the time to make big money on the shorts side or else we will have to engage in a major short covering campaign to avoid losses. So where we are at right now we can make good money on our 10% (to possibly 20% for some of you) shorts or we can get out fast and keep our losses EXTREMELY SMALL by getting out of dodge if we are wrong. And if that happens our longs will be there to make up for that side. But hopefully, if everything works out right, we are about to make some major profits in some to all of our shorts. After that, we can then get our "pretty and hot" setups to get very long and make some big money on those longs and our current few.
Stay positive, remember FOR NOW cash is KING!, and a new dawn will come where we can go fully margined long and make big money. Until this happens, let's profit as best as we can on the short uptrends and big downtrends. Stay flexible, stay cash heavy, and stay ready! We can all do this!
VIDEO ONE, TWO, AND THREE AVAILABLE IN THE GOLD FORUMS FOR GOLD AND PLATINUM SUBSCRIBERS.
FREE YOUTUBE VIDEO:
That is when stock roared back and came back to green for the Nassy and SP 500. However, the DJIA was still negative showing its negative divergence. Before the close, sadly for those looking for a bottom, the bulls could not hold on to the gains and the market closed in the red across the board.
While it was not a very bearish session, the damage was still done as the market failed to follow through on yesterday's gains just like on Monday when it failed the attempted reversal on Thursday and Friday. This is not the action that you normally would like to see in a market possibly putting in a low. Instead this is the action of a market ready to continue on its way lower. How can we judge what the markets next move will be? Well we can do that by looking at the index action and current stocks.
If we do that we can see that the market attempted a rally from the November lows that took most indexes up between 20% and 30%. However, this rally came without something that we have seen in most bear market rallies. That is a leading group setting up and breaking out of a hot chart pattern in a few stocks. Sadly, this last rally was full of ONLY stocks that were pulverized in the 2008 downtrend. Any stock down 75%+ from their 2007/2008 highs seemed to get a nice bid during the bounce. Since these lame stocks bounced and leading stocks, at the time, did not do well, it was clear that this bounce would fail faster than the length of time that it would work upward.
That was proven in early January when all of a sudden I had some newly crowned "wise" investors lose their wise heads and start complaining that they felt bad being left out of a rally their friends were in. Then when I find out more I learn that those same friends hooting and hollaring about the rally are the same investors that bought C, BAC, BSC, and LEH all the way down buying the bargains one dollar lower each time. Of course, these guys are going to brag on a small rally!!! They need you to get excited about this market so that they can get you to help bid their stock up. Sadly you can't do that but they like to believe you can.
In a good bear bounce, the IBD 100 and IBD 85-85 will lead the market higher on a % gain basis and should have heavier volume than the 50 day volume aveage. If this is the case, you can normally find a few CANSLIM quality long setups with proper characteristics and then you can sometimes find some "hot and pretty" charts with perfect BOP/volume/price setups in leading sectors. When you see this, yet see low volume on the market general indexes, then you know you have a good bounce. However, without these nice setups, like August to October 2007, we are not going to find APPY "hot and pretty" charts or DRYS "perfect CANSLIM setups" that return 100% in a couple of months. So make sure you check the stock quality during a bear market bounce.
Now, if your rally is coming after a very low volume market downtrend, you can see some max green BOP bases in nice tight price patterns setting up, with some of those having strong CANSLIM traits, you can see some CANSLIM charts setting up and breaking out, and the general market uptrend is coming on higher volume on the follow-through day and the days following, you know you have a bullish market setup showing up. If this beautiful setup happens and more and more green to max green BOP filled charts setup with great price and volume traits get ready to get 100% or 200% to 400% invested on margin if you have it.
Right now, going that long isn't going to happen, but every subscriber should understand that after we were handed seven new short positions we did not have to give A SINGLE ON back up yesterday. That followed by today's turn lower has all seven of our shorts in profitable positions to go along with our other 35 shorts. This should be the time to make big money on the shorts side or else we will have to engage in a major short covering campaign to avoid losses. So where we are at right now we can make good money on our 10% (to possibly 20% for some of you) shorts or we can get out fast and keep our losses EXTREMELY SMALL by getting out of dodge if we are wrong. And if that happens our longs will be there to make up for that side. But hopefully, if everything works out right, we are about to make some major profits in some to all of our shorts. After that, we can then get our "pretty and hot" setups to get very long and make some big money on those longs and our current few.
Stay positive, remember FOR NOW cash is KING!, and a new dawn will come where we can go fully margined long and make big money. Until this happens, let's profit as best as we can on the short uptrends and big downtrends. Stay flexible, stay cash heavy, and stay ready! We can all do this!
VIDEO ONE, TWO, AND THREE AVAILABLE IN THE GOLD FORUMS FOR GOLD AND PLATINUM SUBSCRIBERS.
FREE YOUTUBE VIDEO:
Wednesday, January 21, 2009
Yesterday's Nasty Breakdown Was Quickly Met With Some Bullish Intraday Support; Despite Today's Gains, The Market Still Looks Very Weak
Stocks put in a very nice intraday reversal off the lows today that sent all the indexes roaring toward their HOD as most indexes only closed just a tad off the HOD level. Volume also came in heavier on both exchanges giving some hope to bulls that another breakdown might get some support.
However, if you remember just a few days ago, we had the almost exact situation. Last week, on Wednesday it looked like the market was ready to crack wide open and go to new lows. But on Thursday and Friday, the general market indexes managed to contain the downside and actually closed in the green on higher volume. That seemed all right and well until Tuesday.
On Tuesday, the stock market cracked opened again on mixed volume with a lot of stocks that were holding up finally breaking down. So that breakdown was a move that typically leads to the market opening wide up and breaking down. This means that shorts should be ready to make a lot of money. Especially with us having seven new shorts. However, that did not happen.
Instead, prices moved higher today and did so on a very large increase in prices. However, the positive news for bears is that the price gains of today did not complete reverse the price losses of Tuesday. Also the seven new shorts that we took yesterday gapped higher thus giving us excellent prices for our short positions. So if every subscriber used limits, LIKE I TOLD YOU TO DO, then you all are now short some very weak stocks at some good prices. This has us setup in excellent reward/risk positions. Even if we have to cut our losses with the market rallying more from these levels, it was still a wise move to take these stocks short as they have patterns setup to provide us with gains of anywhere from 50% to 75% to the ultimate 99%.
Bear markets are usually never as smooth as bull markets, so it is not shocking to not see the market not crack wide open when it looks like it is about ready to. One of the reasons for this might be that there are still too many bears on the short term via the AAII bull/bear reading. A new reading comes out tomorrow, I believe, but right now it is obvious that the bears are beating the bulls. But the investors intelligence numbers show that the professional newsletter writers are bullish still with bulls coming in around 45% and bears coming in around 34%. Clearly, if this market was going to rally in a very bullish fashion, we would see bears beating bulls, since the market likes to do the opposite of the crowd.
One of the reasons I personally thought today would be a down day was that the put/call ratio fell from around 1.0 to .98 yesterday. That was my tell that something is wrong. The market fell around 6% on the NYSE yesterday yet more investors bought calls than puts as prices fell. That hinted to me that the public retail option buying crowd is OUT OF TOUCH with the reality of the market.
While in the long term that may not pay off, it very well could on the short term. Therefore, monitor our shorts closely for possible cover moves. We do have seven strong longs (none are "hot" or "pretty") that will definitely rally if the market decides to rally or move sideways with an upwards bias. However, they are not big enough that if a reversal happens the longs will hurt. Instead the longs are for "in case" moves. That is "in case" the market moves higher, we have seven strong longs to make money while we wait for the rally to fail.
Why do I feel it will fail? Because no "hot" long can stay "hot," any long that I take a position in either leaves me with a small loss or a small gain (ie...not a single recent long is making me rich!), and we continue to add shorts while dropping longs. We have gone from 13 longs to 5 longs to 7 longs the past seven days while going from 34 shorts to 35 shorts to 42 shorts! We lose longs yet gain shorts, while the market drifts sideways. That tells me that when this market decides to start trending again that trend will be down.
Now, is it possible the market can continue to do what it has done since October 27-to-now (the Nasdaq has moved a whopping +0.08% in almost three months) and drift sideways? Absolutely. However, when this drifting sideways is done, the market should move lower since we have so many short positions in downtrends and so few longs in nice uptrends. Now if it does turn into an uptrend, obviously we will take our profits from our long-term shorts, cover our losing recent shorts, and get long the new breakouts that come out of "hot, green, tight, accumulation filled" charts.
Right now, for the past three months, the market has really gone a whole lot of nowhere. That has been the case with our P&L statement but something tells me a trend is about to resolve itself from this long-term downtrend, intermediate term downtrend, sub-intermediate term LATERAL, and short-term LATERAL market. Once a trend is in place it normally stays in place and that would mean a move down. We will see what happens. For now, we do what the market tells us and hold a LOT OF CASH while we wait for the CLEAR "GET LONG NOW" or "GET SHORT NOW" signal. I'll tell you when that alarm goes off!
top short holdings with total returns that were UP yesterday (forgot to post yesterday): MOS 62% SPG 51% CEDC 72% CETV 83% GGB 57% APD 43% SBAC 47% OKE 37% RIMM 49% SPW 64% TITN 46% AAPL 51% PLCE 28% CASY 21% LLL 18% CPRT 29% SDA 76% AMX 50% IPHS 21% POT 58% CYT 61% BOH 20% ARB 70% CEO 36% CFR 17%
VIDEO ONE, TWO, AND THREE AVAILABLE ON THE GOLD FORUMS FOR GOLD AND PLATINUM MEMBERS.
FREE YOUTUBE (SMALL PART ONE) VERSION:
However, if you remember just a few days ago, we had the almost exact situation. Last week, on Wednesday it looked like the market was ready to crack wide open and go to new lows. But on Thursday and Friday, the general market indexes managed to contain the downside and actually closed in the green on higher volume. That seemed all right and well until Tuesday.
On Tuesday, the stock market cracked opened again on mixed volume with a lot of stocks that were holding up finally breaking down. So that breakdown was a move that typically leads to the market opening wide up and breaking down. This means that shorts should be ready to make a lot of money. Especially with us having seven new shorts. However, that did not happen.
Instead, prices moved higher today and did so on a very large increase in prices. However, the positive news for bears is that the price gains of today did not complete reverse the price losses of Tuesday. Also the seven new shorts that we took yesterday gapped higher thus giving us excellent prices for our short positions. So if every subscriber used limits, LIKE I TOLD YOU TO DO, then you all are now short some very weak stocks at some good prices. This has us setup in excellent reward/risk positions. Even if we have to cut our losses with the market rallying more from these levels, it was still a wise move to take these stocks short as they have patterns setup to provide us with gains of anywhere from 50% to 75% to the ultimate 99%.
Bear markets are usually never as smooth as bull markets, so it is not shocking to not see the market not crack wide open when it looks like it is about ready to. One of the reasons for this might be that there are still too many bears on the short term via the AAII bull/bear reading. A new reading comes out tomorrow, I believe, but right now it is obvious that the bears are beating the bulls. But the investors intelligence numbers show that the professional newsletter writers are bullish still with bulls coming in around 45% and bears coming in around 34%. Clearly, if this market was going to rally in a very bullish fashion, we would see bears beating bulls, since the market likes to do the opposite of the crowd.
One of the reasons I personally thought today would be a down day was that the put/call ratio fell from around 1.0 to .98 yesterday. That was my tell that something is wrong. The market fell around 6% on the NYSE yesterday yet more investors bought calls than puts as prices fell. That hinted to me that the public retail option buying crowd is OUT OF TOUCH with the reality of the market.
While in the long term that may not pay off, it very well could on the short term. Therefore, monitor our shorts closely for possible cover moves. We do have seven strong longs (none are "hot" or "pretty") that will definitely rally if the market decides to rally or move sideways with an upwards bias. However, they are not big enough that if a reversal happens the longs will hurt. Instead the longs are for "in case" moves. That is "in case" the market moves higher, we have seven strong longs to make money while we wait for the rally to fail.
Why do I feel it will fail? Because no "hot" long can stay "hot," any long that I take a position in either leaves me with a small loss or a small gain (ie...not a single recent long is making me rich!), and we continue to add shorts while dropping longs. We have gone from 13 longs to 5 longs to 7 longs the past seven days while going from 34 shorts to 35 shorts to 42 shorts! We lose longs yet gain shorts, while the market drifts sideways. That tells me that when this market decides to start trending again that trend will be down.
Now, is it possible the market can continue to do what it has done since October 27-to-now (the Nasdaq has moved a whopping +0.08% in almost three months) and drift sideways? Absolutely. However, when this drifting sideways is done, the market should move lower since we have so many short positions in downtrends and so few longs in nice uptrends. Now if it does turn into an uptrend, obviously we will take our profits from our long-term shorts, cover our losing recent shorts, and get long the new breakouts that come out of "hot, green, tight, accumulation filled" charts.
Right now, for the past three months, the market has really gone a whole lot of nowhere. That has been the case with our P&L statement but something tells me a trend is about to resolve itself from this long-term downtrend, intermediate term downtrend, sub-intermediate term LATERAL, and short-term LATERAL market. Once a trend is in place it normally stays in place and that would mean a move down. We will see what happens. For now, we do what the market tells us and hold a LOT OF CASH while we wait for the CLEAR "GET LONG NOW" or "GET SHORT NOW" signal. I'll tell you when that alarm goes off!
top short holdings with total returns that were UP yesterday (forgot to post yesterday): MOS 62% SPG 51% CEDC 72% CETV 83% GGB 57% APD 43% SBAC 47% OKE 37% RIMM 49% SPW 64% TITN 46% AAPL 51% PLCE 28% CASY 21% LLL 18% CPRT 29% SDA 76% AMX 50% IPHS 21% POT 58% CYT 61% BOH 20% ARB 70% CEO 36% CFR 17%
VIDEO ONE, TWO, AND THREE AVAILABLE ON THE GOLD FORUMS FOR GOLD AND PLATINUM MEMBERS.
FREE YOUTUBE (SMALL PART ONE) VERSION:
The Selloff Gains Steam On All Indexes, With The NYSE Selling Off On Higher Volume; Long Dollar, Long Gold, And Short Past Leaders (AAPL, POT, CETV...
Stocks sold off hard today as most indexes fell between 4% and 6% with volume higher on the NYSE but lower on the Nasdaq. However, the lower volume didn't matter as it was still above average and the breakaway from the 50 day moving average on the NYSE and Nasdaq is signaling to us that the short term rally that did appear like it was about to start will not start. This is probably disappointing for bulls but they can't be that shocked because as we have gone along the past seven days the charts have continually gotten worse.
About six days ago we had 13 small long positions and going into today we only had 5 long positions. All of those remain small since the trend is still very down. And that was proven to be a smart move today as the market cracked wide open thus creating a little bit of damage to our current longs and our current shorts. However, the damage to the shorts is obviously a good thing as it has given us a nice day of profits when most "bottom fishers" just lost more money than what they already lost in 2008 alone. The trend is your friend everyone. Please, never fight it! So many want to buy the bargains and have been doing this the entire way into the pullback. This has obviously been the wrong play and will continue to be the wrong play for as long as we are moving lower on the long-term trend, the intermediate term trend, the sub-intermediate trend, and the short-trend.
There is one thing very much for sure!! and that is that the long side is still not working. Those that think going long now are still clearly missing where the big money is being made. The short side. Until this entire stock market can actually start to rally on very strong volume and pullback on low volume which then unleashes "very beautiful max green BOP filled" and "CANSLIM quality" stocks the only right side will continue to be the short side.
Today we had 35 short positions going into today's market session. At the end of the day we had 34 of 35 higher for gains!!!! Woo hoo is about all I can say to that. The other important information came via our longs. Our five remaining longs all could have swooned today as the market did kill a lot of longs. But our longs are clearly leaders in this rough environment and they all did hold up. But to get me to become a bull and want to load up on longs not only will my current longs have to hold in better and get more green to max green BOP on their charts but I must also start to see setups that hold up the entire way and do not turn into disappointments. Right now, there just is not any pattern out there price, volume, and BOP relationship wise that makes me go "yes! that is the stock I am going to fully margin myself on."
I hope that when this next round of selling is done that we can at least have a short-term bull market in a long-term downtrend. Nothing makes you feel better than getting a 300% return in 3 months in a beautiful long and then repeating that process over and over in a bull market. Bull markets can make you filthy rich in a short time if you are in the right bull market. You normally get 3 to 4 times a decade to get a shot at becoming very wealthy by getting long the "perfect" setups that we used to get often enough from 1995 to 2007 that I would have to believe they will come back when this bear market is over.
Nobody knows how long this bear is going to last but we don't need to know how long it is going to last. All we need to do is keep an eye on the leading individual stocks and the general market. When the market stops trending lower and stops throwing up shorts and gets back to its pre-2008 way of operating then I will be very happy get long our next round of leaders
But that might be a while from now so we must focus on the short side and focus on protecting our cash levels. New investors I want you to completely understand that RIGHT NOW, CASH IS KING!!! If you are an experienced investor and have some experience working on the short side, you have my full blessing to start pressing your shorts. If they don't work you know what to do. Cut your losses very fast and make sure you keep all your shorts to a normal size. Don't get too nuts on any of them but don't be afraid to get short any of these new seven shorts as they all have the potential major issues that these stocks will have to work through.
Remember, in a bear market 3 out of 4 stocks follow the market lower, In this market is worse as 4 out of 5 stocks follow the market lower. So if you decide to buck the trend you are playing with very dangerous fire. Being long is the right move ONLY in bull markets. This is not a bull market. Only cash and a decent holding of shorts is the right play. The most perfect play is long gold, long the US Dollar, short the banks, and short the past leaders (AAPL CETV CEDC RIMM POT MOS etc...). If you have this combination in your IRA you are doing very well and need to keep things up. If you don't have this combination in your IRA then you need to start getting to work on it now.
This market is back to being in a clear downtrend, the few nice charts out there are now gone or are close to being gone, and our shorts are doing very well which is coming with another 7 possible new shorts.
Be careful out there everyone, stay bullish on yourself, and remember the trend is your friend. PLEASE WATCH THE VIDEO BELOW TO FULLY UNDERSTAND THE MARKET SITUATION WE ARE IN. ALOHA!
PLATINUM AND GOLD MEMBERS CAN VIEW FULL SIZE VIDEOS 1-3 IN THE GOLD FORUMS. FREE YOUTUBE VIDEO:
About six days ago we had 13 small long positions and going into today we only had 5 long positions. All of those remain small since the trend is still very down. And that was proven to be a smart move today as the market cracked wide open thus creating a little bit of damage to our current longs and our current shorts. However, the damage to the shorts is obviously a good thing as it has given us a nice day of profits when most "bottom fishers" just lost more money than what they already lost in 2008 alone. The trend is your friend everyone. Please, never fight it! So many want to buy the bargains and have been doing this the entire way into the pullback. This has obviously been the wrong play and will continue to be the wrong play for as long as we are moving lower on the long-term trend, the intermediate term trend, the sub-intermediate trend, and the short-trend.
There is one thing very much for sure!! and that is that the long side is still not working. Those that think going long now are still clearly missing where the big money is being made. The short side. Until this entire stock market can actually start to rally on very strong volume and pullback on low volume which then unleashes "very beautiful max green BOP filled" and "CANSLIM quality" stocks the only right side will continue to be the short side.
Today we had 35 short positions going into today's market session. At the end of the day we had 34 of 35 higher for gains!!!! Woo hoo is about all I can say to that. The other important information came via our longs. Our five remaining longs all could have swooned today as the market did kill a lot of longs. But our longs are clearly leaders in this rough environment and they all did hold up. But to get me to become a bull and want to load up on longs not only will my current longs have to hold in better and get more green to max green BOP on their charts but I must also start to see setups that hold up the entire way and do not turn into disappointments. Right now, there just is not any pattern out there price, volume, and BOP relationship wise that makes me go "yes! that is the stock I am going to fully margin myself on."
I hope that when this next round of selling is done that we can at least have a short-term bull market in a long-term downtrend. Nothing makes you feel better than getting a 300% return in 3 months in a beautiful long and then repeating that process over and over in a bull market. Bull markets can make you filthy rich in a short time if you are in the right bull market. You normally get 3 to 4 times a decade to get a shot at becoming very wealthy by getting long the "perfect" setups that we used to get often enough from 1995 to 2007 that I would have to believe they will come back when this bear market is over.
Nobody knows how long this bear is going to last but we don't need to know how long it is going to last. All we need to do is keep an eye on the leading individual stocks and the general market. When the market stops trending lower and stops throwing up shorts and gets back to its pre-2008 way of operating then I will be very happy get long our next round of leaders
But that might be a while from now so we must focus on the short side and focus on protecting our cash levels. New investors I want you to completely understand that RIGHT NOW, CASH IS KING!!! If you are an experienced investor and have some experience working on the short side, you have my full blessing to start pressing your shorts. If they don't work you know what to do. Cut your losses very fast and make sure you keep all your shorts to a normal size. Don't get too nuts on any of them but don't be afraid to get short any of these new seven shorts as they all have the potential major issues that these stocks will have to work through.
Remember, in a bear market 3 out of 4 stocks follow the market lower, In this market is worse as 4 out of 5 stocks follow the market lower. So if you decide to buck the trend you are playing with very dangerous fire. Being long is the right move ONLY in bull markets. This is not a bull market. Only cash and a decent holding of shorts is the right play. The most perfect play is long gold, long the US Dollar, short the banks, and short the past leaders (AAPL CETV CEDC RIMM POT MOS etc...). If you have this combination in your IRA you are doing very well and need to keep things up. If you don't have this combination in your IRA then you need to start getting to work on it now.
This market is back to being in a clear downtrend, the few nice charts out there are now gone or are close to being gone, and our shorts are doing very well which is coming with another 7 possible new shorts.
Be careful out there everyone, stay bullish on yourself, and remember the trend is your friend. PLEASE WATCH THE VIDEO BELOW TO FULLY UNDERSTAND THE MARKET SITUATION WE ARE IN. ALOHA!
PLATINUM AND GOLD MEMBERS CAN VIEW FULL SIZE VIDEOS 1-3 IN THE GOLD FORUMS. FREE YOUTUBE VIDEO:
Saturday, January 17, 2009
Second Bullish Intraday Reversal In-A-Row Comes On Lower Volume; For The Week, Stock Indexes Pullback On Higher Volume
It was a fitting end to a week that saw emotions pull dramatically at first to the bear side then to the bull side before the week came to end. Today, like yesterday, saw the market selloff early on only to see the bulls pull out an amazing display of confidence as indexes reversed and closed in the green on both Thursday and Friday’s trading session. The same market action that was seen on Thursday and Friday was also seen this week during the past five session.
Stocks started the week on a very weak note, sending me from 11 small longs to 5 smaller longs as some recent stocks that I went long gave me signals that they were not ready to blast off and make runs higher quickly. But there was a slight hint that the turn down might not last long. What was that hint? It was the fact that I could only generate ONE NEW short position during the first three days of this very weak week. The Nasdaq fell 5.2% but I only had ONE NEW short that setup in what I consider to be a very high reward/low risk pattern.
After these three ugly sessions, we saw the bullish reversals on Thursday and Friday, that helped confirm why we only had ONE new short and not 10 new short positions during those three days. If the market was ready to crack wide open IMMEDIATELY we probably would have had at least a new short a day. However, that isn’t going to happen when so many stocks are so far extended from their 200 day moving average.
I guess I forgot how extended stocks were on the downside until I noticed in every single one of my short scans (four of them) every single day this week showed the SAME THING. That is that every stock that still has a big previous uptrend to give back from the 02-07 rally is currently too far extended from their 200 day moving averages to be safe shorts. Most of these stocks have broken down and look ugly. But they will not be shorts until they can catch back up with their 200 day moving averages.
This means that we could have a few weeks to a few months where stocks rally. Whatever stock sets up and breaks out during that time, I will be more than happy to get long and take some profits on the way up, if we get this rally. However, I honestly believe the more prudent and profitable trade will be what follows the uptrend that we could be in store for. That will be the resulting failure of prices around either key resistance points in the index charts or their 200 day moving averages. Where the index 200 DMA’s are most stocks with excellent possible setups for future shorts are also.
Now make no mistake about my stance on the market. I am NOT a perma-bear. I only follow the market’s overall trend as that is what has proven to make the big money time-after-time. The smart investor knows that having a bearish bias is foolish because the market trends higher most of the time historically and you are never going to find a short that can produce a 2,390% gain in nine months like TASR did in 2003 for me. The best you will get with a short is 99.999%–you can not do better than this. So obviously the smart money is going to be very bullish in uptrends with volume and bullish in uptrends without volume.
Therefore, I assume we are only going to have a counter-trend rally (ie…bear market rally) that will eventually die out. Why do I believe this? Because, the setups for longs are pathetic. While I have only 5 longs what is worse is that only ONE looks pretty. And this one pretty long is no where to being perfect and is close to losing its “pretty” status. This is the OPPOSITE of what you see BEFORE big rallies that HOLD. Before the 1999, 2002-2003, 2004, 2005, 2006, and 2007 uptrends, you could see “hot, nice, pretty, CANSLIM quality, and perfect” setups in more than five places in the stock market. Right now, these high-quality charts are NO WHERE to be found. When these charts and CANSLIM quality longs are no where to be found, and bank stocks are leading the way down, you can almost be 100% sure that any rally that starts now will not last long.
This is why I only expect a short-term rally that will only allow us to take profits in at 25%, 50%, and 100% in the great longs that we get. I truly doubt a rally, with the lack of leadership that we have–sorry, folks, education and small bank stocks do NOT cut it for REAL leadership–in the stock market I doubt we are going to get any 1000% runs in any long right now. However, a 100% gain in three months would be FANTASTIC right now as I have almost forgotten what it is like to be long, be right, and make a lot of money from that correct decision.
No matter, with that. The most important thing is to make money now and not just some money but enough money that you and I can make a living doing what we love. After you make the money, you can donate it to charity or to whoever you want. But when you are out there going for the big money you have to go get it! That means going with the trend, as this is obviously where history has told us the big money is made. This means, more-than-likely, that we should continue to hold our long-term shorts that are still giving us huge gains like our short in CETV (80% in six months), SDA (76% in four months) or even AAPL (48% in four months) until we get a clear signal via a huge volume move above the 50 day moving average or a move above the 200 day moving average. Once that happens, I have no problem getting out of my shorts and then HOPEFULLY turn bullish. But until that happens, I am holding my shorts.
Also, the fact that I have very few longs that look beautiful and/or have that CANSLIM quality strength in it with a proper base combined with so many potential really strong short candidates and it only makes sense to lean still to the short side.
But ultimately whatever happens will happen. I am ready for a dead market where we continue to go nowhere any time soon (11/14/08-1/16/09 the Nasdaq has moved .82%), I am ready for a potential low volume bull run here (I would prefer a heavy volume breakout that starts a new bull market–but I am VERY REALISTIC and NOT hopeful), and I am ready for the low volume rally to fail and lead to a better shorting setup with a lot of stocks that I have listed on my New Shorts page. The bottom line: I am prepared for anything and everything. No matter what this market does I am ready. And like I said earlier, it sure isn’t doing much the past three months at all. In fact, it has been rough for bulls and bears recently which is why I continue to recommend that everyone take SMALL positions in stocks right now until a PERFECT setup shows up on either the longs or shorts. Until that perfect setup comes, it is too random of a market to be “cocky confident” in either a long selection or a short selection when you hold positions for more than a few weeks like I do.
If you are a short term daytrader that loves to play support and resistance levels, this is your kind of market. But for those of you that like to go long, sit back, and watch the stock rise steadily higher keeping you in it in a nice calm fashion, it might be a little while before that game comes into play. However, I am sure that sometime soon (because it has been a long time already) we will have a beautiful long setup with the right Technical and Fundamental characteristics.
The most important thing right now is to KEEP YOUR CASH LEVELS VERY HIGH, invest wisely using tight stops and smaller positions than you would normally take in a bull market, and constantly keep your watchlist updated. This updating process will keep you wise to when the leaders change and then you can see that strength in the price/volume/BOP levels on our charts. If we can then confirm that with fundamentals things will be going very well! Right now, there is no doubt about it, in this market environment, with all of the random action, you must keep your longs and shorts to a manageable level. There are times to be 400% invested on margin and then there are times to be only 10% invested. This is one of those times to be invested in the 10% to 20% range. Trust me, when the easy uptrends (2003) come along that produce 300%, 500%, 1000%, and 2000% winners comes back we will be constantly 400% invested. Right now, you would be a fool to be that heavily invested.
There are a lot of negative economic reports out there and earnings season is turning into a very ugly affair. I understand contrarian investing but I still have a feeling once the buy the bad news crowd is done buying that the weight of these poor earning reports and guidance will final weigh on those stocks.
One thing I always tell my subscribers: from my own personal inventory in my head, I would say that 95%+ of the stocks that I have seen trade above $50 that then trade at $10 will usually hit $5. And then what is even worse (and is completely proven by looking at the bank stocks in this wrecking of our free markets by the bailouts) is that those stocks that were over $50 that are now $5 in about 95%+ of those cases then see the stock hit $1. Then once a stock hits $1, it has less than a 10% chance of actually survive a listing on the Nasdaq or NYSE. So for all of you wanting to buy these TOXIC ASSETS at bargain base prices…you might want to look at the history of stocks that have gone from 50 to 10 to 5 to 1…I think you will see C and BAC are the next BSC and LEH.
The only good long is a stock that is moving higher. The only good short is a stock that is moving lower. Adding to your losers is a stupid backwards way to invest. The intelligent and WISE investor adds to his winning stocks ON THE WAY UP and NOT on the way down.
Aloha everyone, have a great long weekend, and I will have video one, two, and three available for the Gold and Platinum members on the Gold Forums Sunday. I will also have the free video posted here before Monday. Aloha!
Top Short Holdings With Total Returns That Were Profitable Today: CETV 80% SDA 76% AAPL 48% AMX 48% CPRT 25%
New YouTube Video Part One:
Stocks started the week on a very weak note, sending me from 11 small longs to 5 smaller longs as some recent stocks that I went long gave me signals that they were not ready to blast off and make runs higher quickly. But there was a slight hint that the turn down might not last long. What was that hint? It was the fact that I could only generate ONE NEW short position during the first three days of this very weak week. The Nasdaq fell 5.2% but I only had ONE NEW short that setup in what I consider to be a very high reward/low risk pattern.
After these three ugly sessions, we saw the bullish reversals on Thursday and Friday, that helped confirm why we only had ONE new short and not 10 new short positions during those three days. If the market was ready to crack wide open IMMEDIATELY we probably would have had at least a new short a day. However, that isn’t going to happen when so many stocks are so far extended from their 200 day moving average.
I guess I forgot how extended stocks were on the downside until I noticed in every single one of my short scans (four of them) every single day this week showed the SAME THING. That is that every stock that still has a big previous uptrend to give back from the 02-07 rally is currently too far extended from their 200 day moving averages to be safe shorts. Most of these stocks have broken down and look ugly. But they will not be shorts until they can catch back up with their 200 day moving averages.
This means that we could have a few weeks to a few months where stocks rally. Whatever stock sets up and breaks out during that time, I will be more than happy to get long and take some profits on the way up, if we get this rally. However, I honestly believe the more prudent and profitable trade will be what follows the uptrend that we could be in store for. That will be the resulting failure of prices around either key resistance points in the index charts or their 200 day moving averages. Where the index 200 DMA’s are most stocks with excellent possible setups for future shorts are also.
Now make no mistake about my stance on the market. I am NOT a perma-bear. I only follow the market’s overall trend as that is what has proven to make the big money time-after-time. The smart investor knows that having a bearish bias is foolish because the market trends higher most of the time historically and you are never going to find a short that can produce a 2,390% gain in nine months like TASR did in 2003 for me. The best you will get with a short is 99.999%–you can not do better than this. So obviously the smart money is going to be very bullish in uptrends with volume and bullish in uptrends without volume.
Therefore, I assume we are only going to have a counter-trend rally (ie…bear market rally) that will eventually die out. Why do I believe this? Because, the setups for longs are pathetic. While I have only 5 longs what is worse is that only ONE looks pretty. And this one pretty long is no where to being perfect and is close to losing its “pretty” status. This is the OPPOSITE of what you see BEFORE big rallies that HOLD. Before the 1999, 2002-2003, 2004, 2005, 2006, and 2007 uptrends, you could see “hot, nice, pretty, CANSLIM quality, and perfect” setups in more than five places in the stock market. Right now, these high-quality charts are NO WHERE to be found. When these charts and CANSLIM quality longs are no where to be found, and bank stocks are leading the way down, you can almost be 100% sure that any rally that starts now will not last long.
This is why I only expect a short-term rally that will only allow us to take profits in at 25%, 50%, and 100% in the great longs that we get. I truly doubt a rally, with the lack of leadership that we have–sorry, folks, education and small bank stocks do NOT cut it for REAL leadership–in the stock market I doubt we are going to get any 1000% runs in any long right now. However, a 100% gain in three months would be FANTASTIC right now as I have almost forgotten what it is like to be long, be right, and make a lot of money from that correct decision.
No matter, with that. The most important thing is to make money now and not just some money but enough money that you and I can make a living doing what we love. After you make the money, you can donate it to charity or to whoever you want. But when you are out there going for the big money you have to go get it! That means going with the trend, as this is obviously where history has told us the big money is made. This means, more-than-likely, that we should continue to hold our long-term shorts that are still giving us huge gains like our short in CETV (80% in six months), SDA (76% in four months) or even AAPL (48% in four months) until we get a clear signal via a huge volume move above the 50 day moving average or a move above the 200 day moving average. Once that happens, I have no problem getting out of my shorts and then HOPEFULLY turn bullish. But until that happens, I am holding my shorts.
Also, the fact that I have very few longs that look beautiful and/or have that CANSLIM quality strength in it with a proper base combined with so many potential really strong short candidates and it only makes sense to lean still to the short side.
But ultimately whatever happens will happen. I am ready for a dead market where we continue to go nowhere any time soon (11/14/08-1/16/09 the Nasdaq has moved .82%), I am ready for a potential low volume bull run here (I would prefer a heavy volume breakout that starts a new bull market–but I am VERY REALISTIC and NOT hopeful), and I am ready for the low volume rally to fail and lead to a better shorting setup with a lot of stocks that I have listed on my New Shorts page. The bottom line: I am prepared for anything and everything. No matter what this market does I am ready. And like I said earlier, it sure isn’t doing much the past three months at all. In fact, it has been rough for bulls and bears recently which is why I continue to recommend that everyone take SMALL positions in stocks right now until a PERFECT setup shows up on either the longs or shorts. Until that perfect setup comes, it is too random of a market to be “cocky confident” in either a long selection or a short selection when you hold positions for more than a few weeks like I do.
If you are a short term daytrader that loves to play support and resistance levels, this is your kind of market. But for those of you that like to go long, sit back, and watch the stock rise steadily higher keeping you in it in a nice calm fashion, it might be a little while before that game comes into play. However, I am sure that sometime soon (because it has been a long time already) we will have a beautiful long setup with the right Technical and Fundamental characteristics.
The most important thing right now is to KEEP YOUR CASH LEVELS VERY HIGH, invest wisely using tight stops and smaller positions than you would normally take in a bull market, and constantly keep your watchlist updated. This updating process will keep you wise to when the leaders change and then you can see that strength in the price/volume/BOP levels on our charts. If we can then confirm that with fundamentals things will be going very well! Right now, there is no doubt about it, in this market environment, with all of the random action, you must keep your longs and shorts to a manageable level. There are times to be 400% invested on margin and then there are times to be only 10% invested. This is one of those times to be invested in the 10% to 20% range. Trust me, when the easy uptrends (2003) come along that produce 300%, 500%, 1000%, and 2000% winners comes back we will be constantly 400% invested. Right now, you would be a fool to be that heavily invested.
There are a lot of negative economic reports out there and earnings season is turning into a very ugly affair. I understand contrarian investing but I still have a feeling once the buy the bad news crowd is done buying that the weight of these poor earning reports and guidance will final weigh on those stocks.
One thing I always tell my subscribers: from my own personal inventory in my head, I would say that 95%+ of the stocks that I have seen trade above $50 that then trade at $10 will usually hit $5. And then what is even worse (and is completely proven by looking at the bank stocks in this wrecking of our free markets by the bailouts) is that those stocks that were over $50 that are now $5 in about 95%+ of those cases then see the stock hit $1. Then once a stock hits $1, it has less than a 10% chance of actually survive a listing on the Nasdaq or NYSE. So for all of you wanting to buy these TOXIC ASSETS at bargain base prices…you might want to look at the history of stocks that have gone from 50 to 10 to 5 to 1…I think you will see C and BAC are the next BSC and LEH.
The only good long is a stock that is moving higher. The only good short is a stock that is moving lower. Adding to your losers is a stupid backwards way to invest. The intelligent and WISE investor adds to his winning stocks ON THE WAY UP and NOT on the way down.
Aloha everyone, have a great long weekend, and I will have video one, two, and three available for the Gold and Platinum members on the Gold Forums Sunday. I will also have the free video posted here before Monday. Aloha!
Top Short Holdings With Total Returns That Were Profitable Today: CETV 80% SDA 76% AAPL 48% AMX 48% CPRT 25%
New YouTube Video Part One:
Thursday, January 15, 2009
Stock Indexes Reverse Off Their Lows On Strong Volume But The Damage Has Already Been Done
A lot of people, including myself, were expecting for the market to puke it up, after yesterday's very bearish session. However, the market, like it always does, proved the majority wrong and gave us a bullish close on all the indexes.
The only negative about today's bullish session is that is following a session that officially killed a few nice longs we still had and killed a few of the remaining nice charts out there. However, I have to admit it was very nice to see the support and to see this support come with volume. Too bad that volume is still well below the levels that preceded it on its way down from September to November. So obviously today's bullish session did not have the volume needed for today to be a capitulation day. Besides the volume the intraday range also was not enough to call a capitulation.
What today was, in the scheme of Technical Analysis, is day one of a new rally attempt. Even though we did not breach the November lows, using the facts that we have had a multitude of distribution days in the indexes since the November lows combined with the lack of stocks either building or breaking out of nice bases, it is easy to come to the conclusion that this market has to reset back up and follow-through to make me confident enough to go long.
Sadly, I don't think that is going to happen. What I would love to see is for us to rally here for the next few months. That ensures that our remaining positions and the few new positions we pick up along the way will make us money, while we wait for the shorts to reset up. This will require a low volume rally from now till the indexes can get close to their downtrending 200 day moving averages. If the market can break this key average, then we can forget about going short and look to start getting much more long as an index above the 50 and 200 day moving average is a must to get the big powerful move in our longs. However, if the rally does come on low volume and is followed by a heavier volume reversal then we can look to reload on our shorts.
As you can see I am prepared for both a bullish outcome and a bearish outcome. But at the same time, while I am ready to go long or short, I also assume that we could go sideways for a long time. If that is the case then I must admit to myself that the "hot, nice, and pretty" charts will not return us anything around that 300%-1000% that we are looking for. Instead, I will have to settle for gains around the 25%, 50%, and 100% marks and so on. It isn't as much fun but the point of the stock market for me is not to have...it is to make money. And it isn't to just make a little money but a lot of money when the time is right. When the times are not right, I am fine just making some money or protecting all of my money.
I hope everyone is ready for either outcome to come to fruition, but I have to be honest, if we don't see volume on a possible rally, you should know that that means to look for those shorts when they do reverse at key resistance levels or the 200 DMA. Subscribers, there are about 40 names on the short side that we are watching to get short. Compare that with about 10 stocks that look like they could be "hot" soon and it is clear which side the market seems to be on. It doesn't help that I also had MORE shorts in my scans than longs--on an up day you would expect to see a lot more. Those long scans still can't get more than 10 in them when they used to have 200+ in the bull markets from 02-07.
Since I have more shorts that are working to longs and since I have a lot more shorts on my scans and watchlist than longs, I think it is safe to say that the smart money is short. If the smart money are still not buying stocks and are instead selling stocks heavier than accumulating them even on up days then I know I have to lean to the bears and not the bulls.
Don't let this fool you. I have NO BIAS in the stock market. In fact, I LOVE the bull side and loath the short side. But the market doesn't care how I feel about my Past Big Winners of my longs vs. the Past Big Winners of my shorts. The market only cares about where it is going now. It doesn't care about how much I loved the HRZ and MAMA charts of 2006 (MAMA is now CNIC) or how much I loved my first true heavy homerun in LMLP in 1999, it only cares about what it wants to do now. My opinion is like a sewer: they stink! And that goes for everyone. The charts may not tell the whole story but it tells you enough to keep your butt out of the bad times and in during the good times.
Averaging down is for people that like to add to mistakes. Averaging up is for people that like to add to their successes. Those that average down are going against what history has PROVEN to be the correct strategy which is averaging up--not down. CANSLIM combines both fundamentals and technical analysis. Why does it have to be technicals vs. fundamentals? Why not grow a brain and try the radical idea that IBD's founder William O'Neil has used and PROVEN to be the best methodology for selecting STOCKS: CANSLIM (a marriage of fundamentals and technicals). What a crazy concept!
Stay positive everyone and take comfort in knowing that today both our shorts held in there well and our longs did very well. For the longs that we have, three did amazing today, and this is how all of my longs should act right after we get long. I know that some of my subscribers are new to this site, and if you have not reviewed my Past Big Winners in my Longs section or seen my long returns in my blog post during the 2005-to-now period, I recommend that you take some time this weekend and go look at my returns near the short-term market top in 2006, near the short-term market top in early 2007, near the REAL market top in late 2007, and even check out January-March to see the gains we made on the short side.
I think it is clear that when the trends are up and not sideways--like it has been from October to now--I can make a TON of money on the beautiful chart patterns or on the CANSLIM leading stocks that either breakout to new highs and/or bounce off the 50 day moving average, on heavy volume. So stay patient, stay positive, keep your head up, keep reviewing my past successes AND YOURS, and we will come and get them EVERY session. My vacation is the stock market! I will ALWAYS be here for you, even if my manners sometimes are not. Like the market, we are all works in progress. :)
Aloha everyone, have a great Friday, and I hope you have an enjoyable and profitable day!
TOP SHORTS WITH THEIR TOTAL RETURNS THAT PRODUCED GAINS TODAY: CEDC 64% POT 56% AAPL 48% AMX 47%
VIDEO ONE AND TWO ARE AVAILABLE ON THE GOLD FORUMS FOR SUBSCRIBERS, IN THEIR FULL SIZE.
FREE VIDEO:
The only negative about today's bullish session is that is following a session that officially killed a few nice longs we still had and killed a few of the remaining nice charts out there. However, I have to admit it was very nice to see the support and to see this support come with volume. Too bad that volume is still well below the levels that preceded it on its way down from September to November. So obviously today's bullish session did not have the volume needed for today to be a capitulation day. Besides the volume the intraday range also was not enough to call a capitulation.
What today was, in the scheme of Technical Analysis, is day one of a new rally attempt. Even though we did not breach the November lows, using the facts that we have had a multitude of distribution days in the indexes since the November lows combined with the lack of stocks either building or breaking out of nice bases, it is easy to come to the conclusion that this market has to reset back up and follow-through to make me confident enough to go long.
Sadly, I don't think that is going to happen. What I would love to see is for us to rally here for the next few months. That ensures that our remaining positions and the few new positions we pick up along the way will make us money, while we wait for the shorts to reset up. This will require a low volume rally from now till the indexes can get close to their downtrending 200 day moving averages. If the market can break this key average, then we can forget about going short and look to start getting much more long as an index above the 50 and 200 day moving average is a must to get the big powerful move in our longs. However, if the rally does come on low volume and is followed by a heavier volume reversal then we can look to reload on our shorts.
As you can see I am prepared for both a bullish outcome and a bearish outcome. But at the same time, while I am ready to go long or short, I also assume that we could go sideways for a long time. If that is the case then I must admit to myself that the "hot, nice, and pretty" charts will not return us anything around that 300%-1000% that we are looking for. Instead, I will have to settle for gains around the 25%, 50%, and 100% marks and so on. It isn't as much fun but the point of the stock market for me is not to have...it is to make money. And it isn't to just make a little money but a lot of money when the time is right. When the times are not right, I am fine just making some money or protecting all of my money.
I hope everyone is ready for either outcome to come to fruition, but I have to be honest, if we don't see volume on a possible rally, you should know that that means to look for those shorts when they do reverse at key resistance levels or the 200 DMA. Subscribers, there are about 40 names on the short side that we are watching to get short. Compare that with about 10 stocks that look like they could be "hot" soon and it is clear which side the market seems to be on. It doesn't help that I also had MORE shorts in my scans than longs--on an up day you would expect to see a lot more. Those long scans still can't get more than 10 in them when they used to have 200+ in the bull markets from 02-07.
Since I have more shorts that are working to longs and since I have a lot more shorts on my scans and watchlist than longs, I think it is safe to say that the smart money is short. If the smart money are still not buying stocks and are instead selling stocks heavier than accumulating them even on up days then I know I have to lean to the bears and not the bulls.
Don't let this fool you. I have NO BIAS in the stock market. In fact, I LOVE the bull side and loath the short side. But the market doesn't care how I feel about my Past Big Winners of my longs vs. the Past Big Winners of my shorts. The market only cares about where it is going now. It doesn't care about how much I loved the HRZ and MAMA charts of 2006 (MAMA is now CNIC) or how much I loved my first true heavy homerun in LMLP in 1999, it only cares about what it wants to do now. My opinion is like a sewer: they stink! And that goes for everyone. The charts may not tell the whole story but it tells you enough to keep your butt out of the bad times and in during the good times.
Averaging down is for people that like to add to mistakes. Averaging up is for people that like to add to their successes. Those that average down are going against what history has PROVEN to be the correct strategy which is averaging up--not down. CANSLIM combines both fundamentals and technical analysis. Why does it have to be technicals vs. fundamentals? Why not grow a brain and try the radical idea that IBD's founder William O'Neil has used and PROVEN to be the best methodology for selecting STOCKS: CANSLIM (a marriage of fundamentals and technicals). What a crazy concept!
Stay positive everyone and take comfort in knowing that today both our shorts held in there well and our longs did very well. For the longs that we have, three did amazing today, and this is how all of my longs should act right after we get long. I know that some of my subscribers are new to this site, and if you have not reviewed my Past Big Winners in my Longs section or seen my long returns in my blog post during the 2005-to-now period, I recommend that you take some time this weekend and go look at my returns near the short-term market top in 2006, near the short-term market top in early 2007, near the REAL market top in late 2007, and even check out January-March to see the gains we made on the short side.
I think it is clear that when the trends are up and not sideways--like it has been from October to now--I can make a TON of money on the beautiful chart patterns or on the CANSLIM leading stocks that either breakout to new highs and/or bounce off the 50 day moving average, on heavy volume. So stay patient, stay positive, keep your head up, keep reviewing my past successes AND YOURS, and we will come and get them EVERY session. My vacation is the stock market! I will ALWAYS be here for you, even if my manners sometimes are not. Like the market, we are all works in progress. :)
Aloha everyone, have a great Friday, and I hope you have an enjoyable and profitable day!
TOP SHORTS WITH THEIR TOTAL RETURNS THAT PRODUCED GAINS TODAY: CEDC 64% POT 56% AAPL 48% AMX 47%
VIDEO ONE AND TWO ARE AVAILABLE ON THE GOLD FORUMS FOR SUBSCRIBERS, IN THEIR FULL SIZE.
FREE VIDEO:
Wednesday, January 14, 2009
Is This A Start Of Another Nasty Selloff? Probably! I Hate To Say I Told You…
Well, I wish there was a lot of profound wisdom that I could put here that I have not already given. But I don't think I need to add to much because I have been pretty adamant about people not going long the recent rally from the November lows.
Why did I advise against this? Easy! Because most people that went long the lows in November DID NOT sell out at the high in this move. Instead AAII and investors intelligence surveys showed that bulls were beating bears in both polls. This, along with the VIX failing to hit the 1.7 to 2.0 level shows me that this means people are and were too complacent on this market. Now most have losses from their recent purchases. They can now add those losses to their previous losses from trying to "bottom fish" the most recent downtrend in 2008.
I have been saying this for a very long time and I will say it again. Most of my shorts that I took before October are all still shorts, except for two of them. And those two are back to being good short positions. So it was stupid to cover those. Take the fact that all my long-term shorts with the lack of beautiful longs setting was proof positive that the worst of this market was not over.
Instead it appears that it was just a lull before another storm. The eye of the hurricane, if you will. And that is exactly what "bottom fishers" have been hit by in this market: a giant hurricane. Now, that isn't to say my long strategy isn't perfect (OBVIOUSLY in bear markets I am going to lose more on longs than succeed--it's an odds game) but my short strategy seems to be on point. How do I know that? Once again, it's easy! 33 of my 34 short holdings were UP FOR ME today which means today was a decent day for yours truly.
The few shorts that we have remaining continues to work and work and work, and what is even more problematic for investors that are long only is the fact that the amount of nice solid strong charts look bleaker now than even in November. The good news is that we have not been focused on longs and have instead been focused on the short side. It is quite clear to me that not only is CASH IS KING! but BEING SHORT is the way to make big money in this market.
I need to make it clear that if you are a new investor and do not have a track record of making money on the long side in bull markets that you may want to wait for a rally on the indexes with other nice stocks breaking out so that you can put your money to work at the right time. I know a lot of you want to either buy the few "nice" chart patterns that are out there but the facts just told us that buying "nice" breakouts in stocks with good fundamentals is strictly not working now. The better news for us is that bottom fishers are doing much worse.
If it is of any comfort to all of you out there you now know that not only was I bullish from 99-00, bearish from 00-02, bullish from 02-07, and bearish from 07-now but that I have a track record of making very strong gains in bull markets and can clearly beat the overall market by leaps and bounds in bear markets. How do we do that? Easy! We buy stocks in uptrends and add to the best stocks that bounce right off key averages (that is if they have either "perfect" charts or excellent CANSLIM ratings) and short stocks in downtrends that can't get over the 50 and 200 day moving averages. My longs made a TON of money during the last bull market and this bear market has been very friendly to us.
If you still think that the November lows are going to hold, you really need to actually learn technical analysis. And by learn TA, I do NOT mean watch Cramer's charts-vs-fundamentals crap on CNBC. This segment really bugs me because whatever technicians he is talking to, they are not that bright. I saw EWZ used as an example of a "nice chart." Exuse me?!!! That is pure crap! That is an ugly chart. However, not nearly as ugly as POT which he said was a "nice chart." Is he off his rocker? Did TSCM not even research my past winners when they hired me last year? Did they even look at my Past Big Winners in my longs section and take a peek at the shorts Past Big Winners? I doubt it and that is why TSCM is a shell of its former glory self. Sad.
Anyways, the bottom line is that no one can say "Joshua, but you didn't tell me the market wasn't a buy on the way up in the last uptrend." Uhm, that is BS. Anyone that reads my longs section knows that there were only a few recent longs that looked great and they all disappointed as we moved along. In fact in 5 days we have gone from 13 small longs to only 6 much smaller longs. If this was a bottom and the November lows were going to hold, it would have been the other way around--we would have gone from 6 longs to 13 longs. We also would not have increased our short exposure which has recently happened thanks to new shorts like our new short today.
This market is very ugly and I please ask everyone to watch the LAST FIVE VIDEOS of part one to clearly see that I remained bearish the entire time. No one out there ever has to worry about my integrity because this site documents EVERY word I type. You can anything you need to find by using the search engine at the upper right hand side of the .com and .net site.
I hate to say I told you so BUT I DID TELL YOU SO. This market and its breakdown yesterday with these hideous charts is a clear sign to get out of dodge. If any of you are still holding longs, you really need to consider selling them unless you have a twenty year horizon. I also suggest everyone study Japan 1990 to now and the DJIA from 1928-1954. I think that will put you in great perspective of where we are. But at the same time while that may look gloomy remember I WILL make good money on the few "hot" or "perfect" charts that do setup during those bullish rallies. So don't worry too much about us becoming Japan of 1990 we will still find stocks with nice charts and growing fundamentals that the big boys will trip over themselves to get into. However, more pain has to happen before the good news starts kicking in.
Leaders are born and made in great difficulties! They are not made in times of joy and peace. So when the going gets tough I get going. And that is exactly what I am going to do here. Enjoy the video and remember if you don't have time to watch here you can go to iTunes and search for "Joshua Hayes" and find the videos there. This might help some of you transient guys in NYC, SF, or LA.
We'll see what tomorrow brings. But with 35 (now after our new short) shorts and only 6 longs I think we know where we are headed. Remember, these are NOT my opinions when I get long or short a stock. I am simply following the rules that history has shown repeats itself every time all the time. This is all supply and demand and human emotions. What a toxic combination.
Aloha everyone. I will see you here tomorrow/today (depending on where you live). Remember, CASH OR BEING SHORT IS KING UNTIL THE MARKET CAN PUT IN A HUGE VOLUME REVERSAL OR BUILD A RALLY ON STRONG VOLUME. THIS LOW VOLUME STUFF DOESN'T CUT IT.
top shorts w/ total returns UP on the day: (coming very soon)
VIDEO ONE AND TWO AVAILABLE IN FULL SIZE ON THE GOLD FORUMS
FREE VIDEO:
Why did I advise against this? Easy! Because most people that went long the lows in November DID NOT sell out at the high in this move. Instead AAII and investors intelligence surveys showed that bulls were beating bears in both polls. This, along with the VIX failing to hit the 1.7 to 2.0 level shows me that this means people are and were too complacent on this market. Now most have losses from their recent purchases. They can now add those losses to their previous losses from trying to "bottom fish" the most recent downtrend in 2008.
I have been saying this for a very long time and I will say it again. Most of my shorts that I took before October are all still shorts, except for two of them. And those two are back to being good short positions. So it was stupid to cover those. Take the fact that all my long-term shorts with the lack of beautiful longs setting was proof positive that the worst of this market was not over.
Instead it appears that it was just a lull before another storm. The eye of the hurricane, if you will. And that is exactly what "bottom fishers" have been hit by in this market: a giant hurricane. Now, that isn't to say my long strategy isn't perfect (OBVIOUSLY in bear markets I am going to lose more on longs than succeed--it's an odds game) but my short strategy seems to be on point. How do I know that? Once again, it's easy! 33 of my 34 short holdings were UP FOR ME today which means today was a decent day for yours truly.
The few shorts that we have remaining continues to work and work and work, and what is even more problematic for investors that are long only is the fact that the amount of nice solid strong charts look bleaker now than even in November. The good news is that we have not been focused on longs and have instead been focused on the short side. It is quite clear to me that not only is CASH IS KING! but BEING SHORT is the way to make big money in this market.
I need to make it clear that if you are a new investor and do not have a track record of making money on the long side in bull markets that you may want to wait for a rally on the indexes with other nice stocks breaking out so that you can put your money to work at the right time. I know a lot of you want to either buy the few "nice" chart patterns that are out there but the facts just told us that buying "nice" breakouts in stocks with good fundamentals is strictly not working now. The better news for us is that bottom fishers are doing much worse.
If it is of any comfort to all of you out there you now know that not only was I bullish from 99-00, bearish from 00-02, bullish from 02-07, and bearish from 07-now but that I have a track record of making very strong gains in bull markets and can clearly beat the overall market by leaps and bounds in bear markets. How do we do that? Easy! We buy stocks in uptrends and add to the best stocks that bounce right off key averages (that is if they have either "perfect" charts or excellent CANSLIM ratings) and short stocks in downtrends that can't get over the 50 and 200 day moving averages. My longs made a TON of money during the last bull market and this bear market has been very friendly to us.
If you still think that the November lows are going to hold, you really need to actually learn technical analysis. And by learn TA, I do NOT mean watch Cramer's charts-vs-fundamentals crap on CNBC. This segment really bugs me because whatever technicians he is talking to, they are not that bright. I saw EWZ used as an example of a "nice chart." Exuse me?!!! That is pure crap! That is an ugly chart. However, not nearly as ugly as POT which he said was a "nice chart." Is he off his rocker? Did TSCM not even research my past winners when they hired me last year? Did they even look at my Past Big Winners in my longs section and take a peek at the shorts Past Big Winners? I doubt it and that is why TSCM is a shell of its former glory self. Sad.
Anyways, the bottom line is that no one can say "Joshua, but you didn't tell me the market wasn't a buy on the way up in the last uptrend." Uhm, that is BS. Anyone that reads my longs section knows that there were only a few recent longs that looked great and they all disappointed as we moved along. In fact in 5 days we have gone from 13 small longs to only 6 much smaller longs. If this was a bottom and the November lows were going to hold, it would have been the other way around--we would have gone from 6 longs to 13 longs. We also would not have increased our short exposure which has recently happened thanks to new shorts like our new short today.
This market is very ugly and I please ask everyone to watch the LAST FIVE VIDEOS of part one to clearly see that I remained bearish the entire time. No one out there ever has to worry about my integrity because this site documents EVERY word I type. You can anything you need to find by using the search engine at the upper right hand side of the .com and .net site.
I hate to say I told you so BUT I DID TELL YOU SO. This market and its breakdown yesterday with these hideous charts is a clear sign to get out of dodge. If any of you are still holding longs, you really need to consider selling them unless you have a twenty year horizon. I also suggest everyone study Japan 1990 to now and the DJIA from 1928-1954. I think that will put you in great perspective of where we are. But at the same time while that may look gloomy remember I WILL make good money on the few "hot" or "perfect" charts that do setup during those bullish rallies. So don't worry too much about us becoming Japan of 1990 we will still find stocks with nice charts and growing fundamentals that the big boys will trip over themselves to get into. However, more pain has to happen before the good news starts kicking in.
Leaders are born and made in great difficulties! They are not made in times of joy and peace. So when the going gets tough I get going. And that is exactly what I am going to do here. Enjoy the video and remember if you don't have time to watch here you can go to iTunes and search for "Joshua Hayes" and find the videos there. This might help some of you transient guys in NYC, SF, or LA.
We'll see what tomorrow brings. But with 35 (now after our new short) shorts and only 6 longs I think we know where we are headed. Remember, these are NOT my opinions when I get long or short a stock. I am simply following the rules that history has shown repeats itself every time all the time. This is all supply and demand and human emotions. What a toxic combination.
Aloha everyone. I will see you here tomorrow/today (depending on where you live). Remember, CASH OR BEING SHORT IS KING UNTIL THE MARKET CAN PUT IN A HUGE VOLUME REVERSAL OR BUILD A RALLY ON STRONG VOLUME. THIS LOW VOLUME STUFF DOESN'T CUT IT.
top shorts w/ total returns UP on the day: (coming very soon)
VIDEO ONE AND TWO AVAILABLE IN FULL SIZE ON THE GOLD FORUMS
FREE VIDEO:
Saturday, January 10, 2009
Ugly Selloff On Lower Volume Cast Doubts On The Rally
It was a fitting end to the ugly session when stocks decided to take another turn lower before the EOD and go out with most of the indexes closing near their LOD. The Nasdaq had a very weak close actually closing at its LOD.
About the only good news behind the selloff is that it came on lower volume than the day before. That gives some people comfort that this is just a minor pullback in the uptrend that started in November.
I just want to remind everyone that thinks that this is a real bull market that they need to closely examine the volume on the rally after the heavy volume selloff. We have not seen a capitulation day on HUGE volume or a rally in the general market indexes on higher volume. Instead what we are watching is a low volume rally that is really just putting us in the position of going nowhere over the past three months. This is why I keep showing you the trends in my videos. I want to make sure you know that the trends are very mixed right now and that is making it hard to go long or short any stock with confidence.
Now, I know a lot of you know that I have been taking some longs and some shorts here and there the past two to three months. However, I need to keep making sure that I am making myself very clear. When I am going long stocks right now, since the trend is basically lateral over the past three months, I am keeping my positions small (even with a very nice chart) because the long term and intermediate term trend is down. At the same time, when I go short, I am keeping my shorts small. Why? Because on a sub-intermediate we are lateral to slightly up and on the short term we were just up but now are starting to go down again. So it is a very mixed situation.
But after the action on January the 6th when the market indexes had a nice up day, with the volume on the Nasdaq being the first day above average (besides quad witching) volume day in over a month, it has been nothing but non-stop pain. Now, normally, I would be happy because this means that all my long term shorts are about ready to start adding on to their gains.
Sadly, there were three stocks with pretty (NOT perfect) charts that I just could not pass up once they broke out. I have now either sold all of the stock or almost all of my positions in the other two stocks. However, I want to make it VERY CLEAR that NONE of these longs were large positions. There were two longs in this group that I went a little heavier than normal in this bear but still they had the charts to justify a smaller position. Why not a huge position? Because there is absolutely no volume on the rally.
The really sad part is that on January 6th after the Nasdaq popped above the 50 day moving average, and a few stocks were looking good and acting well, the market immediately stopped moving higher. That day with the higher volume, if this market wanted to really bounce or start a new uptrend, would have been the start of a nice rally in the indexes. The sad fact that it was reversed immediately with the SP 600 down 6.8% and the Nasdaq down 4.9% proves that the market just isn't ready. Now, while those losses might sting a little (because I am sure a couple of you reading this bought more than you should have) the great news is that we did not load up on any of them.
One did not close at the HOD, one did not have max green BOP and too short a base, and the last one has reversed its excellent recent breakout within three days. This is NOT how fresh bull markets act. They do not have stocks breakout then fail, they do not show the churning like they show (small banks and stocks like AFAM), and you do not see the indexes rallying on low volume. Even on low volume shorting can be dangerous because you need a lot of institutional selling to push prices lower and keep them lower since stocks naturally rise over time (they used to at least :(). The power of their selling helps prevent any major short-squeeze run by a pool of market operators or the market maker.
This market can be wrapped up in one word: range-bound (do you like that?). This market is going nowhere fast and the fact that breakouts are not working and that a lot of shorts are having trouble breaking and moving lower immediately shows that this market is in a range. Usually in a range bound market you buy support and sell at resistance. However, that is limiting my profit potential so I would rather have another GGB short that gives me 82% gain in a few months or another TASR long that gave me a 2,390% gain in nine months. This sounds a lot better than trying to grab 20% moves in-between ranges that constantly change.
I will not lie about the difficulty of this market. However, you must realize that the market is in the mode right now of going nowhere as there is a ton of uncertainty out there. I assume if earnings estimates continue to come down going into 2009 that the P/E on the major indexes will continue to climb and climb thus making the market expensive for a lot of people to buy. That then hints that we will definitely move lower. But the market might have priced in the bad news already and may be looking further out. The truth is nobody knows and you do not need to know.
All you need to know to make money in the stock market is when to buy, when to sell, and when to sit on your butt and do nothing. Jesse Livermore said it was his "sitting" that made him a rich man. Do you know what that means? It means when he went long, he did not play for pennies, he played the whole uptrend to get the 400%+ gain in AAPL from 2004-2006. He also meant that when short and longs are random and success rates are low to not trade the market. That means sitting on your butt and updating all of your watchlist while keeping track of all the stocks in the market that are racing up the charts making right sides of bases.
Most importantly continue to watch strong stocks that reverse. Take a look at the weekly charts of LHCG, AFAM, GTIV, ESRX, QCOR, CVS, and ANCI. Anything medical related that was looking good recently has seemingly really put in a top. CVS has been in a downtrend for a while but was still in my scans tonight. LHCG, GTIV, SERX, QCOR, CELG and ANCI have been medical stocks that were display bullish uptrends/charts during the severe bear market. And as William O'Neil has said before "even the leaders can not escape the clutches of a sever bear market. Eventually the baby gets thrown out with the bathwater." Now I got to be honest I am not sure this quote is word for word but I have read enough O'Neil text to know it goes somewhere along this line.
And I am going to draw a line in tonight's analysis by saying that I really hope we can eventually get a rally sometime in 2009. But if we don't, please do not be upset, either stay in cash or join me in my short positions. Everything I post I take. You probably enter the orders before I do. But the fact is just by looking below we know this methodology works and once it stops working on the short side then we need to look to prepare to work with the long side. The bad news, however, is that the amount of pretty charts continues to decline. The past three days really threw a monkey wrench into that whole fantasy of mine that the market might actually rally for more than two days and that we might have been starting a nice bear market bounce.
Now you will hear people talk about the November lows holding and that if they do we will be off to the races. Don't count on that. We have gone sideways for three months. Nothing says we couldn't do that for another 15 months. Just keep your eyes on your longs and shorts for perfect setups and if they are not perfect either do not take them or please keep them very small. I keep saying CASH IS KING! but I really hope everyone is listening. Nobody in this casino market should be more than 20% invested. I don't know of a short or a long that still looks so good that we can throw a huge position behind it. To me everything is not in order. When a perfect long or short comes along, I am pretty sure all the Platinum members will know and all the Gold members that educated themselves on the Past Big Winners section on this site and the videos on the Forums
Have a great weekend everyone. If you have any questions (newbies), please post them in the New Member area under the General Market Discussion forum and above the New Videos forum. Have fun everyone and make sure to watch video two and especially video three if you are Gold or Platinum members. Video three is very important for newbies also as it delves into the pre-analysis that I do before going short a stock. Aloha!
top shorts with total returns UP today: SDA 72% ARB 65% CETV 76% CEDC 58% SPW 59% MOS 54% CYT 57% TITN 40% AMX 42% AAPL 43% SBAC 42% SPG 43% APD 39% OKE 33% IPHS 21% PLCE 22% CEO 25% CASY 22% CPRT 22% LLL 18% RDK 15%
VIDEO ONE (10 MINS), VIDEO TWO (16 MINS), AND VIDEO THREE (25 MINS) ARE AVAILABLE ON THE GOLD FORUMS FOR GOLD AND PLATINUM SUBSCRIBERS. FREE SMALL YOUTUBE VIDEO OF PART ONE AVAILABLE BELOW:
About the only good news behind the selloff is that it came on lower volume than the day before. That gives some people comfort that this is just a minor pullback in the uptrend that started in November.
I just want to remind everyone that thinks that this is a real bull market that they need to closely examine the volume on the rally after the heavy volume selloff. We have not seen a capitulation day on HUGE volume or a rally in the general market indexes on higher volume. Instead what we are watching is a low volume rally that is really just putting us in the position of going nowhere over the past three months. This is why I keep showing you the trends in my videos. I want to make sure you know that the trends are very mixed right now and that is making it hard to go long or short any stock with confidence.
Now, I know a lot of you know that I have been taking some longs and some shorts here and there the past two to three months. However, I need to keep making sure that I am making myself very clear. When I am going long stocks right now, since the trend is basically lateral over the past three months, I am keeping my positions small (even with a very nice chart) because the long term and intermediate term trend is down. At the same time, when I go short, I am keeping my shorts small. Why? Because on a sub-intermediate we are lateral to slightly up and on the short term we were just up but now are starting to go down again. So it is a very mixed situation.
But after the action on January the 6th when the market indexes had a nice up day, with the volume on the Nasdaq being the first day above average (besides quad witching) volume day in over a month, it has been nothing but non-stop pain. Now, normally, I would be happy because this means that all my long term shorts are about ready to start adding on to their gains.
Sadly, there were three stocks with pretty (NOT perfect) charts that I just could not pass up once they broke out. I have now either sold all of the stock or almost all of my positions in the other two stocks. However, I want to make it VERY CLEAR that NONE of these longs were large positions. There were two longs in this group that I went a little heavier than normal in this bear but still they had the charts to justify a smaller position. Why not a huge position? Because there is absolutely no volume on the rally.
The really sad part is that on January 6th after the Nasdaq popped above the 50 day moving average, and a few stocks were looking good and acting well, the market immediately stopped moving higher. That day with the higher volume, if this market wanted to really bounce or start a new uptrend, would have been the start of a nice rally in the indexes. The sad fact that it was reversed immediately with the SP 600 down 6.8% and the Nasdaq down 4.9% proves that the market just isn't ready. Now, while those losses might sting a little (because I am sure a couple of you reading this bought more than you should have) the great news is that we did not load up on any of them.
One did not close at the HOD, one did not have max green BOP and too short a base, and the last one has reversed its excellent recent breakout within three days. This is NOT how fresh bull markets act. They do not have stocks breakout then fail, they do not show the churning like they show (small banks and stocks like AFAM), and you do not see the indexes rallying on low volume. Even on low volume shorting can be dangerous because you need a lot of institutional selling to push prices lower and keep them lower since stocks naturally rise over time (they used to at least :(). The power of their selling helps prevent any major short-squeeze run by a pool of market operators or the market maker.
This market can be wrapped up in one word: range-bound (do you like that?). This market is going nowhere fast and the fact that breakouts are not working and that a lot of shorts are having trouble breaking and moving lower immediately shows that this market is in a range. Usually in a range bound market you buy support and sell at resistance. However, that is limiting my profit potential so I would rather have another GGB short that gives me 82% gain in a few months or another TASR long that gave me a 2,390% gain in nine months. This sounds a lot better than trying to grab 20% moves in-between ranges that constantly change.
I will not lie about the difficulty of this market. However, you must realize that the market is in the mode right now of going nowhere as there is a ton of uncertainty out there. I assume if earnings estimates continue to come down going into 2009 that the P/E on the major indexes will continue to climb and climb thus making the market expensive for a lot of people to buy. That then hints that we will definitely move lower. But the market might have priced in the bad news already and may be looking further out. The truth is nobody knows and you do not need to know.
All you need to know to make money in the stock market is when to buy, when to sell, and when to sit on your butt and do nothing. Jesse Livermore said it was his "sitting" that made him a rich man. Do you know what that means? It means when he went long, he did not play for pennies, he played the whole uptrend to get the 400%+ gain in AAPL from 2004-2006. He also meant that when short and longs are random and success rates are low to not trade the market. That means sitting on your butt and updating all of your watchlist while keeping track of all the stocks in the market that are racing up the charts making right sides of bases.
Most importantly continue to watch strong stocks that reverse. Take a look at the weekly charts of LHCG, AFAM, GTIV, ESRX, QCOR, CVS, and ANCI. Anything medical related that was looking good recently has seemingly really put in a top. CVS has been in a downtrend for a while but was still in my scans tonight. LHCG, GTIV, SERX, QCOR, CELG and ANCI have been medical stocks that were display bullish uptrends/charts during the severe bear market. And as William O'Neil has said before "even the leaders can not escape the clutches of a sever bear market. Eventually the baby gets thrown out with the bathwater." Now I got to be honest I am not sure this quote is word for word but I have read enough O'Neil text to know it goes somewhere along this line.
And I am going to draw a line in tonight's analysis by saying that I really hope we can eventually get a rally sometime in 2009. But if we don't, please do not be upset, either stay in cash or join me in my short positions. Everything I post I take. You probably enter the orders before I do. But the fact is just by looking below we know this methodology works and once it stops working on the short side then we need to look to prepare to work with the long side. The bad news, however, is that the amount of pretty charts continues to decline. The past three days really threw a monkey wrench into that whole fantasy of mine that the market might actually rally for more than two days and that we might have been starting a nice bear market bounce.
Now you will hear people talk about the November lows holding and that if they do we will be off to the races. Don't count on that. We have gone sideways for three months. Nothing says we couldn't do that for another 15 months. Just keep your eyes on your longs and shorts for perfect setups and if they are not perfect either do not take them or please keep them very small. I keep saying CASH IS KING! but I really hope everyone is listening. Nobody in this casino market should be more than 20% invested. I don't know of a short or a long that still looks so good that we can throw a huge position behind it. To me everything is not in order. When a perfect long or short comes along, I am pretty sure all the Platinum members will know and all the Gold members that educated themselves on the Past Big Winners section on this site and the videos on the Forums
Have a great weekend everyone. If you have any questions (newbies), please post them in the New Member area under the General Market Discussion forum and above the New Videos forum. Have fun everyone and make sure to watch video two and especially video three if you are Gold or Platinum members. Video three is very important for newbies also as it delves into the pre-analysis that I do before going short a stock. Aloha!
top shorts with total returns UP today: SDA 72% ARB 65% CETV 76% CEDC 58% SPW 59% MOS 54% CYT 57% TITN 40% AMX 42% AAPL 43% SBAC 42% SPG 43% APD 39% OKE 33% IPHS 21% PLCE 22% CEO 25% CASY 22% CPRT 22% LLL 18% RDK 15%
VIDEO ONE (10 MINS), VIDEO TWO (16 MINS), AND VIDEO THREE (25 MINS) ARE AVAILABLE ON THE GOLD FORUMS FOR GOLD AND PLATINUM SUBSCRIBERS. FREE SMALL YOUTUBE VIDEO OF PART ONE AVAILABLE BELOW:
Thursday, January 08, 2009
Stocks Put In A Very Bullish Session, With The Nasdaq and Russell 2000 Closing at the HOD, On Lower Volume
Stock indexes had a pretty strong showing but overall were not making much progress for most of the day. But by the end of the day the stock market took off and the DJIA closed at its best levels intraday after the open, the SP 500 closed near the HOD, and the Nasdaq and RUT 2K closed at the HOD. The only problem with the gains is that they came on lower volume. Well, I guess there was a second problem in that it did not take much back from the previous day's selloff.
However, many stocks seemed to put in very strong reversals today after a bit of selling and some of our longs that still look a bit shaky are all still holding their most recent lows in there base. So things are not ugly out there but at the same time they are not pretty yet either.
In fact, if you take a look at the SP-500 from 10/9/2008 to 1/8/2009 you will see that the NYSE has moved only -0.02%. That means for the past three months we have basically gone nowhere in the stock market. That is why the recent longs we have taken started off well but have all fizzled out somewhat (some haven't so we need to cross our fingers) and why the recent shorts we have are working but not going too far just yet.
At first, at the start of this week, it appeared that we were about to rally a little bit on lower volume. While I am never thrilled with a low volume rally, if this is all we can get right now I will take it. But after going long four stocks recently that had very nice to near-perfect charts (no perfect) I can honestly say that they have not performed like I expected them to perform. I know what the main problem is: that is the market. However, there is a secondary problem: the charts are not perfect which means they are subject to a poor market affecting them more than if the market was rallying on higher volume.
If we had a rally happening off the November lows on higher volume I would be very bullish on my longs and would assume we would not have had to cut any that we took recently (there was a full sell today) and the stocks that are doing well would be doing much better like they were about a month to two months ago for a couple of long term winners. However, the lower volume continues to make all longs suspect and that is why I have continued to tell my subscribers to keep their longs small.
Some wanted to argue with me about a recent breakout. Some said that it not closing at the HOD put it in a better position to be a "safer" long. Well now that person sees how that turned out. A higher volume close near or at the HOD shows that the big boys were scooping it up all the way into the close and chances are high they will return again the next day to continue their operation. The fact a stock doesn't close near the HOD suggest funds are not that anxious to buy the stock at any price. That usually means a little hit. The other long we took closed near the HOD and the next day green BOP remains and another HOD close has followed. We can't complain about that. We can do the complaining later when the market hurts another beautiful chart pattern in a stock with very strong recent fundamental growth.
This market, like I showed you with the SP 500 the past three months, is really not going very far. And that is what happens when the big boys step to the side and let the retail crowd take over. The retail traders can not move the market and even if they do their movement will not hold. It take pension, mutual, hedge, school, insurance funds to do this. They move the market and if you study the NYSE and Nasdaq on your charts you can see that we have not had real higher volume by institutional investors since 12/8/08 on the NYSE (leaving the quadruple witching day out). Also the Nasdaq just recently had its first higher than average volume day two days ago. That was its first above average volume day since 11/21.
So as you can see, unless you like dealing with retail driven markets where bids and ask can move in a flash and disappear just as quickly you are more than welcome to fully margin yourself on longs and shorts. I will instead keep my cash level highs so that I don't have it trapped in a mediocre play whenever those "near-perfect to perfect" short and long pattern show up. I am ready to get fully long on full margin but at the same time I am extremely patient and will wait for that beautiful perfect chart so that I may load up and make a lot of money on a for sure thing. Doing that instead of gambling away my earnings on stocks that "might" work even with nice chart patterns is the way I prefer to do business. You can gamble. I never gamble. Even when I played poker I NEVER gambled. Everything was calculated and read from the opponents.
This is how you must treat the market. Aloha everyone, have a great Friday, and I will see you when I get my next commentary posted. I want to thank all the Platinum members for showing up today. We still only have about 33% of you in at one time but the numbers are higher and it is getting more fun. I love you all and want to thank everyone for making this site such a fun site. What really helped was this bear market getting rid of those who are not serious and those who are just plain crooks. GOOD RIDANCE!
stocks I am short with total returns UP today: CEDC 57% RIMM 53% SDA 73% AMX 42% TITN 39% ARB 65% CEO 23% SPG 38%
VIDEO ONE, TWO, AND THREE AVAILABLE IN FULL BEAUTIFUL SIZE ON THE GOLD FORUMS. FREE VERSION BELOW.
However, many stocks seemed to put in very strong reversals today after a bit of selling and some of our longs that still look a bit shaky are all still holding their most recent lows in there base. So things are not ugly out there but at the same time they are not pretty yet either.
In fact, if you take a look at the SP-500 from 10/9/2008 to 1/8/2009 you will see that the NYSE has moved only -0.02%. That means for the past three months we have basically gone nowhere in the stock market. That is why the recent longs we have taken started off well but have all fizzled out somewhat (some haven't so we need to cross our fingers) and why the recent shorts we have are working but not going too far just yet.
At first, at the start of this week, it appeared that we were about to rally a little bit on lower volume. While I am never thrilled with a low volume rally, if this is all we can get right now I will take it. But after going long four stocks recently that had very nice to near-perfect charts (no perfect) I can honestly say that they have not performed like I expected them to perform. I know what the main problem is: that is the market. However, there is a secondary problem: the charts are not perfect which means they are subject to a poor market affecting them more than if the market was rallying on higher volume.
If we had a rally happening off the November lows on higher volume I would be very bullish on my longs and would assume we would not have had to cut any that we took recently (there was a full sell today) and the stocks that are doing well would be doing much better like they were about a month to two months ago for a couple of long term winners. However, the lower volume continues to make all longs suspect and that is why I have continued to tell my subscribers to keep their longs small.
Some wanted to argue with me about a recent breakout. Some said that it not closing at the HOD put it in a better position to be a "safer" long. Well now that person sees how that turned out. A higher volume close near or at the HOD shows that the big boys were scooping it up all the way into the close and chances are high they will return again the next day to continue their operation. The fact a stock doesn't close near the HOD suggest funds are not that anxious to buy the stock at any price. That usually means a little hit. The other long we took closed near the HOD and the next day green BOP remains and another HOD close has followed. We can't complain about that. We can do the complaining later when the market hurts another beautiful chart pattern in a stock with very strong recent fundamental growth.
This market, like I showed you with the SP 500 the past three months, is really not going very far. And that is what happens when the big boys step to the side and let the retail crowd take over. The retail traders can not move the market and even if they do their movement will not hold. It take pension, mutual, hedge, school, insurance funds to do this. They move the market and if you study the NYSE and Nasdaq on your charts you can see that we have not had real higher volume by institutional investors since 12/8/08 on the NYSE (leaving the quadruple witching day out). Also the Nasdaq just recently had its first higher than average volume day two days ago. That was its first above average volume day since 11/21.
So as you can see, unless you like dealing with retail driven markets where bids and ask can move in a flash and disappear just as quickly you are more than welcome to fully margin yourself on longs and shorts. I will instead keep my cash level highs so that I don't have it trapped in a mediocre play whenever those "near-perfect to perfect" short and long pattern show up. I am ready to get fully long on full margin but at the same time I am extremely patient and will wait for that beautiful perfect chart so that I may load up and make a lot of money on a for sure thing. Doing that instead of gambling away my earnings on stocks that "might" work even with nice chart patterns is the way I prefer to do business. You can gamble. I never gamble. Even when I played poker I NEVER gambled. Everything was calculated and read from the opponents.
This is how you must treat the market. Aloha everyone, have a great Friday, and I will see you when I get my next commentary posted. I want to thank all the Platinum members for showing up today. We still only have about 33% of you in at one time but the numbers are higher and it is getting more fun. I love you all and want to thank everyone for making this site such a fun site. What really helped was this bear market getting rid of those who are not serious and those who are just plain crooks. GOOD RIDANCE!
stocks I am short with total returns UP today: CEDC 57% RIMM 53% SDA 73% AMX 42% TITN 39% ARB 65% CEO 23% SPG 38%
VIDEO ONE, TWO, AND THREE AVAILABLE IN FULL BEAUTIFUL SIZE ON THE GOLD FORUMS. FREE VERSION BELOW.
Wednesday, January 07, 2009
This Is Why I Don't Trust Low Volume Rallies; Ugly News Slams Stocks On Lower Volume
Stocks had a nasty day on Thursday as the general market indexes all sold off with the Nasdaq, SP 500, and SP 600 all losing between 3% to 3.5% on the day. The good news about the losses is that volume pulled back on today's trading in all but the Dow Jones Industrial Averge. The DJIA was also the best performer today besting the market with a 2.7% loss.
Now, normally when the stock market pulls back on low volume, after an initial start of a rally I feel that this is a constructive day. However, today's low volume pullback had the wrong feeling to it. That feeling is not hard for me to see but might be a little hard trying to explain it this late at night (It is 11pm; I'll have you ready for the opening bell). However I will do my best.
The first clue that this rally was probably going to run into a rough patch was that since the November lows volume has been non-existent on the rally into Wednesday morning. The few stocks that have had a rally with strong volume continue to have nasty reversals sometime either right before a breakout appears to be within distance or some time right after the successful breakout has taken the stock higher just enough for you to believe this time stocks are going to work this time. These are all warnings of a market that is in the middle of a bear market bounce and not at the start of a new bull market.
Another thing that threw up a warning flag for me today was the fact that the investors intelligence survey came out and shows that bulls are now up to 42% while the bears are at 34%. This is not really surprising as the crowd (including smart money managers) has wanted to be bullish for a long time (even back in March). But with the market in a constant selloff, all those value dip-buyers ended up being burned left and right. Not only are investor newsletter writers getting bullish on the way up but the retail crowd is showing very high levels of bullishness too with the AAII coming in with 49% bullish and 35% bearish. So the newsletter writers and the crowd are bullish. The best bottoms come when the bears are beating the bulls by a wide margin.
Now I will recognize that earlier in the year bears were destroying the bulls in the poll. But during that time we had no hint of an actual bottom in the form of either a capitulation day with huge volume, a rally on heavy accumulation after a low volume selloff, or with leading stocks setting up and breaking out leading the overall market. With all of these conditions, combined with the fact that the McClellan hit the highest level I have ever seen on the oscillator on my Telechart system. And my data goes back to 1986. So seeing the McClellan oscillator this overbought and seeing how poor this rally has been so far should have a lot of people concerned that this "Santa rally" might come to an end.
To top all the poor charts and lame volume on the indexes, we are still dealing with load after load of very bad news item. Heck, now we know SAY was a scam company. When they opened the Bernie Madoff can of worms you knew there were more cockroaches under the sink.
This market is still one tricky beast with the short term trend and sub-intermediate term trend up and the long-term and intermediate trend down. That means that the longs we take must have profits taken quickly (unless they are up 20% in a few weeks--then we hold longer) and must keep the longs small until we get an uptrend on strong volume.
At the same time, we must continue to look for long term topping patterns in stocks that have broken down and now have rallied back to their 50 and 200 day moving averages on low volume. If they can fail and crack there at those lines then maybe we can make some great money again on the short side.
The one thing remains the same and I believe I have been saying it for OVER a year now. That is that CASH IS KING! What does that mean? It simply means that when the market is in a series of mixed uptrends and downtrends and more of your recent longs/shorts fail normal. How do you stop that? You can't. You can only wait for the perfect long setup to come and then go heavily long. Until then, it would be foolish to put any significant play in any stock right now. Nothing is perfect and the few that start to look perfect quickly lose that gusto. if you go 400% long in a raging bull market where IBD leading stocks are leading, you are definitely going to be VERY WEALTHY at the end of a bull market. When IBD stocks are not leading, you do not have pretty chart patterns, and the indexes are rallying on low volume you have a perfect mix for a big possible nasty surprise.
So I can't stress it enough: CASH IS STILL KING. You can play the short side when the setups are similar to the recent shorts that we have taken that are working but even then I think we need to work on a little bit more of back and filling before these short setups look really ripe.
I am going to go ahead and wrap up the commentary there as it has been a very long day as the Platinum chat room is starting to get real active along with the Gold members in the forums. I LOVE IT but that means everyone that reads the free commentary will sometimes have to wait for the morning to get all the information. I apologize and will continue to make efforts to get everything done before 10pm EST. It is just really hard to do with my active lifestyle and heavy demands by the Platinum and Gold members (which I love). Also putting in my orders is another priority over this free commentary. Still I always get those videos done on time. Some days are better than others but at least you are getting the TRUTH unlike Madoff investors.
top short holdings with total returns UP today: RDK 15% MOS 55% LLL 18% POT 48% AAPL 43% CYT 55% SBAC 42% CASY 22% OKE 31% CPRT 22% APD 38% SDA 73% AMX 40% SPG 39% GGB 50% CEDC 57% CETV 75% CEO 22% IPHS 19% SPW 61% TITN 39%
VIDEO ONE, TWO, AND THREE AVAILABLE IN ITS FULL BEAUTIFUL SIZE TO GOLD AND PLATINUM MEMBERS IN THE GOLD FORUMS. FREE YOUTUBE VIDEO (SMALL) BELOW:
Now, normally when the stock market pulls back on low volume, after an initial start of a rally I feel that this is a constructive day. However, today's low volume pullback had the wrong feeling to it. That feeling is not hard for me to see but might be a little hard trying to explain it this late at night (It is 11pm; I'll have you ready for the opening bell). However I will do my best.
The first clue that this rally was probably going to run into a rough patch was that since the November lows volume has been non-existent on the rally into Wednesday morning. The few stocks that have had a rally with strong volume continue to have nasty reversals sometime either right before a breakout appears to be within distance or some time right after the successful breakout has taken the stock higher just enough for you to believe this time stocks are going to work this time. These are all warnings of a market that is in the middle of a bear market bounce and not at the start of a new bull market.
Another thing that threw up a warning flag for me today was the fact that the investors intelligence survey came out and shows that bulls are now up to 42% while the bears are at 34%. This is not really surprising as the crowd (including smart money managers) has wanted to be bullish for a long time (even back in March). But with the market in a constant selloff, all those value dip-buyers ended up being burned left and right. Not only are investor newsletter writers getting bullish on the way up but the retail crowd is showing very high levels of bullishness too with the AAII coming in with 49% bullish and 35% bearish. So the newsletter writers and the crowd are bullish. The best bottoms come when the bears are beating the bulls by a wide margin.
Now I will recognize that earlier in the year bears were destroying the bulls in the poll. But during that time we had no hint of an actual bottom in the form of either a capitulation day with huge volume, a rally on heavy accumulation after a low volume selloff, or with leading stocks setting up and breaking out leading the overall market. With all of these conditions, combined with the fact that the McClellan hit the highest level I have ever seen on the oscillator on my Telechart system. And my data goes back to 1986. So seeing the McClellan oscillator this overbought and seeing how poor this rally has been so far should have a lot of people concerned that this "Santa rally" might come to an end.
To top all the poor charts and lame volume on the indexes, we are still dealing with load after load of very bad news item. Heck, now we know SAY was a scam company. When they opened the Bernie Madoff can of worms you knew there were more cockroaches under the sink.
This market is still one tricky beast with the short term trend and sub-intermediate term trend up and the long-term and intermediate trend down. That means that the longs we take must have profits taken quickly (unless they are up 20% in a few weeks--then we hold longer) and must keep the longs small until we get an uptrend on strong volume.
At the same time, we must continue to look for long term topping patterns in stocks that have broken down and now have rallied back to their 50 and 200 day moving averages on low volume. If they can fail and crack there at those lines then maybe we can make some great money again on the short side.
The one thing remains the same and I believe I have been saying it for OVER a year now. That is that CASH IS KING! What does that mean? It simply means that when the market is in a series of mixed uptrends and downtrends and more of your recent longs/shorts fail normal. How do you stop that? You can't. You can only wait for the perfect long setup to come and then go heavily long. Until then, it would be foolish to put any significant play in any stock right now. Nothing is perfect and the few that start to look perfect quickly lose that gusto. if you go 400% long in a raging bull market where IBD leading stocks are leading, you are definitely going to be VERY WEALTHY at the end of a bull market. When IBD stocks are not leading, you do not have pretty chart patterns, and the indexes are rallying on low volume you have a perfect mix for a big possible nasty surprise.
So I can't stress it enough: CASH IS STILL KING. You can play the short side when the setups are similar to the recent shorts that we have taken that are working but even then I think we need to work on a little bit more of back and filling before these short setups look really ripe.
I am going to go ahead and wrap up the commentary there as it has been a very long day as the Platinum chat room is starting to get real active along with the Gold members in the forums. I LOVE IT but that means everyone that reads the free commentary will sometimes have to wait for the morning to get all the information. I apologize and will continue to make efforts to get everything done before 10pm EST. It is just really hard to do with my active lifestyle and heavy demands by the Platinum and Gold members (which I love). Also putting in my orders is another priority over this free commentary. Still I always get those videos done on time. Some days are better than others but at least you are getting the TRUTH unlike Madoff investors.
top short holdings with total returns UP today: RDK 15% MOS 55% LLL 18% POT 48% AAPL 43% CYT 55% SBAC 42% CASY 22% OKE 31% CPRT 22% APD 38% SDA 73% AMX 40% SPG 39% GGB 50% CEDC 57% CETV 75% CEO 22% IPHS 19% SPW 61% TITN 39%
VIDEO ONE, TWO, AND THREE AVAILABLE IN ITS FULL BEAUTIFUL SIZE TO GOLD AND PLATINUM MEMBERS IN THE GOLD FORUMS. FREE YOUTUBE VIDEO (SMALL) BELOW:
Leading Stocks Remain on Shaky Ground as Small Caps Lead the Market Higher on Volume
Housecleaning item: Josh went to the "L" in Lahaina today and left him just enough time to get Bigwavetrading.com updated. Rest assured, Josh is fine and will be back writing commentary.
Stocks were able to shake off Monday's heavier volume selling by bouncing back higher on higher volume. Price action as of late has been positive while volume has been on the light side. Small caps lead the rally today as the Russell 2000 rose 1.9%. However, leading stocks continue to struggle to catch up to the broader market averages. IBD indexes still show accumulation far below the major averages, suggesting the leadership in the market is not destined to lead to a new bull market. Quite simply, we are moving higher in a bear market.
The most compelling story is the lack of strong leadership in the market. Normally, IBD indexes of leading stocks would be outpacing all broad market averages. New Bull markets show new leadership breaking out on volume and not looking back. However, we are faced with a market where leadership is spotty and old leaders are the ones leading. Stocks who lead that are moving off lows is not the "ideal" leadership you want to see for a sustainable rally. Despite of this fact there are still gains to be had in this market, but it will be quick and one must be able to take profits fast.
I have studied the 1937 high thru the 1938 low and the ultimately low in 1942 prior to the massive bull market started immediately after that low. We are mirroring the price and volume action of the 1938 low. From its high to low the Dow Jones Industrial averaged dropped 50%, but from its 1938 low to high it rallied back 50%. This is not the only time in history stocks have repeated this move, in the late 1890s stocks moved in similar fashion. Will we rally above 1900 on the NASDAQ or 1100 on the S&P500 remains to be seen but history does show stocks can snap back significantly.
Swinging back around to today's action we did see a positive move in the New High vs New Low ratio. What is troubling is the fact that ETFs are included in both of the New High and New Low numbers. At any rate, we have seen a positive move in this ratio suggesting we can still move higher.
If you are sitting on profits at the moment, it is a wise move to book those profits. Rallies occurring in Bear Markets tend to be quick, duration is very short and profits can be lost quickly. The worse thing that can happen is if you are sitting on 20% profits and that quickly evaporates into a 5% loss. Capital preservation is a vital skill to learn in order to have a fighting chance during the next bull market.
Josh will be posting a video at the end of this commentary, if you do not see it please return later to view the video. Please note, that the video attached here and other videos are available to our gold and platinum subscribers. These videos are top notch quality, not just the content but the quality of video is far superior.
I wish you all success in 2009 and if you aren't a member of Big Wave Trading I look forward to seeing you become one.
Stocks were able to shake off Monday's heavier volume selling by bouncing back higher on higher volume. Price action as of late has been positive while volume has been on the light side. Small caps lead the rally today as the Russell 2000 rose 1.9%. However, leading stocks continue to struggle to catch up to the broader market averages. IBD indexes still show accumulation far below the major averages, suggesting the leadership in the market is not destined to lead to a new bull market. Quite simply, we are moving higher in a bear market.
The most compelling story is the lack of strong leadership in the market. Normally, IBD indexes of leading stocks would be outpacing all broad market averages. New Bull markets show new leadership breaking out on volume and not looking back. However, we are faced with a market where leadership is spotty and old leaders are the ones leading. Stocks who lead that are moving off lows is not the "ideal" leadership you want to see for a sustainable rally. Despite of this fact there are still gains to be had in this market, but it will be quick and one must be able to take profits fast.
I have studied the 1937 high thru the 1938 low and the ultimately low in 1942 prior to the massive bull market started immediately after that low. We are mirroring the price and volume action of the 1938 low. From its high to low the Dow Jones Industrial averaged dropped 50%, but from its 1938 low to high it rallied back 50%. This is not the only time in history stocks have repeated this move, in the late 1890s stocks moved in similar fashion. Will we rally above 1900 on the NASDAQ or 1100 on the S&P500 remains to be seen but history does show stocks can snap back significantly.
Swinging back around to today's action we did see a positive move in the New High vs New Low ratio. What is troubling is the fact that ETFs are included in both of the New High and New Low numbers. At any rate, we have seen a positive move in this ratio suggesting we can still move higher.
If you are sitting on profits at the moment, it is a wise move to book those profits. Rallies occurring in Bear Markets tend to be quick, duration is very short and profits can be lost quickly. The worse thing that can happen is if you are sitting on 20% profits and that quickly evaporates into a 5% loss. Capital preservation is a vital skill to learn in order to have a fighting chance during the next bull market.
Josh will be posting a video at the end of this commentary, if you do not see it please return later to view the video. Please note, that the video attached here and other videos are available to our gold and platinum subscribers. These videos are top notch quality, not just the content but the quality of video is far superior.
I wish you all success in 2009 and if you aren't a member of Big Wave Trading I look forward to seeing you become one.
Tuesday, January 06, 2009
Market Sells Off On Slightly Higher Volume But A Nice Last Hour Rally Saves The Market From A Real Distribution Day
It was an EXTREMELY active day in the platinum chat room and the gold forums as market players officially return from the 2-week shortened holiday season. I hope everyone had a great holiday season and spent some time with loved ones and friends. I know I had a wonderful time and it was even made better since I got to be in shorts and a t-shirt the entire time while the mainland froze in most parts. I only hope that you all get the nice mild weather we have received here.
Getting back to the market, I would say that today was the "official" first day of the 2009 year as Friday's session came after a night of drunken insanity by most that deal on Broad and Wall. However, we were here spotting potential longs that might breakout soon. Good thing I work while others mess off. The working paid off and we have three very nice longs and one very good short selection. With the mixed trend and some good stock picking skills it should turn out to be a very fun market as both our longs AND shorts are working.
Recently, everything we have gone long has moved higher, while old shorts continue to hold well below resistance and new shorts actually fell today instead of rising like most recent shorts have. So our 32 small short positions are all in the clear and our 12 longs with about 3 being of OK size are doing very well. We don't have a loser in the longs and everything has worked that we have touched this month. As long as this keeps going now that only bodes well for us 10x over when a real bull market starts or when the bear starts another leg down. Either way, as you can tell I AM READY. Unlike the talking biased billboards on CNBC. There you will only get a bull side or a bear side and you can be sure those positions are biased based on the holdings of the interviewee.
Those that do not prepare for this market to fail or prepare for this market to run are going to find themselves wondering what to do next when their biased views turn out wrong. And let me tell you, I have seen some interesting 2009 predictions that range from the market up 25% to the market down 50%. People are all over the map. But no matter what, I can guarantee that those that think the market will be up will say, if the market is down, that they were still right and something was wrong with the market. However, when you finish down 40% for the year like Jim Cramer, which so many watch like mindless zombies (yes we can, yes we can, yes we can....boyaah; robots!), you are still wrong not right.
The only way to be right in the market is if you are making money. And when it comes to day to day returns, I could CARE LESS about what you made today! What I want to know is what you made the past 3 months, the past 6 months, the past 12 months, the past 24, and the past 36 months. That is what really counts. Do you think I am going to trust my money to someone who beats it big one day out of the year and brags yet misses every other day of the year? I don't think so.
This market is still rallying on lower volume but there is an apparent increase in volume and today it was to the downside. However, even if today is a technical distribution day by the books with all indexes down .25% or more, it would seem that the increase in volume was a bad thing today. Too bad people can't get past the actual price move for the day and the actual price of the index they are watching on CNN or MSNBC.
If they would look past the prices you could see that volume was indeed up today but volume was still well below the 50 day volume average. Now the weighting of the average line is dropping since we have rallied on lower volume the whole way the past month. This could lead to the market's volume jumping above average pretty soon thus telling us that the big institutional money is coming back to work in the market. If this volume jumps you can be sure I will go from bearish-overall-but-short-term-bullish to BULLISH. Why? Because we do have some nice charts setting up.
Now do not get me wrong, even after a month of rallying off the November lows, we do have some nice charts that are popping up A*** A*** E*** M*** and a few others have the price, volume, and BOP action that I love when going long a stock. However, it is totally up to the market if it wants me to go up 100% to 400% fully long or go down 100% to 400% fully short. To not be prepared for a bull market or a bear market here is foolish. The last way you can look at this market is as a bull or bear market. It is mixed.
So for now, I continue to be a bull short-term, a bull sub-intermediate term, a bear intermediate term, and a bear long-term. This means that there will be some good recent longs like our ANCI up 51% since June and CSKI up 32% since December 12th. Besides those two beautiful longs, I have another 10 longs that are all moving higher showing gains since we went long and another 32 shorts that continue to act well in perfect downtrends. They are either not breaking above the 50 day moving average on high volume or they are not closing above the 200 day moving average since their big gains.
To sum it up, my long-term shorts continue to tell me that in the future we will hit resistance and turn to new lows. If this wasn't the case or will soon not be the case, then I will get about 10 full covers and then another 22 soon enough. By then I could be long as many as 20 stocks. But hopefully by then there will be more perfect looking stocks like HIL in 2003/HRZ 2006.
Either way, I am patient and know when to pick my spots and if I miss them another chance will come around. Do you know what the most bullish thing I saw today on a DOWN day...there were 25 new 52-week highs to 14 new 52-week lows. Hallelujah!! Do you know what I find odd? That the investors intelligence survey actually has the same amount of bulls and bears at 38.5% each. Short term it looks bullish and feels bullish but has the crowd jumped on this rally too soon with a future that looks to be headed for more troubled signs. Earnings are down seven quarters already and estimates are being lowered. That can't be good for the economy long term.
Anyways it is amazing the crowd and professionals turned bullish so fast after a LOW VOLUME rally with LEADING stocks lagging the beaten down turds that lost tons of value. The leading stocks we are long like ANCI 51% gain, QCOR 35% gain, and CSKI 32% gain all have one thing in common. What is it? If you guessed they are all related to the medical arena you nailed it. And one of the fastest growing groups on the left side of the Investors Business Daily 197 industry group list. As you can see Medical-related stocks are flying up the list. Pretty soon, at the rate the Medical stocks are growing, we will soon see Medical stocks dominate the whole black box of the top 20 industry groups.
If you don't remember, somewhere from May to August, almost the entire top 20 industry groups were Medical stocks. That shows you how much we love to stay healthy and make our lives better for us and everyone around us, even in a horrible bear market. Thanks to Doctor malpractice insurance, unnecessary lawsuits, and overuse of our medical system you can bet even in a down market Medical stocks will lead at some point. Some things never change. :)
top longs/(shorts) w/ total returns UP today: ANCI 51% CSKI 32% (CYT 57% CPRT 20% CASY 20% SPG 38% PLCE 21% CAJ 29% CETV 74%)
Getting back to the market, I would say that today was the "official" first day of the 2009 year as Friday's session came after a night of drunken insanity by most that deal on Broad and Wall. However, we were here spotting potential longs that might breakout soon. Good thing I work while others mess off. The working paid off and we have three very nice longs and one very good short selection. With the mixed trend and some good stock picking skills it should turn out to be a very fun market as both our longs AND shorts are working.
Recently, everything we have gone long has moved higher, while old shorts continue to hold well below resistance and new shorts actually fell today instead of rising like most recent shorts have. So our 32 small short positions are all in the clear and our 12 longs with about 3 being of OK size are doing very well. We don't have a loser in the longs and everything has worked that we have touched this month. As long as this keeps going now that only bodes well for us 10x over when a real bull market starts or when the bear starts another leg down. Either way, as you can tell I AM READY. Unlike the talking biased billboards on CNBC. There you will only get a bull side or a bear side and you can be sure those positions are biased based on the holdings of the interviewee.
Those that do not prepare for this market to fail or prepare for this market to run are going to find themselves wondering what to do next when their biased views turn out wrong. And let me tell you, I have seen some interesting 2009 predictions that range from the market up 25% to the market down 50%. People are all over the map. But no matter what, I can guarantee that those that think the market will be up will say, if the market is down, that they were still right and something was wrong with the market. However, when you finish down 40% for the year like Jim Cramer, which so many watch like mindless zombies (yes we can, yes we can, yes we can....boyaah; robots!), you are still wrong not right.
The only way to be right in the market is if you are making money. And when it comes to day to day returns, I could CARE LESS about what you made today! What I want to know is what you made the past 3 months, the past 6 months, the past 12 months, the past 24, and the past 36 months. That is what really counts. Do you think I am going to trust my money to someone who beats it big one day out of the year and brags yet misses every other day of the year? I don't think so.
This market is still rallying on lower volume but there is an apparent increase in volume and today it was to the downside. However, even if today is a technical distribution day by the books with all indexes down .25% or more, it would seem that the increase in volume was a bad thing today. Too bad people can't get past the actual price move for the day and the actual price of the index they are watching on CNN or MSNBC.
If they would look past the prices you could see that volume was indeed up today but volume was still well below the 50 day volume average. Now the weighting of the average line is dropping since we have rallied on lower volume the whole way the past month. This could lead to the market's volume jumping above average pretty soon thus telling us that the big institutional money is coming back to work in the market. If this volume jumps you can be sure I will go from bearish-overall-but-short-term-bullish to BULLISH. Why? Because we do have some nice charts setting up.
Now do not get me wrong, even after a month of rallying off the November lows, we do have some nice charts that are popping up A*** A*** E*** M*** and a few others have the price, volume, and BOP action that I love when going long a stock. However, it is totally up to the market if it wants me to go up 100% to 400% fully long or go down 100% to 400% fully short. To not be prepared for a bull market or a bear market here is foolish. The last way you can look at this market is as a bull or bear market. It is mixed.
So for now, I continue to be a bull short-term, a bull sub-intermediate term, a bear intermediate term, and a bear long-term. This means that there will be some good recent longs like our ANCI up 51% since June and CSKI up 32% since December 12th. Besides those two beautiful longs, I have another 10 longs that are all moving higher showing gains since we went long and another 32 shorts that continue to act well in perfect downtrends. They are either not breaking above the 50 day moving average on high volume or they are not closing above the 200 day moving average since their big gains.
To sum it up, my long-term shorts continue to tell me that in the future we will hit resistance and turn to new lows. If this wasn't the case or will soon not be the case, then I will get about 10 full covers and then another 22 soon enough. By then I could be long as many as 20 stocks. But hopefully by then there will be more perfect looking stocks like HIL in 2003/HRZ 2006.
Either way, I am patient and know when to pick my spots and if I miss them another chance will come around. Do you know what the most bullish thing I saw today on a DOWN day...there were 25 new 52-week highs to 14 new 52-week lows. Hallelujah!! Do you know what I find odd? That the investors intelligence survey actually has the same amount of bulls and bears at 38.5% each. Short term it looks bullish and feels bullish but has the crowd jumped on this rally too soon with a future that looks to be headed for more troubled signs. Earnings are down seven quarters already and estimates are being lowered. That can't be good for the economy long term.
Anyways it is amazing the crowd and professionals turned bullish so fast after a LOW VOLUME rally with LEADING stocks lagging the beaten down turds that lost tons of value. The leading stocks we are long like ANCI 51% gain, QCOR 35% gain, and CSKI 32% gain all have one thing in common. What is it? If you guessed they are all related to the medical arena you nailed it. And one of the fastest growing groups on the left side of the Investors Business Daily 197 industry group list. As you can see Medical-related stocks are flying up the list. Pretty soon, at the rate the Medical stocks are growing, we will soon see Medical stocks dominate the whole black box of the top 20 industry groups.
If you don't remember, somewhere from May to August, almost the entire top 20 industry groups were Medical stocks. That shows you how much we love to stay healthy and make our lives better for us and everyone around us, even in a horrible bear market. Thanks to Doctor malpractice insurance, unnecessary lawsuits, and overuse of our medical system you can bet even in a down market Medical stocks will lead at some point. Some things never change. :)
top longs/(shorts) w/ total returns UP today: ANCI 51% CSKI 32% (CYT 57% CPRT 20% CASY 20% SPG 38% PLCE 21% CAJ 29% CETV 74%)
Saturday, January 03, 2009
Is It Healthy When A Market Rallies On Low Volume After A 50% Selloff? Of Course Not
Today sure did seem exciting didn't it. I mean all over the boards and TV I saw the same headline of "the bottom is in." My question is "do these people ever look at volume" or are they just blinded by price action alone.
I guess this method works for short-term traders that have USUALLY poor results over the long term. But from someone coming from my end (a market historian going back to 1880) I believe that my analysis is all I need to believe that this rally has not a snowballs chance in Hell of succeeding for more than a few months.
The biggest problem I saw today were people actually bragging about a 3% gain today, after they lost 30% to 50% last year. Uhm, hello, (pardon the french) douche-bag, you are still down 27% to 47% the past 12 months. Nice job (sarcasm heavy). The real investors took shorts before September and went a little long off the November lows and are looking to go short when the market rallies back to the 200 DMA's of these indexes.
Now some of you have told me that the 2005 rally and 2006 rally started on low volume. Yes, that is true. However, can't you see that we were in a CONSTANT uptrend from October 2002 and that the low volume rallies followed low volume selloffs that were natural pullbacks in a long uptrend. The simple fact is, going back to 1880 on the DJ, you can not find one major long-term selloff that was followed by a low volume rally that put in a real bottom for a bull market to come out of.
In fact, the only low volume follow-through days I have found that have worked are like the ones in 2005 and 2006. They are ONLY coming from previous uptrends on long-term time frames. Long-term downtrends that have low volume rallies from the DAWN OF TIME has led to a further selloff.
So what is it going to take for me to get bullish? Duh. The same thing it has always taken: "hot" stock charts in top speculative and in top CANSLIM stocks. Both need to be setting up beautiful bases with low volume pullbacks, high volume rallies, and green BOP. Not only do we need bases, we need major volume on the indexes on the uptrend to give us the true support that is needed to keep stocks rallying.
This does not mean that we have to wait for the market to get above both the 50 and 200 DMA before we go long. All we need to do is see a real follow-through day with strong volume that clearly shows institutional investors are ready to get into this market. Subscribers know that I still don't see any beautiful accumulated stocks out there besides two (M*** and A***). In the 2002-2003 bottom process at least 20-30 stocks were setting up with proper volume and BOP characteristics. This still isn't the case.
The also thing that I have noticed is skipping from some people's minds is that they do not understand why you can not have the gains in 2008 like we did in 2003. Well, sheesh, let's look at a simple stat. Stocks over 100% for the year 2008 vs. the year 2003. In 2008 there were ONLY 22 stocks over 100% with the best stock EBS up 416%. In 2003 there were 898 (that remain; it was over 1,000) that were up 100% or more. How many were up over the best stock of 2008? 115 stocks. How many stocks were up over 500% in 2008: zero. How many were up in 2003 over 500%: 82 (that still exist; it was over 95). And obviously you now know nothing was up 500% so nothing was up 1000%. How many were up 1,000% in 2003: 12 (there were 15 in 2003 before some delistings).
This clearly shows that if any of you thought you could produce the same returns as I did in 2003, you simple do not know market history. 22 stocks to 1000, 0 stocks to 95, and 0 stocks to 15 when we look at 100%, 500%, and 1000% returns. So if you don't get why 2008 could not create the 2003 gains you simply have no clue about how the market works and when and where you should invest.
At the same time (I have not looked yet) we can compare the amount of stocks down 50% in 2003 to stocks down 50% in 2008 and believe you will clearly see being short was right this year and stupid in 2003.
I am still not sure why some of you that are here focus so much on the daily action. This is not another lame daytrading site that shows up for three years then closes. This is a real active investor that knows how to make the big money when it sets up. When it is not there, I am not a dumb-a** and know better than to force a trade just to keep up with a few people on one day. Everyone that beat me today with their gains, had horrible 2008s. Meanwhile I have capital gains taxes I will be paying for 2008 and have TONS of subscribers up over 10% for the year. So for those of you cocky daytraders that are reading this...I would LOVE to see your financial statements. I am pretty sure I will see a 30% to 50% loss for 2008 followed by a 3% gain for today. Congratulations! Ugh.
Personally, I don't care about any rally off the lows when it has below average volume almost EVERY SINGLE day. If we do not come back on Monday through Friday with strong gains on strong volume there is no way I will be thinking of going long anything in size. The difference between a $1000 investment and a $100,000 investment is COMPLETELY in the chart. There is not a single freaking chart out there that is worth $500,000 much less $100,000. I will continue to keep my longs/shorts during this range bound market the past two months that hold resistance/support levels. But new longs/shorts will continue to be small until one of these two scenarios happen.
One: either the stock market will stop rallying on low volume and will start to rally on heavy volume which then starts to build more and more charts with beautiful correct bases. Two: the low volume rally continues and sucks in all the suckers who have no idea how to read a weekly or a monthly chart (some don't even know what a daily chart looks like--LAME) and volume. They will buy stocks on low volume that are beaten up as bargains thinking they have a steal of a deal. Well, for those that do this, I want you to watch interviews on CNBC and in the WSJ about MSFT, DELL, INTC, CSCO, JDSU, and QCOM. Back then in 2000 to 2002 and even when the 2003 rally got started, everyone was recommending these past loser laggards as longs. Here we are six years later and I believe EVERY SINGLE ONE is down over 50% from their highs in 2000. Great call (sarcasm)!
Those that invested in those OLD leaders lost getting long SINA, SOHU, NTES, SSYS, GRMN, USNA, EPIC, SIGM, HIL, FMDAY, IST, GNSS, LMLP, HRZ, AFSI, APPY, PDO, TASR, and DGLY which all returned huge returns over anything out there. TASR broke out nine months AFTER the bottom and went on to run 2,400% in nine months. So in nine months I made 2,400%, while the "geniuses" who nailed the bottom ended that run with a 20% gain from their laggards that produced minor gains.
I don't know about you but when the next rally comes I don't want to go long GOOG, BIDU, RIMM, AAPL, or any other PAST big leader. These stocks are all too big and I have NO interest in any of them anymore except to short every low volume rally in these stocks till they make their way to the teens. What goes up and then moves in a parabolic fashion usually leads to a full retracement of previous gains.
If you want to be the best and get long the Past Big Winners that I have been blessed to hold onto, you will need to learn how the market really works. Not how CNBC and the Wall Street Journal tell you they way it should work. It might need to work that way. But the real money by the best investors of wall street all-time come from going long new "hot" innovative companies that have stocks breaking out of perfect to near-perfect chart patterns with the stock having strong to growing fundamentals.
Remember, for all of you guys with a 3% gain today, big deal. I have a 52% gain in ANCI in six months for one long and a 74% gain in SDA from a short in four months. My TASR 2,390% gain in nine months didn't come in one day so why are you daytrading? Just be patient, keep that cash heavy, and unless you can get in and flip out with 20% gains there is NO reason to be getting heavily long in any stock. My hottest holding is up 21% in less than a month and continues to have max green BOP in it as it climbs higher. If you know this stock and/or are a subscriber, you may study it to see what we need to see before we go long. However, AIPC is the perfect current example of how a new purchase should act the whole way it moves up. AIPC 6/18 move to now is loaded with green to max green BOP. AIPC in June is what you want to see when you go HUGE into a position. It is a breakout like that on max green BOP with RS and Moneystream hitting new highs when you want to put 20%+ in one position. However, right now, we have to wait for something like that June/August ANCI setup and AIPC 6/18 setup.
Getting the big gains takes patience. But if you don't know why holding cash and leaving with a 0% flatline instead of a 40% loss followed by a 3% move in one day is a good way to invest well then you are not going to be involved in the stock market much longer. Those patterns of EPIC, HRZ, AFSI, TESO, TASR, LMLP, GNSS, MRVC, PDO, DGLY, and FMDAY will show up again and instead of having my money tied up in some BS municipal bond fund, I will wait for the next "perfect" setup like AIPC on 6/18.
I wonder how many OTCBB stocks might have looked like that or might look like that now???? Too bad I will never know thanks to the greatest software out there for under $500 being so far behind the curve on keeping up with the times. How much can it cost to add OTCBB. So what if it is scammy. As long as it builds the charts that I KNOW lead to huge 100% to 1000% gains, we can make big money. AIPC is a lesson for us that we are in fact missing great longs in other countries that setup in the patterns that I see before HUGE gains come. So thank you Telechart for having a great product but a VERY LAME stock exchange service. OTCBB and Toronto stocks should be on this system, bottom line.
My bottom line is have a wonderful weekend and I will see you on Monday. Unless you are in the chat room or forums. Then I will see you every moment I am not shopping, surfing, or relaxing on the beach.
top longs/(shorts) w/ total returns UP today: (SDA 74% SPG 36% CASY 19%)
VIDEO ONE, TWO, AND THREE (REVIEW OF 2008) WILL BE AVAILABLE ON THE GOLD FORUMS THIS WEEKEND IN THEIR FULL BEAUTIFUL SIZE. THE FREE YOUTUBE VERSION IS BELOW.
Aloha!
I guess this method works for short-term traders that have USUALLY poor results over the long term. But from someone coming from my end (a market historian going back to 1880) I believe that my analysis is all I need to believe that this rally has not a snowballs chance in Hell of succeeding for more than a few months.
The biggest problem I saw today were people actually bragging about a 3% gain today, after they lost 30% to 50% last year. Uhm, hello, (pardon the french) douche-bag, you are still down 27% to 47% the past 12 months. Nice job (sarcasm heavy). The real investors took shorts before September and went a little long off the November lows and are looking to go short when the market rallies back to the 200 DMA's of these indexes.
Now some of you have told me that the 2005 rally and 2006 rally started on low volume. Yes, that is true. However, can't you see that we were in a CONSTANT uptrend from October 2002 and that the low volume rallies followed low volume selloffs that were natural pullbacks in a long uptrend. The simple fact is, going back to 1880 on the DJ, you can not find one major long-term selloff that was followed by a low volume rally that put in a real bottom for a bull market to come out of.
In fact, the only low volume follow-through days I have found that have worked are like the ones in 2005 and 2006. They are ONLY coming from previous uptrends on long-term time frames. Long-term downtrends that have low volume rallies from the DAWN OF TIME has led to a further selloff.
So what is it going to take for me to get bullish? Duh. The same thing it has always taken: "hot" stock charts in top speculative and in top CANSLIM stocks. Both need to be setting up beautiful bases with low volume pullbacks, high volume rallies, and green BOP. Not only do we need bases, we need major volume on the indexes on the uptrend to give us the true support that is needed to keep stocks rallying.
This does not mean that we have to wait for the market to get above both the 50 and 200 DMA before we go long. All we need to do is see a real follow-through day with strong volume that clearly shows institutional investors are ready to get into this market. Subscribers know that I still don't see any beautiful accumulated stocks out there besides two (M*** and A***). In the 2002-2003 bottom process at least 20-30 stocks were setting up with proper volume and BOP characteristics. This still isn't the case.
The also thing that I have noticed is skipping from some people's minds is that they do not understand why you can not have the gains in 2008 like we did in 2003. Well, sheesh, let's look at a simple stat. Stocks over 100% for the year 2008 vs. the year 2003. In 2008 there were ONLY 22 stocks over 100% with the best stock EBS up 416%. In 2003 there were 898 (that remain; it was over 1,000) that were up 100% or more. How many were up over the best stock of 2008? 115 stocks. How many stocks were up over 500% in 2008: zero. How many were up in 2003 over 500%: 82 (that still exist; it was over 95). And obviously you now know nothing was up 500% so nothing was up 1000%. How many were up 1,000% in 2003: 12 (there were 15 in 2003 before some delistings).
This clearly shows that if any of you thought you could produce the same returns as I did in 2003, you simple do not know market history. 22 stocks to 1000, 0 stocks to 95, and 0 stocks to 15 when we look at 100%, 500%, and 1000% returns. So if you don't get why 2008 could not create the 2003 gains you simply have no clue about how the market works and when and where you should invest.
At the same time (I have not looked yet) we can compare the amount of stocks down 50% in 2003 to stocks down 50% in 2008 and believe you will clearly see being short was right this year and stupid in 2003.
I am still not sure why some of you that are here focus so much on the daily action. This is not another lame daytrading site that shows up for three years then closes. This is a real active investor that knows how to make the big money when it sets up. When it is not there, I am not a dumb-a** and know better than to force a trade just to keep up with a few people on one day. Everyone that beat me today with their gains, had horrible 2008s. Meanwhile I have capital gains taxes I will be paying for 2008 and have TONS of subscribers up over 10% for the year. So for those of you cocky daytraders that are reading this...I would LOVE to see your financial statements. I am pretty sure I will see a 30% to 50% loss for 2008 followed by a 3% gain for today. Congratulations! Ugh.
Personally, I don't care about any rally off the lows when it has below average volume almost EVERY SINGLE day. If we do not come back on Monday through Friday with strong gains on strong volume there is no way I will be thinking of going long anything in size. The difference between a $1000 investment and a $100,000 investment is COMPLETELY in the chart. There is not a single freaking chart out there that is worth $500,000 much less $100,000. I will continue to keep my longs/shorts during this range bound market the past two months that hold resistance/support levels. But new longs/shorts will continue to be small until one of these two scenarios happen.
One: either the stock market will stop rallying on low volume and will start to rally on heavy volume which then starts to build more and more charts with beautiful correct bases. Two: the low volume rally continues and sucks in all the suckers who have no idea how to read a weekly or a monthly chart (some don't even know what a daily chart looks like--LAME) and volume. They will buy stocks on low volume that are beaten up as bargains thinking they have a steal of a deal. Well, for those that do this, I want you to watch interviews on CNBC and in the WSJ about MSFT, DELL, INTC, CSCO, JDSU, and QCOM. Back then in 2000 to 2002 and even when the 2003 rally got started, everyone was recommending these past loser laggards as longs. Here we are six years later and I believe EVERY SINGLE ONE is down over 50% from their highs in 2000. Great call (sarcasm)!
Those that invested in those OLD leaders lost getting long SINA, SOHU, NTES, SSYS, GRMN, USNA, EPIC, SIGM, HIL, FMDAY, IST, GNSS, LMLP, HRZ, AFSI, APPY, PDO, TASR, and DGLY which all returned huge returns over anything out there. TASR broke out nine months AFTER the bottom and went on to run 2,400% in nine months. So in nine months I made 2,400%, while the "geniuses" who nailed the bottom ended that run with a 20% gain from their laggards that produced minor gains.
I don't know about you but when the next rally comes I don't want to go long GOOG, BIDU, RIMM, AAPL, or any other PAST big leader. These stocks are all too big and I have NO interest in any of them anymore except to short every low volume rally in these stocks till they make their way to the teens. What goes up and then moves in a parabolic fashion usually leads to a full retracement of previous gains.
If you want to be the best and get long the Past Big Winners that I have been blessed to hold onto, you will need to learn how the market really works. Not how CNBC and the Wall Street Journal tell you they way it should work. It might need to work that way. But the real money by the best investors of wall street all-time come from going long new "hot" innovative companies that have stocks breaking out of perfect to near-perfect chart patterns with the stock having strong to growing fundamentals.
Remember, for all of you guys with a 3% gain today, big deal. I have a 52% gain in ANCI in six months for one long and a 74% gain in SDA from a short in four months. My TASR 2,390% gain in nine months didn't come in one day so why are you daytrading? Just be patient, keep that cash heavy, and unless you can get in and flip out with 20% gains there is NO reason to be getting heavily long in any stock. My hottest holding is up 21% in less than a month and continues to have max green BOP in it as it climbs higher. If you know this stock and/or are a subscriber, you may study it to see what we need to see before we go long. However, AIPC is the perfect current example of how a new purchase should act the whole way it moves up. AIPC 6/18 move to now is loaded with green to max green BOP. AIPC in June is what you want to see when you go HUGE into a position. It is a breakout like that on max green BOP with RS and Moneystream hitting new highs when you want to put 20%+ in one position. However, right now, we have to wait for something like that June/August ANCI setup and AIPC 6/18 setup.
Getting the big gains takes patience. But if you don't know why holding cash and leaving with a 0% flatline instead of a 40% loss followed by a 3% move in one day is a good way to invest well then you are not going to be involved in the stock market much longer. Those patterns of EPIC, HRZ, AFSI, TESO, TASR, LMLP, GNSS, MRVC, PDO, DGLY, and FMDAY will show up again and instead of having my money tied up in some BS municipal bond fund, I will wait for the next "perfect" setup like AIPC on 6/18.
I wonder how many OTCBB stocks might have looked like that or might look like that now???? Too bad I will never know thanks to the greatest software out there for under $500 being so far behind the curve on keeping up with the times. How much can it cost to add OTCBB. So what if it is scammy. As long as it builds the charts that I KNOW lead to huge 100% to 1000% gains, we can make big money. AIPC is a lesson for us that we are in fact missing great longs in other countries that setup in the patterns that I see before HUGE gains come. So thank you Telechart for having a great product but a VERY LAME stock exchange service. OTCBB and Toronto stocks should be on this system, bottom line.
My bottom line is have a wonderful weekend and I will see you on Monday. Unless you are in the chat room or forums. Then I will see you every moment I am not shopping, surfing, or relaxing on the beach.
top longs/(shorts) w/ total returns UP today: (SDA 74% SPG 36% CASY 19%)
VIDEO ONE, TWO, AND THREE (REVIEW OF 2008) WILL BE AVAILABLE ON THE GOLD FORUMS THIS WEEKEND IN THEIR FULL BEAUTIFUL SIZE. THE FREE YOUTUBE VERSION IS BELOW.
Aloha!
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