Volume Jumps after the Fed releases its Meeting Minutes

Building permits and housing starts failed to inspire the market, but the selling didn’t start ramping until the FOMC meeting minutes. Volume for much of the day was running lower than Tuesday’s level as traders were waiting on the Federal Reserve’s latest meeting minutes. Upon the release it was clear from the release the Central Bank is at least talking about ending the or at least curbing the latest round of asset buying. The minutes also revealed the Fed is a bit more optimistic about the state of the economy and therefore could reduce the size of their purchases. Sellers didn’t need much more than that to take stocks below last week’s low in heavy trade. One day doesn’t make a trend, but today we finally saw some heavy volume selling. Our uptrend is on shaky ground and it is a prudent move to make sure you have your exit strategy in place. AAPL continues to weigh on the overall market, but today sellers took to the entire market. GOOG dropped back below $800. Crude oil fell more than two points with Gold and Silver falling hard on the day. One day doesn’t make a trend, but it is these types of days where you stand up and take notice. When indexes and leading stocks get hit hard you have to take notice and adjust. Know where your exits are and make sure you stick to your plan. It will be important for this market to find its footing to keep the uptrend alive. Selling in bunches like today are a big red flag for the market. Your stocks will let you know what is going on and if you are noticing your stocks are quickly hitting your exits it is a good sign the broader market is about to head lower. We are in caution mode and will need to see this market shake off today’s selling. Know your exits! Short-term Trends: No changes for today, but any further selling we are likely to see SPY, IWM, and QQQ flip to downtrends. TICKER ST TREND TREND CHANGE DATE CLOSE % SPY UPTREND NO CHANGE 2/20/2013 151.34 -1.25% IWM UPTREND NO CHANGE 2/20/2013 90.83 -1.86% QQQ UPTREND NO CHANGE 2/20/2013 67.19 -1.54% USO DOWNTREND NO CHANGE 2/20/2013 34.17 -2.26% UNG DOWNTREND NO CHANGE 2/20/2013 18.32 0.11% GLD DOWNTREND NO CHANGE 2/20/2013 151.44 -2.50% SLV DOWNTREND NO CHANGE 2/20/2013 27.59 -2.99% DBC UPTREND NO CHANGE 2/20/2013 27.92 -1.13% FXY DOWNTREND NO CHANGE 2/20/2013 104.82 0.05% FXE DOWNTREND NO CHANGE 2/20/2013 131.68 -0.85% TLT DOWNTREND NO CHANGE 2/20/2013 115.92 0.30%

AAPL weighs on the NASDAQ as the S&P 500 Closes in the Green for the 6th day in a Row

AAPL was the talk of the street as the stock took a plunge on fourth quarter earnings. Initial jobless claims came in better than expected helping out on the job front (we’ll forget the surging number of people receiving food stamps and long-term disability). The market appeared poised to continue much higher with the market shaking off AAPL’s move. Just before noon time the NASDAQ had almost erased all of the day’s losses but sellers took over. Sellers dominated into the 2:00 pm EST hour when so when the VIX began to fall back helping the market come off the lows. NYSE and NASDAQ volume were higher giving the NASDAQ a day of distribution and a stall day for the S&P 500. We still have our uptrend and a rest here would make sense. However if this were to turn more sinister we have our exit plan. Gold and silver took a big hit today while other commodities were able to hold up. Gold and silver have yet to push higher despite the Federal’s Reserve’s desire to print $85 billion a month without an expiration date. Perhaps the medals know something about next week’s Fed meeting that the other market don’t. For now, both remain in their short-term uptrends despite their action today. Sentiment is at extremes with many surveys at multi-year highs. The AAII survey showed bulls at 53% highest since last February. Hulbert’s Financial Digest reading is at a level not seen since 2000. While this may be an indication upside may be limited we simply cannot trade off of it. The market may very well turn over here and head lower, but it is anyone’s guess and why we have sell rules in place. Stick to your game plan and execute. Short-term ETF Trends: TICKER ST TREND TREND CHANGE DATE CLOSE % SPY UPTREND NO CHANGE 1/24/2013 149.41 0.03% IWM UPTREND NO CHANGE 1/24/2013 66.66 -1.38% USO UPTREND NO CHANGE 1/24/2013 34.76 0.43% UNG UPTREND NO CHANGE 1/24/2013 19.53 -2.35% GLD UPTREND NO CHANGE 1/24/2013 161.42 -1.10% SLV UPTREND NO CHANGE 1/24/2013 30.65 -1.73% DBC UPTREND NO CHANGE 1/24/2013 28.07 -0.07% FXY DOWNTREND NO CHANGE 1/24/2013 108.66 -1.69% FXE UPTREND NO CHANGE 1/24/2013 132.7 0.41% TLT UPTREND CHANGE 1/24/2013 120.09 -0.35% TLT signals a change in trend from downtrend to uptrend. Have a great weekend.

Dollar Falls and Stocks Shake-off Intraday Sell-Off

Shaking off a late morning sell-off the market was able to rebound closing near the highs of the session as volume pushed higher on the NYSE, but flat on the NASDAQ. The EURO raced higher after comments from the ECB rate announcement pushing down the dollar index. AAPL was the catalyst for both moves in the morning and late afternoon as the stock continues to move sideways after its most recent decline. The NASDAQ and Small Caps hit new highs for the uptrend a good sign for the market in the short-term at least. Our uptrend continues to play out and barring any price destruction should continue on its merry way. Gold and silver rebounded today after their most recent sell-off. Despite the Federal Reserve signaling a possible end to QE forever the metals have been able to rebound somewhat. Crude oil once again moved higher while the rest of the commodity space remained relatively flat. The inflation trade in stocks and commodities still lives. Sentiment has crept back to lofty levels for the market, but not at the highs previously seen. The AAII bull sentiment figure jumped to 46.45. This past year the high for the index hit 51.64 back in February of 2012. The market was still able to rally higher and set a new high for the rally showing sentiment is not a reliable indicator for the market. Bears came in at 26.92 well above the 52 week low of 17.18 set back January of last year. Neither sentiment readings are at extremes, but we are close. The Investors Intelligence survey showed bulls back above 50% at 51%, but no near the high of 58% set earlier. Given the recent action and the lack of ultra-bullishness it appears this market has some room to run. Tomorrow we’ll get a reading on prices on imports and exports followed by the Treasury Budget announcement at 2pm. The deficit is expected to come in at -1 billion dollars. Many took income in the month of January rather than in 2013 due to the fiscal cliff. It will be interesting to see how much money the Treasury will be able to net. I’d think the estimates are off and likely sway when the debt ceiling debate would begin. We can only speculate at this point, but something to keep an eye on. As we ride into the weekend, we expect to see this market hit new highs and stand ready to act as necessary. Cut those losses.

Noon Time Rally is Faded as Stocks Close off The Best Levels of the Session

The market along with the rest of the world awaits the outcome of today’s Presidential Election. Mid-Day stocks enjoyed a nice pop with volume exploding higher, but it would be all for nothing. Friday’s highs would be a big point of resistance for the market and sellers began to take over. At the end of the day the NASDAQ and S&P 500 had closed in the green but well off their best levels. Coinciding with the market rally the VIX or Fear index fell hard as investors rushed back to a “risk on trade.” The Dow Jones Industrial average lead all major market indexes with 133 point gain or up 1.02% gain. Volume was solid for gains, but the lack of ability to close near the best levels put another stain on what would have been considered a solid day. We at Big Wave Trading remain in sell mode and continue to see nothing from the market that would get us to move into buy mode. Perhaps a push above the 50 day for the S&P 500 with volume would change our tune. At this point we simply do not have enough evidence to push higher. Gold and silver along with other commodities jumped along stocks, but commodities as a whole have been beaten up so badly recently the relief rally isn’t unexpected. Two economic figures were released today, but weren’t covered by the media for obvious reasons. Coverage for most of the day was regarding the election and possible outcomes. No one person or anyone knows the future and it is entertaining to see folks continue to predict what will or won’t happen. Both economic figures were disappointing with the JOLTs Job Openings lower than expected and the ISM New York index show a contraction with a reading of 45.9. Prior reading for the ISM New York was 52.9 and when you layer on top Hurricane Sandy things will likely be worse in the coming weeks/months. At 5pm East Coast time we’ll begin to see exit polls and there will be no doubt bets made on InTrade who will win the election. Polls will close staring at 6pm and throughout the night. Let the fun begin!

Dow and S&P 500 Lead Stocks Lower as NASDAQ Finds 200 Day Support

More selling hits the street despite yesterday’s end of day rally. The 200 day provided the NASDAQ with some support, but the index failed to put in a big turn around day. Earnings continue to pour in and are only helping a few stocks. FB reported after-hours and is seeing a rush of buyers into the stock, but FB is not the norm. Volatility spiked closing above its 200 day moving average for the first time since the beginning of June when our most recent rally began. Fear has once again crept back into the market, but we lack the panic we normally see in a market bottom. Price action continues to be weak with volume still big on the downside and we remain in sell mode. Earnings season has crushed many growth stocks, but they continue to pile up. BWLD is just another victim to the earnings disaster. FB and PNRA are two bright spots, but they are the exception to the rule. NFLX was hit hard again in after-hours as the company failed to reach its user target. The stock had seen some life, but for a little over a year has been taken to the woodshed. CMG is in the same camp. The ultimate growth stock AAPL reports on Thursday and after failing to rally after its announcement of the iPad mini Thursday’s report will be important to the stock. AAPL has touched its 200 day, but has yet to top out since the 2009 bottom. More than 3 years later the stock has had a tremendous run and Thursday we’ll see if the stock can find the juice to resume hitting new highs. Commodities continue to pull back as crude oil briefly hit an 85 handle on the day. Gold and silver continue to pullback after their run up from the announcement of QE 3 or what we call QE forever. The market has now pulled back roughly 6% (NASDAQ) from the QE announcement. The market dropped roughly 3.5% from its peak from the QE2 announcement. At the moment we have support at the 200 day for the NASDAQ while the S&P 500 has yet to reach its 200 day. The election is two weeks away and it is bound to have an affect on the market. The most recent pullback has not been kind to leading stocks and it appears we’ll see this continue given the reaction to earnings as of now. Have a plan and trade. Cut losses and ride your winners. Volatility is finally showing some fear in the market and will at some point signal a possible bottom. Cash is king for now.

More Twist, No QE as Stocks End Flat

The story of the day was the Federal Reserve and its actions. With very little on the economic front the market turned and waited on the Federal Reserve to deliver its rate and policy announcement. Failing to initiate a third round of quantitative easing the Federal Reserve did extend its “Operation Twist” until the end of the year. Stocks reacted in volatile fashion and during Bernanke’s testimony, but finally settling near the unchanged level as volume fell on the day. Taking a step back we saw a good day of consolidating the recent gains. Avoiding any further deterioration will be a must for us to continue on a new uptrend. Gold and crude oil did not react as if there was going to be immediate action by the fed to pump more liquidity in the market. Crude was down more than 4% at the stock market close a big tell the trend in crude remains to the downside. Gold finished down roughly 1% on the day as both commodities continue to act as if the Federal Reserve will not print any money any time soon like the equity market. It is quite clear stocks are expecting the fed to step in with further easing to support the market. At the end of the day we follow price and where it goes we do. Opinions mean very little. Listening to Bernanke during his press conference it is apparent he is looking for Congress to get its house in order. The unfortunate part of the quantitative easing is in order for it to work properly budgets must be balanced. Continuing to raise the debt burden only acts as a drag on the economy. Sure short-term bursts of debt are okay and manageable. However, massive debt spending over extended periods of time coupled with money printing is very flammable. History has provided enough evidence when money printing goes unchecked, fiat currencies always dissolve or evolve causing very painful contractions. We need our fiscal policy in order to avoid financial disaster down the road. Luckily we have price as our guide and we’ll be taking full advantage. The future is unknown and while many will try to predict what will happen know one actually knows. Using a rule based system allows us to focus on what matters and ignore the junk you hear from the financial media. Cut those losses and let your winners run.

New Seeking Alpha Article: 4 Gold Stocks For A Bear Market

4 Gold Stocks For A Bear Market

Stocks End The Week The Way They Started With Another Selloff; Long Gold/Silver/Platinum + Short Stocks = Big Profits In This Market

Stocks ended the week the way that they started with all indexes closing down across the board with indexes down anywhere from .1% on the Nasdaq to down 1.6% on the NYSE. The bad news about the losses, today, is that the NYSE and SP-500 (-1.1%) suffered a clear distribution day. The DJIA had a huge distribution day but the bullish intraday reversal and the huge level of volume would appear to be more short-term bullish for me. Why? Because the DJIA has been down 20 of 31 days before today's huge volume down day's intraday bullish reversal. Either way technically they are distribution days but when using "art" with "science" it is clear to see today's losses were not vicious.

What is more problematic is that the longs scans looked worse than only a 1% down day. That just tells me that the market probably is in no mood to rally any time soon and this is probably why we can not find ANY "hottie" chart patterns or high quality CANSLIM stocks setting up in proper patterns with growing fundamentals. The market has turned down on the micro and macro and it will take time to get these stocks growing again. It will even take longer if we go down the road to socialism. If we take a track that has proven to NEVER EVER work in the history of the world, then it might be safe to say the "hottie" stocks might not setup. If that is the case, we will just keep focusing on our shorts in the market and our gold/silver/platinum longs which will make us excellent money in a market like that.

A lot of people seem to not realize that there is a HUGE correlation between long bull markets and technology and financials leading. Even in 2003 the huge bull market rally that we saw that year did not just have technology leading it also had banking leading. Stocks like GS were leading the sector higher making these companies a lot of money. This happened in 1999 also as one of my best longs was a payment system stock that worked in banks. So you normally need banks to help rally the market if you have a healthy market. So I am sitting here wondering what is going to happen if the socialist agenda of our Congress is put in place and our banks become nationalized. You better pray to the Lord above that this doesn't happen. It will flatline and kill banks as investment vehicles and somehow excess capacity will have to be moved from these dead banks to new alive stocks that haven't been killed by socialism yet. There are always future technologies like nano dust, artificial intelligence, security, robotics, and many other green technologies. However, if the venture capitalist have no capital to loan and the banks have no money to loan. NOBODY is going to make money. So let's pray our system makes it through this.

For the week, the market took it on the chin with the IBD 100 falling 4.5%, the DJ down 6.2%, the NYSE lost a whopping 7.7%, the SP 500 lost 6.9%, and the Nasdaq lost 6.1%. It was not a pretty week and that can be confirmed with the amount of longs we had decrease from 10 to 5 and our shorts increase from 39 to 43. I think it is obvious which side is the right side right now, unless you are keeping warm in cash.

With the mess our leaders are making with these trillion dollar SPENDINGULUS bills, these $75 billion housing plans, this exponential printing of money, and the nationalization of banks have me thinking only one thing for the long-term. That is GOLD baby! My gut tells me ANY pullback we can EVER get to the 50 day moving average or the 200 day moving average should be an area that we buy a LOT of gold. The 21 DMA can even be used. However, I have 25% of my IRA in Gold and would not mind putting 50% in it if I can get a proper pullback. I will not chase and will remain patient and let it come to me. When my "hot" max green BOP filled, heavy accumulation filled, and excellent price action stocks setup, I will be going long and strong.

However, if they don't show up and an opportunity to go long comes along, a bounce of Gold right off the 50 day moving average sure looks like a smart thing to do when you have a long-term time frame based on the US Dollar collapsing under the spending in the gov., the corruption in the gov., the printing in the gov., and the lying in the gov. This will lead to China to stop buying and will send Gold/Silver/Platinum exploding higher. Gold is already made us a good amount of money in a short time and we hope more is left. Don't forget to keep an eye on AGQ for a BIG ultra silver play. This is a very bullish silver chart and any pullback BEFORE a climax run should be on a lot of investors wish list.

The bottom line this Friday is that I have had a GREAT week with our gold longs producing large gains in our big holdings, our shorts ALL did us very well giving us nice gains, and the best part is that we still have a LOT of cash on the sidelines to use in case any of those exciting stocks we have fallen in love with since 1998 come along and setup again. I know it will be sooner than later as we still have some nice charts holding up out there that could become "hot, perfect, wonderful" chart patterns in a few more weeks to months. We will see, it is still early. Remember everyone, CASH IS STILL KING, SHORTS ARE QUEEN, and GOLD/SILVER IS PRINCE!

top longs/(shorts) with TOTAL RETURNS since purchase MAKING ME MONEY TODAY: ANCI 56% (CETV 92% CEDC 82% CYT 68% SDA 79% RIMM 60% GGB 63% TITN 54% AMX 51% APD 44% OKE 44% IPHS 48% CEO 32% RDK 30% PG 21% CPRT 22% BOH 22% PLCE 29% AMSG 27% PRGO 25% LLL 19% K 19% WRB 15%)

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Stock Market Indexes Breakdown On Heavy Volume Throwing Every Index Into A Downtrend; Our Gold Longs And Our Shorts Allowed Us To CLEAN UP On Tuesday!

It was a very ugly day for the stock market today but I have to admit that me and my subscribers were very happy as not only did 37 of our 39 shorts make money but our two biggest gold positions were up 9% and 3%+ today. So it is safe to say today was a very bullish day for subscribers and all I have to say is that IT USED TO ALWAYS BE LIKE THIS from 1996-2007. Only recently has things been turned upside down and even then our shorts are doing WONDERFUL proving that the trend will FOREVER be your BEST friend.

The one problem I have had with the downtrend is that unlike the 1997 pullback, 1998 pullback, or the 2000-2002 bear market, this is the first time (besides the March to May period in 2008 which was lame!!) where I have seen the market go so long without rewarding momentum/growth investors with at least a few "hot" stocks where they buck the major downtrend (like CRUS in 2000 or GNSS in 2001--both tech related). This downturn has been so harsh and has hit the whole macro-economy that NO stock is avoiding the downturn. There are a few but compared to any other year I have been doing this it is PATHETIC! Luckily, right now, stem-cell, pasta, and gold all have some momentum and these areas could still make us money if the market doesn't breakdown too much more. However, if the market falls apart, you can kiss these speculative leaders (stem cells) and real leaders (gold) goodnight.

It is possible gold, silver, and platinum stocks can do well. However, I think we need to have some better counter-trend rallies to really get any upside momentum that will allow us to make the 100%+ gains that I was used to getting before 2008 hit us. Gold, silver, and platinum might do well if the world doesn't feel safe buying our debt anymore but the actual stocks on the exchange will still be at the whims of the buyers (demand) and sellers (supply) forces of the market. Gold will replace the Dollar in some countries holdings as they diversify but I doubt those same countries will buy AEM, NEM, GG, ABX, or GOLD instead of the actual bullion.

This is why I think it is safe to buy Gold, Silver, and Platinum on pullbacks but NOT the stocks that are involved in those markets. They are still STOCKS and, since weak holders and small money goes into stocks more than futures, they are at the mercy of supply and demand imbalances caused by a fund liquidating or a big investor jumping ship. In the Gold market, if that investor decides to dump, I am pretty sure, RIGHT NOW, you will not have any problems finding a foreign buyer out there for the Gold. But for NEM or ABX? I doubt it.

Bottom line is this: the market is very ugly and the trend is now down on all four major time-frames that I use. This means that you should either be in cash waiting for the market to turn on volume so you can go long and heavily long on margin if we have leaders break out. Or it means that if you are experienced you should be looking to go short the low volume rallies. Just like we did today on two stocks that freshly broke down from low volume rallies. Take that along with another speculative stock on the long side and you have three new positions for tomorrow which is just as many as we saw TOTAL last week.

Last week we had ONLY 3 shorts. Those three shorts are all three lower than where we went short. Sadly one did swing us out of it with a TINY ITTY BITTY loss but NOW it is working. The other two are working really well and now even if they reverse we will be leaving with profits. The most important thing is that LAST WEEK I did not issue A SINGLE NEW LONG. By doing that I saved you from today's major collapse. Not only did I save you from today's major collapse by not getting you long but you made money by being short the recent short positions I have given out (with all my long-term winners posted below). The best part today, however, was seeing our longs net-up today with our two gold stocks (my two biggest long positions) having VERY bullish sessions today. So not only can we get it right on the short side, but as you can see (and how it was for over 10 years), even when it is a nasty day, we can get it right on the long side too.

Have a great Wednesday everyone. I will see you after the bell, on this .net site, tomorrow! Aloha!

top longs/(shorts) with their total returns MAKING ME MONEY TODAY: ANCI 57% (CEDC 80% CETV 90% CEO 30% IPHS 38% RIMM 55% GGB 58% MOS 54% OKE 40% AAPL 41% CPRT 27% MCY 22% LLL 19% SDA 77% PG 21% CASY 28% PRGO 20% PLCE 28% K 19% ARB 71% APD 44% AMSG 20% AMX 48% CYT 66% SPG 57% TITN 52% POT 51%)

FREE YOUTUBE VIDEO:

It's About Time!; Stocks Breakdown From The Triangle Consolidation (NYSE Reverses Its Breakout), On Much Heavier Volume

Well, I guess, all I can say is, so much for that rally. There were a lot of people that were very confident that the lows in this market were seen on 1/22 and 1/23. Those people that believe that is the case still, are living in serious denial about the true problems this market has. Unless you are only focused on the oil, gold, steel, metal, food, ag, machinery, or chemical stocks, there is no way anyone can be serious when they say they are bullish on this market. Everywhere I look I see some big damage that was caused by today's selloff and the reality of the situation is very clear to me. This market is not a market to buy.

Today, stocks were crushed, as a raft of poor economic data and more subprime BS slammed the door in the face of the bottom-callers. Part of it was due to the consumer as for the third month in four their was no growth in spending. And for those that truly do not grasp how important that is, I hope I can help convince you, along with IBD, that it is indeed very important.

IBD echoes my feelings and they use 2001 as an example. If not for the spending habits of the consumer, there indeed is a high probability that we would not have rallied off that horrible time the way we did. We came back extremely strong and it might not have been that strong if not for the consumer. And after LTCM and the global crisis back in 1998, it was the consumer's spending, once again, that helped keep the economy going just enough to keep other sectors moving. If you want to know what it is like when people stop spending money, take a look at post-bubble Japan in the 1990s. This is a big deal and is just another piece of the puzzle that shows the economy is in a lot of trouble.

The bulls want to say that this is just a minor dip and that things will be better in the future. Realist look at that argument and immediately take a look at the books of the homebuilders and say "wait a minute." "This is just starting." Yes, in fact it is just starting. How do we know that? Easily. I call it common sense. Do you think the Fed is lowering rates because the economy is on fire? Do you think that when they are done the market is just going to say "thank you" and start running again?

Our GDP numbers have just started trending down and when you look at factory backlogs and activity it is almost impossible to say that this will correct in just a quarter or two. But on top of this poor GDP is the nasty PPI and CPI which show that we have real inflationary problems. With that inflation we have a big problem with jobs as joblessness is rising and wages earned is growing at its lowest level in a very long time. This is not the proper macro trend for our stock market. And all you have to do to confirm that the macro trend is not good is look at the stock market. A bullish market with a strong economy does not look like this. This is a market eerily similar to the late 1960s and early 1970s. For those that do not know their history, 1968-1980 was the equivalent of investor hell, as the DJIA moved -.22%. So basically it was twelve years of nothing.

However, not to fear, active investors, as many stocks made a lot of big gains during that time. If you backtest your charts of the DJIA you will see that there were some very serious trends back then that allowed us to make some good money on the long side (1968, 1970-1971, 1972, 1975, 1980) and good money on the short side (1969-1970, 1971, 1974, 1977). During these runs, many stocks, obviously produced some great gains. So if we are about ready to enter a period of stagflation or enter a recession, there should be plenty of shorts for us to profit off of. If you are too nervous to short or are too inexperienced, don't be shy about keeping those cash levels high. Most people, if they would have stayed in cash, during the past few months, would be sitting pretty with gains much larger than the market. I know a lot of people that have losses since the start of this year (like yours truly in 4 of 6 accounts) but the key is to see if you are beating the market.

A lot of people do not understand that just because you are down, does not mean you are a loser or a bad trader. If you are down 10% this year, you should not be upset. Instead you should realize that you are beating the Nasdaq by almost 5% and that makes you better off than well over 50% of investors out there. The best bet to do now is to make sure you stay locked in that cash. Let the mediocre stocks come flying by with their almost nice chart patterns that still fail in this choppy market anyways because 3 out of 4 stocks follow the general market. So if the market is going nowhere, chances are that your stock will not be going anywhere either, unless it is in one of the top 20 industry groups and only if that group has been climbing the list.

This is why I keep saying it is ok to be in cash. By going to cash, you can make sure you do not lose money while you learn how to trade and then when this crazy market is over and a new "real" uptrend starts instead of having $385,000 to try for that 1000% (which should be doable with 4 to 1 margin--study my 'past big winners!!') gain you will still have the original $500,000. And trust me more of you (like 99%) will end up with less money when you get out of this market environment.

Luckily for me, I still have a lot of short positions that did not signal any full sells while we had that very low volume drift higher. Those shorts piled it on thick today. Not only that, the longs that I own all pulled back on lower volume and still have nice chart pattterns--that is, of course, mostly the commodity stocks.

But there is a group of longs that I started to go long based on the strong fundamentals and charts. That is the medical stocks. However, after Friday, things have changed as HMSY, CMED, CHDX, and AMED all had to be fully sold today. This is kind of shocking, considering that medical stocks historically do well in bear markets. This along with the utilities falling in a bearish market environment has to be considered really bad.

I am not sure the reasons why these stocks are reversing. But what normally happens with stocks that everyone think should be going up but selloff on no news is that something bad is going on industry wide underneath but will not be known until much later. Taking those charts along with two popping into my head that I just saw (ELN XNPT) and I believe there is a deeper macro issue happening.

What I personally think might be happening here is one of two things, or both, or none. The medical stocks are selling off because consumers are so extended (130% in debt I recently saw) that they simple can not afford to frivolously use up their medical. Or it could be because the sector is looking ahead to a Barack Obama or Hillary Clinton winning and the taxes, trade barriers, and regulations that will be imposed on this industry, along with the insanity of the already-failed-in-Canada-and-England universal healthcare. No matter how you look at it, it is not good for this industry, and now the market appears to have recognized it.

Whatever the reason is the fact that these stocks are failing and reversing on strong volume and red BOP is very bearish. This leaves ONLY commodity related stocks that are moving up and to me that is scary. They are moving higher because it is obvious there is too much money chasing too few goods. This along with the horrible regime of Mugabe in Zimbabwe has helped to spur what could be 100,000% inflation by the end of 2008. But his is also impacting us here as corn is used for the ridiculous wasteful and "carbon emitting" ethanol fuel. This then effects the food chain and line. Combine this with some bad weather here and there and you get some real problems. Hence, all our great looking commodity charts and ugly everything else. There seems to be no end to higher prices in sight and the charts while going "exponential" are no where near at the end of a parabolic run.

Helene Meisler recently penned a piece suggesting they were parabolic. Well, my fellow colleague (who lives in St. Louis, where I was born; I think I got the better end of the deal ;)) Helene did not look at enough charts and if she would have overlaid the current ETFs over other parabolic runs she could see they are just starting. Fortunately, I am not the one that has to tell her this as Manning was immediately on top of this including his own conversation with Jim Rogers.

Jim believes we are only 1/2 way through this run and if it started in 1999 will last until about 2018. So take that for what it is. Jim is also short MSFT and so am I. So if the guy is long what I am long and is short what I am short, who am I to argue with the man. The only amazing thing is that Manning can talk to Jim. LOL. I don't even think Jim would look at someone like me. Which is fine with me, by the way. I prefer to be the outsider looking in.

My returns with this CANSLIM system sure does prove that. These "professionals" couldn't even touch my subscribers with their money. For proof of that, Cramer's Action Alert Plus has an unbelievably pathetic 30% return since 1/1/02. Now I know that is wrong to say something like that and I do apologize for being a jerk. The truth is that he should have doubled his money. Look at the IBD 100, look at the IBD 85-85, look at the returns from the AAII screen that runs the CANSLIM system, look at Ken Heebner, and look at me, axman, market, and wutan (and many others). 30% is terrible. Yet I am sure for those that ONLY watch Cramer on CNBC, it is incredible. Not good.

Now, I will admit, I do not have the money Cramer has, but I lived in Manhattan and Manhattan prices have nothing on West Side Maui prices. Everything I earn almost goes into my cost of living, so it is going to be hard to be worth what Cramer is worth now. But when I am as old as Cramer is, trust me, my Action Alert portfolio will be doing a lot better than his. Mark my words, mark my 'past big winners.' The only ways it couldn't be is if we never have another bull market ever again or if we are nuked. Either way I am screwed and at least I know how to surf. If there is no stock market, at least there might be waves. If there are no waves, there is still plenty to do in the ocean.

Getting back to this market, I want to go over some internal numbers that caught my attention today. First off, besides the NYSE and SP 600 which only barely made it over the 50 DMA, the rest of the indexes spent five weeks basing BELOW this key moving average and that combined with today's crack on 20% higher volume is bearish. On top of that, new lows killed new highs by a wide margin of 39 new highs to 360 new lows. This is not what you see if the pullback was just a normal pullback in a market that had in fact bottomed. If that was the case we would have seen the new lows stay around the number of new highs since they were close the past few days. This expansion confirms the weakness.

Now, there are a couple of things that indicate there was some fear in this selling. This can be seen in the VIX that jumped 11% to 26.50 which is a good pop but still a weak reading as it is still almost 100% away from the 50 needed to signal a GREAT BOTTOM. On top of the VIX, the put/call ratio jumped to 1.21 which indicates there was a good little amount of fear in the market today. However, with the put/call, big jumps usually don't matter unless the stock makes a big move lower and then puts in a very bullish intraday reversal closing higher. The near 3% move just is not enough to signal a day full of capitulation. So 1.21 is just not high enough. When we see another day similar to August 16th, along with the put/call hitting 1.5, then I may declare a bottom.

For now, however, without an extremely high VIX around 40-50, a put/call around 1.5, or the investors intelligence showing more bears than bulls, there is simply no way I can believe 1/22 and 1/23 are bottoms and today's swoon along with all the ugly stock charts and fresh breakdowns signals to me to be ready for new lows. If that happens, I guess the bottom callers will give it another shot. They sure do think we are going to forget that they keep calling these out. They will continue to be wrong, until you do not hear any more bottom calls.

Once you stop hearing those bottom callers and start seeing more SWIR EGHT USNA EPIC EVOL TASR FMDAY DITC FLML SIGM MOBE from 2003, IST (MT) from 2004, LMLP LPTH MRVC PARD CAMP NEWP CRGN from 1999, HRZ from 2006, AFSI from 2007 and maybe, just maybe, CMP in about five weeks. It would need to continue to move sideways on low volume (with maybe a few big accumulation days in between) and max green BOP. If it could do that we might have our first "HOT" chart since APPY on September 19th and 21st (was too speculative to load up).

But if we continue to selloff and we do not see those pretty charts setting up then what I will be doing will be the same thing I was doing shortly after this market topped. And that is shorting stocks of these high priced ex-leaders that are clearly breaking down. Right now, almost every single stock that I am monitoring as a short is no where near being in a position to short. Most still are not close enough to the 50 and 200 day moving average to warrant any big short position.

Recently, I have been very lucky and two stocks have setup in good short positions two days in a row. What makes this even better is that I was already long these stocks going into Thursday's session. Those that are silver to platinum know which two I am talking about and if you study those charts you will see two stock that have done everything right when it comes to being a good short position. It has topped, broken down on huge volume through key moving averages, rallied on lower volume back to the moving averages, and breaks down again on strong volume. To go along with that I like to see red BOP throughout the chart and see the RS line making new lows before price.

If I continue to find charts that are red and setup like this, instead of the usual "green" subjects, I will obviously be focusing on the short side and not the long side. However, right here, there are not a lot of stocks setup right as many are either down too much already or the stock did not rally back far enough to key resistance or the moving averages. So right here, you are basically still in no man's land as it is hard to short and hard to go long.

Now, with all of this being said this weekend from me, it is probably obvious that I am very bullish on commodities (via the charts) and very bearish on the economy (via the charts and macro data). And even though I know we have not seen any real fear with the VIX failing to hit 40-50 and the put/call refusing to print a ridiculously high number, I do not deny the fact that we could see the lows shortly, if indeed this is just a minor blip in the world economy and not a major setback that will take years to fix.

If that is the case, and the market puts in a powerful follow-through day on huge volume (which it NEVER did off the 1/22 reversal), then my short side bias will obviously drop. It will drop further if I can find some more charts that are looking like CMP and SWC. You already know about CMP, but if SWC can chill-out for five to seven months and create a nice quiet base, just like CMP, SWC could easily be a huge winner. It has already built a right side of a base on mostly green BOP running up almost 150%. If it can build a high tight flag, flat base, or another base on top of it, I would be very bullish on this stock. And if I see more stocks like these then I will be very happy. The last thing that would have to happen to get me fully bullish would be for the remaining shorts to have an extremely bullish day (basically following-through off the lows) that lets me know that the easy gains are over.

I have no problem with being a bull here, but to do that I will need reasons to be. I am not just going to be a bull for the sake of being one. I don't need to call a bottom. I don't have to impress anyone, my accounts give me enough feedback that tell me all I need to know about what being a bull is all about here: ignorant pain. That is unless you are long the commodities. But besides the gems, there is nothing out there with "hot" chart patterns that are slowly and steadily climbing the 50 DMA and 200 DMA higher.

When I have proof and reasons to be bullish I will be bullish. Give me a high VIX, more bears than bulls in the investors intelligence survey, a high put/call ratio, a stock market follow-through day with a HUGE price and volume gain, and a couple of handfuls minimum of stocks that look like my 'past big winners' and how CMP is starting out and I will be more than happy to come down with a case of "irrational exuberance."

Until that happens, chances are very low that you are going to get any kind of rally that has any kind of legs. Yes, we have the commodities moving but unless you are experienced and know how to hold through some volatile trending there is not going to be a lot of gains to be had by nervous traders who sell on any sign of weakness. There are sure to be some volatile movements in these stock prices if they continue to rally.

The best thing I can advise, once again, is that everyone keeps their trades very small, if you have to even trade at all. Keep the cash levels in your account very heavy. If you are experienced with the short side, then by all means take some of your favorites that are setting up in proper short positions short. If you are a newbie and you have not established a consistent long-term track record of making money on the long side, then please heed this advice and go to cash. Your account will thank you. It will be difference of starting the next bull market run, that could produce for you a 10,000% gain if you buy the next NTES, SOHU, and SINA and get those 2,500% returns in a year, with all of your starting equity (let's say $500,000) or just some of your equity (let's say after a year of trying to trade this market you are left with $390,000). $500,000 x a 10,000% return, versus $390,000 x a 10,000% return, is a much better way to start a new bull market.

What most fail to realize is that the chances of you losing money in this market is at least 75%, since three out of four stocks follow the general trend of the market. And that is why for one last time I am asking that newbies please keep their cash levels high here so that when the next trending higher, heavy accumulation, max green BOP, perfect fundamentals stock comes along you will have all of your money to put into it instead of some.

Most traders are churning their accounts slightly lower here. Including yours truly as I have some accounts down for the year. However, being down 1%-5% is A LOT better than being down 15% like the Nasdaq is near. There are a lot of bear market where some sectors do extremely well. That sector, for us, is commodities. Besides maybe poking a few tiny longs here and there, please keep that cash level high, so that when the next 1998 or 2002 bottom occurs, you will know that it is time to start looking and to start actively investing on margin.

I hope you all had a great week and that Friday did not get any of you leaning too heavily one way or the other. If you got caught, at least you can't blame me. In my RealMoney columns and on this bronze commentary, over and over, I have advocated new active investors to raise cash. If you are listening to what I am writing, then you are sitting pretty and should be very excited for when that next bull market comes. I know all I have to do is stair at my 'past big winners' for a little while and the joy and passion I had during those times hits me like a great acid flashback (is there such a thing?).

Have a great weekend, don't forget to read my RM column. It was posted late due to internal website problems. Aloha and I will see you in the chat room where it is always a bull market somewhere. SURFS UP!!

top current longs (shorts) and their returns since purchase: EBIX 130% CCC 95% MCF 109% PTEC 109% RICK 85% CPHD 81% IHS 227% AUXL 83% MA 281% (CBEY 56% GRMN 36% GS 21% AAPL 30% GOOG 28% BEN 23% ATI 22% CLP 24% COH 27% MSTR 30% SGMS 39% RYAAY 25% SHOO 37% PSYS 21% TSRA 35% LFC 32% ASF 29% MI 31% FTEK 20% HIG 22% ING 21% PRU 21% PVH 23% LVS 26%)