Wednesday, January 21, 2009

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!


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