Today was a very dull session and that was a given by just looking at the volume. However, despite the low volume, stocks still sold off almost all day long as most indexes finished down around 1% to 2%. The good news is that stocks found some support during the last hour and they were able to rally off the lows thus giving respectable closes.
That rally the last hour gave all the indexes little tails on their daily chart patterns and the little tail with a lower volume selloff can almost be called a "constructive" session. Why is this? Because it is obviously better to selloff on lower volume than to selloff on higher volume.
Now, I do know that a lot of people want a Christmas rally so they can end the year on a positive note but I must say that a selloff on lower volume during these next two weeks might be a bullish situation for this market.
The lower volume selloff during the Christmas and New Years holiday week might help stocks build bases that some stocks have been building since their November lows. These bases then may help the market make a move to the upside. This is why a lower volume pullback would actually be a good thing for me to see right now, imo.
If during this low volume pullback, I continue to find some stocks setting up in nice price and volume patterns this might be bullish for a possible uptrend to follow the holiday season. While I understand that charts do not look good out there in the long term and intermediate time frame, a short term rally would not be completely out of the cards as we have had almost non-stop selling all year. In fact, the last time I went long a stock that produced a gain almost 100% was XSI (now ANCI) back in June.
Now, had Telechart2007 had access to OTCBB stocks we could have also gone long AIPC as it set up and broke out of a beautiful cup with high handle pattern on June 18th. This breakout with beautiful price, volume, and max green BOP produced a 124% gain by the top of the current move on December 12th. This stock would have joined our other 8 longs in becoming our 9th and best long since June.
Sadly, Telechart will probably never offer these stocks so we will have to continue to wait for one of the NYSE, Nasdaq, and AMEX stocks to setup in the pattern of AIPC on 6/18. I am sure we will see that but when we will see that I do not know. The good news is that these extremely bullish patterns show up when you least expect it.
However, the truth is for them to setup you normally need a long bear market to allow the patterns to fully develop. In a very volatile market with skittish traders trading stocks like they were baseball cards back in the 1980s you will not get many solid patterns that hold up. However, after a while the dead wait leaves and those gambling daytraders stop trading and leave the game. Then order gets restored and we get 2003. If those of you do not remember 2003, you need to go to my Past Big Winners section under my Longs and study the patterns that setup in 2002/2003 (HIL, TASR, EGHT, SIGM, USNA, FMDAY, and many others). These stocks all setup in beautiful patterns similar to AIPC and ANCI in June and all of these stocks produced very large gains due to a market that was no longer popular to flippers.
The gamblers, weak shareholders, and get-rich-quick crowd that showed up in early 2000 finally left in 2002. Hopefully the gamblers that showed up in 2007 will leave soon thus leaving only us serious investors to manage the beautiful longs that will be produced by a market that will overshoot itself too much to the downside.
This is not going to happen tomorrow but if you remember that low volume pullbacks and heavy volume gains are a very good thing in the market and you remember that nice calm and very very green chart patterns prelude a very big uptrend you will have put yourself ahead of the majority of the crowd out there trying to invest.
I know it is very tough right now to make big money in the market. But if you remember that the BIG money is made in the big uptrends and downtrends, you will learn that markets that go sideways, like this one the past few months, are markets where either your shorts reload for another round of big losses or your longs base out for a potential attack on new highs. Sometimes you don't know which way a market will resolve but you will always have clues.
Right now, it is mixed. I still have 34 shorts with 24 of them being "big winners" producing over 25% gains in under nine months. But I had 38 shorts a few weeks ago. The fact that I still have so many big winners holding indicates to me that on the long term we are probably still going much lower. At the same time the fact that I have gone from 38 shorts to 34 now and have gone from 4 longs to 8 longs during that exact same time tells me that on a 1-3 month time frame we are probably looking at a bear-market bounce.
Why not a new bull market? First off, I still have ZERO perfect charts setting up (examples of perfect charts include LMLP 99, HIL 03, IST 04, HRZ 06, AFSI 07) telling me it will be time to get VERY long soon. Second off, I have had ZERO shorts up over 55% give me FULL covers. I had one stock up 50% give me a full cover but it quickly (the very next day) went back into a clear downtrend and had me upset that I covered it. Without any hot charts setting up and any long-term shorts giving me full cover signals there is NO REASON to get bullish and call a bottom.
However, the fact that I have gone from 38 to 34 shorts and from 4 to 8 longs with three of my four newest longs all up NICELY in a VERY SHORT time (21% in six days, 8% in three days, 8% in four days) tells me that we should expect more of a rally on the sub-intermediate to intermediate term. Just don't go thinking that November was the ultimate lows yet. There is absolutely NO evidence of that yet.
As I have it, the long-term trend is down, the intermediate trend is down, the sub-intermediate trend is lateral, and the short-term uptrend is slightly up.
When my video technician has the free market wrap video up I will post it online and if you are a Gold or Platinum member you can go to the Gold forums and watch part one, two, and three. Part two goes over the longs and shorts in the scans and part three looks at the top sectors in the market right now.
Merry Christmas!!! Be ready for some very low volume sessions the rest of the week.
Remember, there are only nine more days to receive the 25% off holiday deal for a monthly or yearly subscription. This deal will not happen for at least another 12 months, and that is only if other financial websites are doing this, so make sure you take advantage of it now. When this market turns you want to make sure you are going long what I go long so that you may also benefit in the huge gains (see Past Big Winners) that we will have in the next uptrend. One good long, like xxxx up 21% in six days, or well timed short, like ARB up 74% in three months, can pay for the annual subscription within weeks to months.
top shorts w/ total returns that are up today: K 15% CASY 19% LLL 23% OKE 38% APD 50% RDK 17% AMX 43% CETV 76% TITN 42% PLCE 28% CYT 62% CEO 30% CPRT 25% RIMM 58% SDA 75% ARB 74% AAPL 46% SBAC 52% CEDC 62% GGB 58% SPW 67% SPG 39% MOS 64% POT 59%
Monday, December 22, 2008
Sunday, December 21, 2008
Stock Market Indexes End Mixed As Quadruple-Witching Options Expiration Sends Volume Higher
Stocks started off strong but as the day wore on indexes pulled back with some finishing higher and some finishing lower. The one bright spot out of all of the indexes was the SP 600 which rose 1.6%. The IBD 100 and DJIA fell .3% leading the way lower. The loss on the DJIA was the second distribution day since the rally attempt started and the IBD 100 is not only lagging all the indexes in this uptrend but it has not even taken out the 50 day moving average. When this is the case it makes it hard to be real excited about today's action.
About the only real positive that I could find with today's action was that there were more stocks in my long scans than there have been in a long time and that raises my confidence level a little bit that maybe we could get a bear market bounce sometime soon. This bounce is too lame for it to be an official bounce in my book. Unless you like gambling and can get lucky and buy HSNI at the exact bottom and get a 250% return in nine days. However, if you got that stock, I am sure you were burned by the other 99 out of 100 you attempted a move like that on.
The sad fact remains that this market is not looking that great. The stocks that reside in the IBD 100 and IBD 85-85 are basically void of any "hot" chart pattern. Nothing is setting up in anything that has me extremely excited and ready to go long. Instead the few longs I get from leading stocks in leading industries have a tough time making headway and once they are up 20% have usually seen the most of their run. This is not the action of a healthy market. In a healthy market you will get 20% gains in a few weeks, a consolidation, and then another run. However, this market has not been very nice to breakouts.
Recently that has changed as two of my three new longs the past week were up 9% and 10% today. This kind of bullish price action with the green BOP increasing gives me hope that this bounce can last longer than just a few weeks. If this bounce can last longer I should have a few longs that should return some very nice gains. And to be honest, that would be an amazing thing for us growth stock/CANSLIM investors that have been waiting a long time for leading stocks to work.
Now, not to say there hasn't been any leading stocks. There has been. The only problem is that it was on the OTCBB. AIPC on Telechart clearly broke out on 6/18 and 8/7. Had OTCBB stocks been in the system this stock would have been a CLEAR long with that price, volume, and max green BOP action. However, since Telechart does not have these stocks, I missed a 124% gain and a 98% gain on both CLEAR buy signals. This is not the first time an OTCBB stock has built a great chart to produce big gains.
Back in 2006 FRPT was listed on the Nasdaq and soon after Telechart grabbed the OTCBB data. Sure enough, price-volume-max green BOP were loaded on this chart. From 9/5/06 to 5/30/07 FRPT stayed in a steady uptrend above the 50 and 200 DMA producing a 335% gain in under nine months. Back in 2006-2007 it was not that big of a deal as longs ranging from GIGM to HRZ to AFSI all showed up during that time.
But this year it has been a barren wasteland of nice charts as ACM on 6/27 was the last "hot" chart to setup in a "near-perfect to perfect" setup. ACM failed and since then NOTHING has come close to looking like AIPC did on 6/18. So if anyone is reading this that has any kind of sympathy for us active investors that like to produce 100% to 3,000% winners, please go to the Worden User Forum and join me and others in requesting charts for OTCBB and Chinese companies. In fact I would like every stock on every stock exchange to be placed on Telechart. I am sure they could do this and I would be more than willing to pay the extra fees. So please everyone help me petition for Chinese, OTCBB, India, and Latin America charts.
I am sure Worden will do nothing. But it can't hurt to ask. Maybe one day he will wake up and realize the value in such a service. It is a global market now and the USA sure isn't a haven to the worlds newest and most innovative companies anymore. We need access to more markets.
Anyways, back to this market. right now we have a market that is not showing us much. When we go back to the top in October 2007 we are definitely in a long-term downtrend. That is why I have 24 out of my 34 shorts from before the major selloff that started in September. All of those stocks are up over 15% during this time with the best of them up over 75% for me. So being short is obviously the right play for the long-term. This trend is also still in effect from the summer of 2008 so the intermediate trend is down to confirming the holding of these shorts.
As for the sub-intermediate trend, we are definitely lateral as the SP 500 has moved a whopping -1.26% from October 10th to December 19th and the Nasdaq has moved higher a whole .8% from October 24th to December 19th. This lateral trading range has caused me to go long and short a few stocks with mixed results. The good news is that the stocks that are working during that time are producing gains larger than the losses. So even with the poor recent record due to the trading range market, my new longs and shorts have not really caused me any problems.
On the short-term the trend is definitely up and this is confirmed by my recent longs moving up 10% and 9% today with my new long on Wednesday moving up almost 7% on Thursday. These quick gains right off the bat show me that going long is right for now. However, unless these charts continue to build on their current gains with more gains on heavy accumulation with green to max green BOP there is no guarantee that we can hold these gains with the weak volume in the indexes on this uptrend.
If this uptrend was moving higher with volume well above the 50 day volume average and we could take out the 50 day moving average and hold above it convincingly then I would be much more bullish with our current situation. However, it appears to me this uptrend is on low volume and with a couple of days of distribution it might not be long till we move lower.
So the best bet is to continue to be heavily cash, take some profits quickly when we have them and remember in the long term our methodology will always beat the market. That is why we have gains in our long term shorts like these top shorts w/ their total returns UP today: CYT 61% OKE 37% CEO 28% SDA 74% AMX 40% APD 49% SBAC 49% CEDC 59% POT 55% MOS 60% CETV 76% CASY 19% PLCE 26%. Not only did those shorts do well but don't forget my three new longs: 10%, 9%, and almost 7% right after going long. This market is not for the weak and only the very skilled experienced investors are going to come out of this market with more money than when they entered.
I am just happy to be on that short list of people. I don't know many up this year but all of my current subscribers can happily let you know, via their own personal returns, that this year has not been a bad year for us. When you compare it to the 1999 and 2003 years where you can return well over 1000% if you move from one HUGE winner to the other, this year isn't that good at all. However, if you compare our returns to those of Bernard Madoff, Bill Miller, Ken Heebner, Jim Cramer, and every other mutual fund out there this year, this year has been an amazing year!
When you cut your losses, go with the trend of the market, and stay extremely disciplined in your methodology it is almost impossible to go broke no matter how bad of a market environment you are in.
Don't forget, there are only 12 days left to take advantage of our 25% offer. I will not be running another deal until next Christmas and I will only run the deal if every other financial website runs one. I really want to get you ready for the next bull market and teach you how to make a ton of money in the stock market without EVER having to listen to another "guru" on CNBC for the rest of your life. Look at those returns in my Past Big Winners and look at the returns I am producing now. If you have losses for the year, don't you think you owe it to yourself to see what you are doing wrong?
Happy Chanukah! and Merry CHRISTmas!!!! everyone. Next week is a holiday-shortened week and boy oh boy can we use it. Aloha, have a great weekend, and I will have the free small youtube video up before Sunday. Gold and Platinum subscribers can watch full size version of market wrap video one, two, and three on the Gold Forums.
About the only real positive that I could find with today's action was that there were more stocks in my long scans than there have been in a long time and that raises my confidence level a little bit that maybe we could get a bear market bounce sometime soon. This bounce is too lame for it to be an official bounce in my book. Unless you like gambling and can get lucky and buy HSNI at the exact bottom and get a 250% return in nine days. However, if you got that stock, I am sure you were burned by the other 99 out of 100 you attempted a move like that on.
The sad fact remains that this market is not looking that great. The stocks that reside in the IBD 100 and IBD 85-85 are basically void of any "hot" chart pattern. Nothing is setting up in anything that has me extremely excited and ready to go long. Instead the few longs I get from leading stocks in leading industries have a tough time making headway and once they are up 20% have usually seen the most of their run. This is not the action of a healthy market. In a healthy market you will get 20% gains in a few weeks, a consolidation, and then another run. However, this market has not been very nice to breakouts.
Recently that has changed as two of my three new longs the past week were up 9% and 10% today. This kind of bullish price action with the green BOP increasing gives me hope that this bounce can last longer than just a few weeks. If this bounce can last longer I should have a few longs that should return some very nice gains. And to be honest, that would be an amazing thing for us growth stock/CANSLIM investors that have been waiting a long time for leading stocks to work.
Now, not to say there hasn't been any leading stocks. There has been. The only problem is that it was on the OTCBB. AIPC on Telechart clearly broke out on 6/18 and 8/7. Had OTCBB stocks been in the system this stock would have been a CLEAR long with that price, volume, and max green BOP action. However, since Telechart does not have these stocks, I missed a 124% gain and a 98% gain on both CLEAR buy signals. This is not the first time an OTCBB stock has built a great chart to produce big gains.
Back in 2006 FRPT was listed on the Nasdaq and soon after Telechart grabbed the OTCBB data. Sure enough, price-volume-max green BOP were loaded on this chart. From 9/5/06 to 5/30/07 FRPT stayed in a steady uptrend above the 50 and 200 DMA producing a 335% gain in under nine months. Back in 2006-2007 it was not that big of a deal as longs ranging from GIGM to HRZ to AFSI all showed up during that time.
But this year it has been a barren wasteland of nice charts as ACM on 6/27 was the last "hot" chart to setup in a "near-perfect to perfect" setup. ACM failed and since then NOTHING has come close to looking like AIPC did on 6/18. So if anyone is reading this that has any kind of sympathy for us active investors that like to produce 100% to 3,000% winners, please go to the Worden User Forum and join me and others in requesting charts for OTCBB and Chinese companies. In fact I would like every stock on every stock exchange to be placed on Telechart. I am sure they could do this and I would be more than willing to pay the extra fees. So please everyone help me petition for Chinese, OTCBB, India, and Latin America charts.
I am sure Worden will do nothing. But it can't hurt to ask. Maybe one day he will wake up and realize the value in such a service. It is a global market now and the USA sure isn't a haven to the worlds newest and most innovative companies anymore. We need access to more markets.
Anyways, back to this market. right now we have a market that is not showing us much. When we go back to the top in October 2007 we are definitely in a long-term downtrend. That is why I have 24 out of my 34 shorts from before the major selloff that started in September. All of those stocks are up over 15% during this time with the best of them up over 75% for me. So being short is obviously the right play for the long-term. This trend is also still in effect from the summer of 2008 so the intermediate trend is down to confirming the holding of these shorts.
As for the sub-intermediate trend, we are definitely lateral as the SP 500 has moved a whopping -1.26% from October 10th to December 19th and the Nasdaq has moved higher a whole .8% from October 24th to December 19th. This lateral trading range has caused me to go long and short a few stocks with mixed results. The good news is that the stocks that are working during that time are producing gains larger than the losses. So even with the poor recent record due to the trading range market, my new longs and shorts have not really caused me any problems.
On the short-term the trend is definitely up and this is confirmed by my recent longs moving up 10% and 9% today with my new long on Wednesday moving up almost 7% on Thursday. These quick gains right off the bat show me that going long is right for now. However, unless these charts continue to build on their current gains with more gains on heavy accumulation with green to max green BOP there is no guarantee that we can hold these gains with the weak volume in the indexes on this uptrend.
If this uptrend was moving higher with volume well above the 50 day volume average and we could take out the 50 day moving average and hold above it convincingly then I would be much more bullish with our current situation. However, it appears to me this uptrend is on low volume and with a couple of days of distribution it might not be long till we move lower.
So the best bet is to continue to be heavily cash, take some profits quickly when we have them and remember in the long term our methodology will always beat the market. That is why we have gains in our long term shorts like these top shorts w/ their total returns UP today: CYT 61% OKE 37% CEO 28% SDA 74% AMX 40% APD 49% SBAC 49% CEDC 59% POT 55% MOS 60% CETV 76% CASY 19% PLCE 26%. Not only did those shorts do well but don't forget my three new longs: 10%, 9%, and almost 7% right after going long. This market is not for the weak and only the very skilled experienced investors are going to come out of this market with more money than when they entered.
I am just happy to be on that short list of people. I don't know many up this year but all of my current subscribers can happily let you know, via their own personal returns, that this year has not been a bad year for us. When you compare it to the 1999 and 2003 years where you can return well over 1000% if you move from one HUGE winner to the other, this year isn't that good at all. However, if you compare our returns to those of Bernard Madoff, Bill Miller, Ken Heebner, Jim Cramer, and every other mutual fund out there this year, this year has been an amazing year!
When you cut your losses, go with the trend of the market, and stay extremely disciplined in your methodology it is almost impossible to go broke no matter how bad of a market environment you are in.
Don't forget, there are only 12 days left to take advantage of our 25% offer. I will not be running another deal until next Christmas and I will only run the deal if every other financial website runs one. I really want to get you ready for the next bull market and teach you how to make a ton of money in the stock market without EVER having to listen to another "guru" on CNBC for the rest of your life. Look at those returns in my Past Big Winners and look at the returns I am producing now. If you have losses for the year, don't you think you owe it to yourself to see what you are doing wrong?
Happy Chanukah! and Merry CHRISTmas!!!! everyone. Next week is a holiday-shortened week and boy oh boy can we use it. Aloha, have a great weekend, and I will have the free small youtube video up before Sunday. Gold and Platinum subscribers can watch full size version of market wrap video one, two, and three on the Gold Forums.
Thursday, December 18, 2008
Major Market Indexes Continue To Struggle Around The 50 Day Moving Averages On Mixed Volume
Today was a bearish and dull session that saw stocks fail to take advantage of the recent takeover of the 50 day moving average. The fact that stocks can't really mount much of an advance after getting above this crucial line indicates to me that the market might not be ready to turn into an intermediate trend uptrend.
Instead it appears the trading range the market has been in the past two months will continue to trod along until the market actually decides to make a decision one way or the other from the 50 day moving average.
When we look at individual stocks in our scans and look at leading industries we can see that the market is not real healthy and while some education, small banks, medical, and metal related stocks are doing well recently the fact remains that this market has a lot of resistance to deal with and will probably be tough to deal with in the short-term.
This is why I must caution everyone from calling a bottom. If we had a volume, we HONESTLY would have some high quality fundamentally strong stocks setting up in beautiful green bases on my charting software. The fact that my scans continue to be completely void of any high quality stock with nice charts and that my long-term shorts continue to work perfectly and not give me full cover signals is a clear signal that the downside is not fully in check yet.
Even more proof of this is that I had a short that was taken in September that gave me a full cover signal yesterday. However, today, it re-reverses on even higher volume and now is back to being a clear short. So in other words I covered a short that gave me a full cover signal and now it is back to being a clear short again. So the fact that even when the first full cover signal on a long-term short was given it still did not lead to the stock rising. Instead today it was back to selling off on higher volume. Do I regret covering all of it now? YES! Still another 35 shorts tell me that I am in good position.
We did have a new long yesterday and it did produce for us a gain over 5% today but this is a leading stock in a leading industry. The airlines and education stocks have two clear leaders in those two groups and I am happily long both. However, if they decide to rollover, I will not wait and ask questions. I will instead act and get out of the leading stocks in the leading industry groups. So far they are holding in there with gains but anything is possible in this market.
The fact is that on the short-term the trend is up, the sub-intermediate term is sideways, the intermediate term is down, and the long term trend is definitely very down. For those that do not fully grasp the severity of this downturn I want you to realize that we have fallen harder and faster than even the great depression. I guess we will see if we lose 90% like that market did. The way the data looks it sure would not surprise me.
Luckily, I never have to worry about guessing which way the market will go as I have learned to use a combination of fundamentals and technicals to know if I should be bullish or bearish. Right now, the charts say to stay bearish and a few charts hint that they want to rally but not really. The fact these charts are not super bullish and working right away on huge accumulation is a big red flag.
This market is definitely not out of the water and today was a very dull day with the lack of any follow-through to the recent gains. I have to stress this over and over, ONCE AGAIN, cash is king! There will be a time to get very long on full margin when those beautiful charts like AIPC (from June to now) start showing up everywhere. But until then, you can be sure the safest and surest play, unless you are a daytrading this volatile market, is to be heavily long cash. If you can't stand being patient and have to play the market, you can go to my Gold forums and play my ETF recommendations.
Just because I do not take my long/short recommendations in ETFs doesn't mean you shouldn't either. i would actually be having a much better year had I followed my own ETF recommendations. I am sure if beautiful charts don't show up any time soon, and new shorts do not build proper setups, that I will soon be going long/short ETFs.
All I have to say is Thank GOD for CANSLIM. The money made in 1999, 2003-2007 by being long the strongest stocks in the strongest sectors has allowed me to stay patiently in cash this year as we wait for the best short/long setups to setup. The only regret I have is that I did not load up on my shorts like RIMM, AAPL, and a few other key stocks that are now up over 65%+ when they setup in their very bearish patterns. I really thought we would have more time and better setups to short. However, this market fell apart so fast there was nothing I could do.
Stay positive, continue to stay VERY DISCIPLINED, and remember this too shall pass. Part one and part two of my stock market wrap up videos are available on the Gold forums in full size. Part one free Youtube version will be ready as soon as my video technician has it up! Have a great day/night! Aloha!
Instead it appears the trading range the market has been in the past two months will continue to trod along until the market actually decides to make a decision one way or the other from the 50 day moving average.
When we look at individual stocks in our scans and look at leading industries we can see that the market is not real healthy and while some education, small banks, medical, and metal related stocks are doing well recently the fact remains that this market has a lot of resistance to deal with and will probably be tough to deal with in the short-term.
This is why I must caution everyone from calling a bottom. If we had a volume, we HONESTLY would have some high quality fundamentally strong stocks setting up in beautiful green bases on my charting software. The fact that my scans continue to be completely void of any high quality stock with nice charts and that my long-term shorts continue to work perfectly and not give me full cover signals is a clear signal that the downside is not fully in check yet.
Even more proof of this is that I had a short that was taken in September that gave me a full cover signal yesterday. However, today, it re-reverses on even higher volume and now is back to being a clear short. So in other words I covered a short that gave me a full cover signal and now it is back to being a clear short again. So the fact that even when the first full cover signal on a long-term short was given it still did not lead to the stock rising. Instead today it was back to selling off on higher volume. Do I regret covering all of it now? YES! Still another 35 shorts tell me that I am in good position.
We did have a new long yesterday and it did produce for us a gain over 5% today but this is a leading stock in a leading industry. The airlines and education stocks have two clear leaders in those two groups and I am happily long both. However, if they decide to rollover, I will not wait and ask questions. I will instead act and get out of the leading stocks in the leading industry groups. So far they are holding in there with gains but anything is possible in this market.
The fact is that on the short-term the trend is up, the sub-intermediate term is sideways, the intermediate term is down, and the long term trend is definitely very down. For those that do not fully grasp the severity of this downturn I want you to realize that we have fallen harder and faster than even the great depression. I guess we will see if we lose 90% like that market did. The way the data looks it sure would not surprise me.
Luckily, I never have to worry about guessing which way the market will go as I have learned to use a combination of fundamentals and technicals to know if I should be bullish or bearish. Right now, the charts say to stay bearish and a few charts hint that they want to rally but not really. The fact these charts are not super bullish and working right away on huge accumulation is a big red flag.
This market is definitely not out of the water and today was a very dull day with the lack of any follow-through to the recent gains. I have to stress this over and over, ONCE AGAIN, cash is king! There will be a time to get very long on full margin when those beautiful charts like AIPC (from June to now) start showing up everywhere. But until then, you can be sure the safest and surest play, unless you are a daytrading this volatile market, is to be heavily long cash. If you can't stand being patient and have to play the market, you can go to my Gold forums and play my ETF recommendations.
Just because I do not take my long/short recommendations in ETFs doesn't mean you shouldn't either. i would actually be having a much better year had I followed my own ETF recommendations. I am sure if beautiful charts don't show up any time soon, and new shorts do not build proper setups, that I will soon be going long/short ETFs.
All I have to say is Thank GOD for CANSLIM. The money made in 1999, 2003-2007 by being long the strongest stocks in the strongest sectors has allowed me to stay patiently in cash this year as we wait for the best short/long setups to setup. The only regret I have is that I did not load up on my shorts like RIMM, AAPL, and a few other key stocks that are now up over 65%+ when they setup in their very bearish patterns. I really thought we would have more time and better setups to short. However, this market fell apart so fast there was nothing I could do.
Stay positive, continue to stay VERY DISCIPLINED, and remember this too shall pass. Part one and part two of my stock market wrap up videos are available on the Gold forums in full size. Part one free Youtube version will be ready as soon as my video technician has it up! Have a great day/night! Aloha!
Wednesday, December 17, 2008
Stocks Hang Around In A Tight Trading Range Consolidating The Gains Of Yesterday On Lower Volume
Today was a pretty boring session for those that stare at their computer screens all day as major stock indexes stayed in a tight volatile range as most pulled back around 1% on lower volume. This was taken to mean two different things for two different class of traders.
The bulls championed today's action because they were able to hold onto the gains after retaking the 50 day moving average. However, on the other end, I heard bears say that the inability of the market to rally further on the gains shows lack of confidence and confirmation on yesterday's gains.
I on the other hand have no opinion and take the market for what it was today. A tight ranged inside day (basically an inside day. A few indexes went a little outside yesterday's price range) on lower volume. It was neither bullish or bearish. It just was what it was.
Now, there was one thing that happened today that has not happened yet during this entire downtrend. While many people tried to play super-hero by calling bottoms in September and October, I stayed with the downtrend and thus made good money on some very solid shorts. Since then the market has gone range bound from 10/15 to 12/17 on the SP 500 with that index falling just .38%. That tight movement the past two weeks has made it hard to take new longs or new shorts.
That is why I have continued to recommend to my subscribers that they keep new longs or shorts small until a clear trend is evidenced via higher volume and a break higher above this two month range or a break lower from the same range. Either way, going short or long is fine with me, as long as we can make some money.
Some of the best money to be made has come via ETFs and if any of you have been trading my ETF recommendations I guess all I can say is congratulations. Once again, another ETF has moved 50% in my favor and yet I don't have a position because I don't fell comfortable holding ETFs. This might be a game that I definitely need to get involved because I have done very well on the long and short side with my ETF calls and would have probably doubled my return this year by playing the 2x and 3x ETFs that I must ethically say is helping to ruin this great market. Even though some big gains can be had by them they are still not healthy for the market. Like so many other things.
There are two groups that are clearly leading and I am long two leading stocks in each sector so if you are looking to go long I am long two leading stocks in the two leading industries that should produce some good gains if we can get this LOW volume Santa Clause rally going.
Now, while I would LOVE for this bear market bounce to turn into a bull market, everything in my analysis of technical analysis tells me that it would be foolish to be a raging bull here. There are a couple of easy to use technical signals that will help keep you in an uptrend for the majority of it and visa versa for downtrends. Right now, at the level of the moving averages, MACD lines, and RSI lines, it appears to me we are far away from a bottom.
The other clear red flag to me that keeps popping up is the lack of accumulation on the rallies in the indexes the past few weeks. Not only that the few leaders that setup and broke out before this rally got moving came crashing back to the earth in a very violent manner.
While it is very good to see stocks setting up in possible future long positions and nice to have three new longs this week in a week where I did not think we would find anything to go long as a low volume holiday rally usually doesn't allow us to get long too many great big winners. It was still nice to get some stocks and then have them hold after some of the recent horrible situations we have been in after a nice stock sets up.
If this market was really ready to run not only would the stocks I am going long now hold up but the stocks that were very pretty that I went long earlier would still be in my holdings. Instead stocks like DMND, ISYS, AXYS, and ASEI have signaled to me to get fully out and on three of them that has definitely been the right decision as lower prices continue to smack these stocks. Now if the recent longs I just took throw me for a loop you can guarantee I will get even more strict on my purchases.
Before I used to take a nice price move off the 50 day moving average or a breakout with a volume surge as long as it had green BOP. I don't do that anymore. From now on price and volume has to surge with BOP either going green from yellow or a higher green from a lower green. Basically I need to see strength before I even go long a stock right now as we do not have a market rising on strong volume.
Now, remember that one thing I was talking about, before I went on my long tangent? Well that one thing that has happened that has not happened since the September downtrend. And that is one of my long-term shorts has given me a full cover signal. This is the first time since the major downtrend started in September that one of those big winners had to be fully covered. The last is being covered with a 35% gain after peaking with a 53% gain in two months. Not bad for two months on the short side in a VERY UGLY market.
Don't forget that I am running a Holiday Special for everyone. I know it says it is for 25% off one month but if you want to buy an annual subscription for the price of 11 months we will also give you the 25% deal. I was not aware that they only authorized a month but I am willing to give a full year for 25% off 11 months. Trust me you will make more money here than anywhere else when it comes to the stock market. And if you invest in futures or ETFs, you can use my recommendations to make a lot of money. I said to buy Gold in 2002, to short the Dollar in 2001, to buy Gold and Silver a week ago, and I recently gave a short recommendation on SRS multiple times that have resulted in gains for subscribers from 35% to 50% in UNDER A MONTH.
Remember, those Past Big Winners under my Longs section will come back again. Heck, recently we had one setup and produce a 124% gain. Too bad it was on the OTCBB market with that perfect chart. And looking at the price, volume, and BOP of that one and FRPT of 2006 I wonder why TCNet doesn't open its software to the OTCBB market. There are some gems on there that setup and breakout before being listed on the Nassy, NYSE, or AMEX exchanges. I really wish TCNet would give us access to that market. It is obvious the price, volume, and BOP that I look for in my best longs (and we will see these setups again LEFT AND RIGHT in the next bull market!!!; DGLY, PDO, and ANCI all setup this year) show up on the OTCBB too.
Imagine if we had access to that. That would have been a 325% gain in 2006 on FRPT's near-perfect chart and a 125% gain in six months on AIPC's near-perfect chart this year. Come on TCNet. Let's open the system up to other markets. ESPECIALLY China! :)
Have a great Thursday and I will see you in the chat room and forums.
Stock Market Wrap Up Part One and Two full size version available on the Gold Forums. Free YouTube small version will be posted below:
The bulls championed today's action because they were able to hold onto the gains after retaking the 50 day moving average. However, on the other end, I heard bears say that the inability of the market to rally further on the gains shows lack of confidence and confirmation on yesterday's gains.
I on the other hand have no opinion and take the market for what it was today. A tight ranged inside day (basically an inside day. A few indexes went a little outside yesterday's price range) on lower volume. It was neither bullish or bearish. It just was what it was.
Now, there was one thing that happened today that has not happened yet during this entire downtrend. While many people tried to play super-hero by calling bottoms in September and October, I stayed with the downtrend and thus made good money on some very solid shorts. Since then the market has gone range bound from 10/15 to 12/17 on the SP 500 with that index falling just .38%. That tight movement the past two weeks has made it hard to take new longs or new shorts.
That is why I have continued to recommend to my subscribers that they keep new longs or shorts small until a clear trend is evidenced via higher volume and a break higher above this two month range or a break lower from the same range. Either way, going short or long is fine with me, as long as we can make some money.
Some of the best money to be made has come via ETFs and if any of you have been trading my ETF recommendations I guess all I can say is congratulations. Once again, another ETF has moved 50% in my favor and yet I don't have a position because I don't fell comfortable holding ETFs. This might be a game that I definitely need to get involved because I have done very well on the long and short side with my ETF calls and would have probably doubled my return this year by playing the 2x and 3x ETFs that I must ethically say is helping to ruin this great market. Even though some big gains can be had by them they are still not healthy for the market. Like so many other things.
There are two groups that are clearly leading and I am long two leading stocks in each sector so if you are looking to go long I am long two leading stocks in the two leading industries that should produce some good gains if we can get this LOW volume Santa Clause rally going.
Now, while I would LOVE for this bear market bounce to turn into a bull market, everything in my analysis of technical analysis tells me that it would be foolish to be a raging bull here. There are a couple of easy to use technical signals that will help keep you in an uptrend for the majority of it and visa versa for downtrends. Right now, at the level of the moving averages, MACD lines, and RSI lines, it appears to me we are far away from a bottom.
The other clear red flag to me that keeps popping up is the lack of accumulation on the rallies in the indexes the past few weeks. Not only that the few leaders that setup and broke out before this rally got moving came crashing back to the earth in a very violent manner.
While it is very good to see stocks setting up in possible future long positions and nice to have three new longs this week in a week where I did not think we would find anything to go long as a low volume holiday rally usually doesn't allow us to get long too many great big winners. It was still nice to get some stocks and then have them hold after some of the recent horrible situations we have been in after a nice stock sets up.
If this market was really ready to run not only would the stocks I am going long now hold up but the stocks that were very pretty that I went long earlier would still be in my holdings. Instead stocks like DMND, ISYS, AXYS, and ASEI have signaled to me to get fully out and on three of them that has definitely been the right decision as lower prices continue to smack these stocks. Now if the recent longs I just took throw me for a loop you can guarantee I will get even more strict on my purchases.
Before I used to take a nice price move off the 50 day moving average or a breakout with a volume surge as long as it had green BOP. I don't do that anymore. From now on price and volume has to surge with BOP either going green from yellow or a higher green from a lower green. Basically I need to see strength before I even go long a stock right now as we do not have a market rising on strong volume.
Now, remember that one thing I was talking about, before I went on my long tangent? Well that one thing that has happened that has not happened since the September downtrend. And that is one of my long-term shorts has given me a full cover signal. This is the first time since the major downtrend started in September that one of those big winners had to be fully covered. The last is being covered with a 35% gain after peaking with a 53% gain in two months. Not bad for two months on the short side in a VERY UGLY market.
Don't forget that I am running a Holiday Special for everyone. I know it says it is for 25% off one month but if you want to buy an annual subscription for the price of 11 months we will also give you the 25% deal. I was not aware that they only authorized a month but I am willing to give a full year for 25% off 11 months. Trust me you will make more money here than anywhere else when it comes to the stock market. And if you invest in futures or ETFs, you can use my recommendations to make a lot of money. I said to buy Gold in 2002, to short the Dollar in 2001, to buy Gold and Silver a week ago, and I recently gave a short recommendation on SRS multiple times that have resulted in gains for subscribers from 35% to 50% in UNDER A MONTH.
Remember, those Past Big Winners under my Longs section will come back again. Heck, recently we had one setup and produce a 124% gain. Too bad it was on the OTCBB market with that perfect chart. And looking at the price, volume, and BOP of that one and FRPT of 2006 I wonder why TCNet doesn't open its software to the OTCBB market. There are some gems on there that setup and breakout before being listed on the Nassy, NYSE, or AMEX exchanges. I really wish TCNet would give us access to that market. It is obvious the price, volume, and BOP that I look for in my best longs (and we will see these setups again LEFT AND RIGHT in the next bull market!!!; DGLY, PDO, and ANCI all setup this year) show up on the OTCBB too.
Imagine if we had access to that. That would have been a 325% gain in 2006 on FRPT's near-perfect chart and a 125% gain in six months on AIPC's near-perfect chart this year. Come on TCNet. Let's open the system up to other markets. ESPECIALLY China! :)
Have a great Thursday and I will see you in the chat room and forums.
Stock Market Wrap Up Part One and Two full size version available on the Gold Forums. Free YouTube small version will be posted below:
Tuesday, December 16, 2008
Ben Unleashes A Bullish Rally Sending The Major Market Indexes Over Their 50 Day Moving Averages; If This Is A New Bull Market And Not A Bear Rally, W
It has been an extremely busy day in the chat room and I produced three videos tonight with the third one focusing on the best gold and silver stocks that appear to be building bottoms and making right sides of bases. The length that it took to make these three videos with all the conversation in the Gold Forums and Chat Room means that I am just going to keep this short tonight.
The market had a WONDERFUL rally today due to the huge rate cut. However, I want to remind everyone that when the Fed RAISES rates it is telling you "the economy is hot and we need to cool it down." This means usually that stocks are rising and on fire. When the Fed cut rates it usually means that they are saying "things are REALLY bad and a .25 basis point will not be enough so we need to go deeper since the data is so ugly."
Since we have eyes we can see how ugly the market has been. But the fact that after all this carnage they are still SLASHING rates is a HUGE red flag to me to be ready for more lows. This also worries me about the dollar and believe that fear is being realized via the accumulation in the UDN and the distribution in the UUP.
However, this is not saying that we can not have a santa clause rally into Christmas and the New Years. Still, you guys and girls need to remember that a rally without volume nine times out of ten leads to lower prices soon after. To have a sustainable rally you need volume. Did you all look at the volume on the indexes today? There wasn't any! Volume was below the 50 day volume average on both the NYSE and the Nasdaq.
The only bright spot that I could see in today's rally was Gold and Silver stocks. I am not listing them here but if you go to the Gold Forums you can watch video three and take a look at the 30 or so gold and silver stocks that we are watching to complete bases so that we can get heavily long a proper setup and breakout. This will take some time for those stocks to setup in the beautiful bases that led to my gains in these stocks in 2005 (ERS 550% ZEUS 90% etc...). Still at least we have some stocks that do appear to be setting up.
The other problem with this little rally. Where is the leadership? Why did so many stocks that were leading breakdown right before this move (AXYS, ISYS, DMND, etc...)? All of these questions really put question marks on all those people that are saying "the bottom is in for sure." Really? Really? You believe we can have a bottom without fear? You believe we can have a bottom without a capitulation day? You think we can have a bottom without accumulation on the rally following the "lows of the year?"
Well if you want to believe the people calling a bottom now, you do that. I remember what they said in March, July, September, October, and November. No need to believe these jokesters now. I have gains for the year. Even though I have lost a lot of my gains that I had in November, I am still crushing all the "geniuses" that have their own TV show. LOL. That is all that matters. In the long run, I will be here and they will retire. Why? They can't adapt. My charts will always work.
Speaking of charts: Can TCNet please get OTCBB stocks!!!! Once again, we now have the old OTCBB data on AIPC and it clearly shows a breakout in June with huge volume and max green BOP that EVERYONE in our Platinum Chat Room noticed. If we would have taken that as a long we would have had a 124% gain now from the first buy and a 98% gain from our second buy by now. I think TCNet's BOP works best with small caps and that is all that exist in the OTCBB arena. If I could use TC's charts with those cheap POS stocks, I would have no problem taking 100% to 1000% gains in scam stocks with nice chart patterns. I think we should all flood TCNet asking for them to add OTCBB and Pink Sheet stocks to their NYSE, Nasdaq, and AMEX listed securities. I mean let's be honest...are any of these exchanges not crooked or scammy? I think not.
Stock Market Wrap Up Video 1 (general market), 2 (longs and shorts in the scans), and 3 (gold and silver stocks, futures, and sectors) is available in full size on the Gold Forums. Free YouTube Video 1 small version is available below:
The market had a WONDERFUL rally today due to the huge rate cut. However, I want to remind everyone that when the Fed RAISES rates it is telling you "the economy is hot and we need to cool it down." This means usually that stocks are rising and on fire. When the Fed cut rates it usually means that they are saying "things are REALLY bad and a .25 basis point will not be enough so we need to go deeper since the data is so ugly."
Since we have eyes we can see how ugly the market has been. But the fact that after all this carnage they are still SLASHING rates is a HUGE red flag to me to be ready for more lows. This also worries me about the dollar and believe that fear is being realized via the accumulation in the UDN and the distribution in the UUP.
However, this is not saying that we can not have a santa clause rally into Christmas and the New Years. Still, you guys and girls need to remember that a rally without volume nine times out of ten leads to lower prices soon after. To have a sustainable rally you need volume. Did you all look at the volume on the indexes today? There wasn't any! Volume was below the 50 day volume average on both the NYSE and the Nasdaq.
The only bright spot that I could see in today's rally was Gold and Silver stocks. I am not listing them here but if you go to the Gold Forums you can watch video three and take a look at the 30 or so gold and silver stocks that we are watching to complete bases so that we can get heavily long a proper setup and breakout. This will take some time for those stocks to setup in the beautiful bases that led to my gains in these stocks in 2005 (ERS 550% ZEUS 90% etc...). Still at least we have some stocks that do appear to be setting up.
The other problem with this little rally. Where is the leadership? Why did so many stocks that were leading breakdown right before this move (AXYS, ISYS, DMND, etc...)? All of these questions really put question marks on all those people that are saying "the bottom is in for sure." Really? Really? You believe we can have a bottom without fear? You believe we can have a bottom without a capitulation day? You think we can have a bottom without accumulation on the rally following the "lows of the year?"
Well if you want to believe the people calling a bottom now, you do that. I remember what they said in March, July, September, October, and November. No need to believe these jokesters now. I have gains for the year. Even though I have lost a lot of my gains that I had in November, I am still crushing all the "geniuses" that have their own TV show. LOL. That is all that matters. In the long run, I will be here and they will retire. Why? They can't adapt. My charts will always work.
Speaking of charts: Can TCNet please get OTCBB stocks!!!! Once again, we now have the old OTCBB data on AIPC and it clearly shows a breakout in June with huge volume and max green BOP that EVERYONE in our Platinum Chat Room noticed. If we would have taken that as a long we would have had a 124% gain now from the first buy and a 98% gain from our second buy by now. I think TCNet's BOP works best with small caps and that is all that exist in the OTCBB arena. If I could use TC's charts with those cheap POS stocks, I would have no problem taking 100% to 1000% gains in scam stocks with nice chart patterns. I think we should all flood TCNet asking for them to add OTCBB and Pink Sheet stocks to their NYSE, Nasdaq, and AMEX listed securities. I mean let's be honest...are any of these exchanges not crooked or scammy? I think not.
Stock Market Wrap Up Video 1 (general market), 2 (longs and shorts in the scans), and 3 (gold and silver stocks, futures, and sectors) is available in full size on the Gold Forums. Free YouTube Video 1 small version is available below:
Monday, December 15, 2008
Late Day Rally Saves The Market From An Ugly Close But Stock Indexes Still Finish Lower On Lower Volume
Today's action was not that exciting as no real big news item came out today to bring any dramatic action to the tape. However, quiet pullbacks when a market has been moving higher in the short term is always a welcome thing to see if you are a bull. However, if you are a bear then you are comforted by the fact that the indexes are still unable to get above the 50 day moving average. Either way we look at it, right now, the indexes are not doing that much.
Instead the indexes continue to meander around this trading range that it has been in from the September to December period. This sideways movement has made it both difficult for longs and shorts to really take any positions recently and gain any kind of significant worthwhile reward. However, with the market coming up on a holiday shortened week next week, you would think that the path of least resistance would be up. At least for now.
If that were to happen and we would take out the 50 day moving average in a manner like that, I am sure a lot of technicians will jump the gun way to quick and declare the bear market over. Folks, can you do me a favor? Go look at the downtrend in 2008 on the NYSE and Nasdaq and ask me what happened every time you bought the index above the 50 DMA alone, with the 200 DMA ahead of it.
As you will clearly see, your investment soon turned into losses as the index would constantly roll over and soon be in another downtrend. Jumping the gun early has been a key reason people continue to lose money left and right in this market. They are still trying to pick "bottoms" and as long as they keep trying to do that they are going to get caught in more and more pitfalls before they actually hit the bottom. By then, I am sure both legs will be broken and a lung will have collapsed as your portfolio will be a shell of its one self.
So don't fall for the bottom is in rhetoric that you will likely hear on CNBC if the 50 day moving average is taken out on the indexes. This rally will more than likely just end up setting us up for a better short opportunity, if the rally happens. If it doesn't, that should be a real bad indication as markets are always supposed to go up in holiday shortened sessions due to the seasonal bias. If we go down on low volume, then come back and selloff on heavier volume. That would really put a damper on the prospects of a great 2009 start.
In my personal experience, the sad truth is, no bottom can be formed when people are looking for a bottom. It is only once the regular bottom caller finally sees what he thinks is a bottom and says to himself "I am not getting fooled this time." When he says that, then and only then do you have a bottom.
Right now, honestly, too many people are looking for that bottom and by looking for that bottom when we do not have ANY stocks setting up in very pretty bases, we do not have ANY shorts that are long term winners giving us full profit taking signals, and every new long we take ends up working for more than two days and they give us fast 20%+ gains then and only then will I be confident that we have a bottom.
Before that bottom comes a lot of stocks will be climbing off lows with strong accumulation and green BOP that will turn into a near-perfect to perfect calm flat base with some accumulation and green to preferably max green BOP. When these bases and breakouts start showing up everywhere then I will go ALL-IN long in the best of the best and then start rotating my money to hot stocks that still have not had their run.
No matter what happens tomorrow in this market, you are completely prepared for either outcome. We continue to have our shorts do very well and we are still praying for the few longs we snatch up to actually make us some big money. Maybe our new long will. Its first day in our port has it looking better than it did on Friday. That is always a good sign. The most important question is how long is this going to last? Let's hope a LOT longer than our AXYS long attempt.
Right now the name of the game is being short. If you don't believe me, look at these returns. It says it all.
top shorts w/ total returns UP today: ARB 78% SDA 76% MOS 63% SPW 68% RIMM 62% CYT 61% GGB 56% SBAC 52% APD 47% AMX 42% ATHR 44% AAPL 41% OKE 38% IPHS 35% SPG 38% TITN 35% CPRT 26% LLL 28% RDK 20% CEO 26% PLCE 25% K 15%
Part One and Part Two of the Stock Market Wrap videos are available in full screen on the Gold Forums. Part One Youtube version will be posted shortly:
Instead the indexes continue to meander around this trading range that it has been in from the September to December period. This sideways movement has made it both difficult for longs and shorts to really take any positions recently and gain any kind of significant worthwhile reward. However, with the market coming up on a holiday shortened week next week, you would think that the path of least resistance would be up. At least for now.
If that were to happen and we would take out the 50 day moving average in a manner like that, I am sure a lot of technicians will jump the gun way to quick and declare the bear market over. Folks, can you do me a favor? Go look at the downtrend in 2008 on the NYSE and Nasdaq and ask me what happened every time you bought the index above the 50 DMA alone, with the 200 DMA ahead of it.
As you will clearly see, your investment soon turned into losses as the index would constantly roll over and soon be in another downtrend. Jumping the gun early has been a key reason people continue to lose money left and right in this market. They are still trying to pick "bottoms" and as long as they keep trying to do that they are going to get caught in more and more pitfalls before they actually hit the bottom. By then, I am sure both legs will be broken and a lung will have collapsed as your portfolio will be a shell of its one self.
So don't fall for the bottom is in rhetoric that you will likely hear on CNBC if the 50 day moving average is taken out on the indexes. This rally will more than likely just end up setting us up for a better short opportunity, if the rally happens. If it doesn't, that should be a real bad indication as markets are always supposed to go up in holiday shortened sessions due to the seasonal bias. If we go down on low volume, then come back and selloff on heavier volume. That would really put a damper on the prospects of a great 2009 start.
In my personal experience, the sad truth is, no bottom can be formed when people are looking for a bottom. It is only once the regular bottom caller finally sees what he thinks is a bottom and says to himself "I am not getting fooled this time." When he says that, then and only then do you have a bottom.
Right now, honestly, too many people are looking for that bottom and by looking for that bottom when we do not have ANY stocks setting up in very pretty bases, we do not have ANY shorts that are long term winners giving us full profit taking signals, and every new long we take ends up working for more than two days and they give us fast 20%+ gains then and only then will I be confident that we have a bottom.
Before that bottom comes a lot of stocks will be climbing off lows with strong accumulation and green BOP that will turn into a near-perfect to perfect calm flat base with some accumulation and green to preferably max green BOP. When these bases and breakouts start showing up everywhere then I will go ALL-IN long in the best of the best and then start rotating my money to hot stocks that still have not had their run.
No matter what happens tomorrow in this market, you are completely prepared for either outcome. We continue to have our shorts do very well and we are still praying for the few longs we snatch up to actually make us some big money. Maybe our new long will. Its first day in our port has it looking better than it did on Friday. That is always a good sign. The most important question is how long is this going to last? Let's hope a LOT longer than our AXYS long attempt.
Right now the name of the game is being short. If you don't believe me, look at these returns. It says it all.
top shorts w/ total returns UP today: ARB 78% SDA 76% MOS 63% SPW 68% RIMM 62% CYT 61% GGB 56% SBAC 52% APD 47% AMX 42% ATHR 44% AAPL 41% OKE 38% IPHS 35% SPG 38% TITN 35% CPRT 26% LLL 28% RDK 20% CEO 26% PLCE 25% K 15%
Part One and Part Two of the Stock Market Wrap videos are available in full screen on the Gold Forums. Part One Youtube version will be posted shortly:
Friday, December 12, 2008
After An Ugly Open, Stocks Rally On Lower Volume, Saving The Market From A Possible Very Painful Day
It was very nice to see the market rally today, after the very weak open/futures market that preceded the close on Friday. The major problem with the rally today is the same problem we keep happening since the November lows: lower volume rallies.
These low volume rallies might look good to those that trade the market for short quick hits. But for investors and active-investors that like to build positions in their best leading stocks, this market is still not giving any clear sign that it wants to actually make any significant move higher.
History has proven, throughout every bull market run, that you need to have large accumulation or just any accumulation, period, to continue moving higher for more than just a few weeks to a couple of months. To get the really big gains in stocks with a nice uptrend in the indexes, you must see strong volume on the up sessions in the overall market.
Continuing to see heavy volume selloffs followed by lower volume rallies, the market indexes being rejected at the 50 day moving average, and the inability of any leading group to actually give leading stocks that can maintain a nice clean uptrend has me still very very cautious on this market.
I must make it clear that if this market was healthy, I would not just have 3 stocks in my two long-scans that I do nightly. During the early bull run that started in late-2002, there were at least 10 MINIMUM in each of these scans while the indexes at the start and by the time 2007 rolled around it was not uncommon to see 200-300 stocks in the scan that deals with stocks with volume over 100,000. So history tells me that if this run really had any REAL staying power that not only would I have more stocks to look at in my longs I would also have more longs showing up in my pre-breakout scans.
The fact that these long-scans continue to have very few stocks, the few that I do go long with nice chart patterns fail, and I continue to not have a SINGLE one of my shorts from before the downtrend took off in September give me a FULL cover signals to me that there is still not one good reason to say that the November lows were the actual lows of the stock market.
Heck, if that was even the bottom, my biggest question is this: if that was the bottom, where was the capitulation volume? If that was the bottom and there was no capitulation (but instead was a "quiet" bottom) why is there no heavy accumulation as the market rallies off the lows? I'll tell you why. Because we probably by well over a 50% margin have not seen the lows.
If we had seen the lows this is what you could expect. Not only would I have current shorts with gains over 40%+ give me full cover signals, I would have more and more nice looking charts show up in my long scans, the few stocks I am going long would work immediately and would give us a 20% gain within a few weeks, and we would be seeing very strong volume on the rallies.
You know what else we would see, if this was a bottom? Not a single person calling a bottom! What are people thinking? Granted, and I do see it, the selling is not as extreme as it was and, yes, more people do think we are going lower than at the lows in September and October. But until you actually see evidence of an actual bottom via huge volume in stocks that are below both averages, and breakouts that happen on strong volume and continue to climb higher, you can be sure that it would be extremely dangerous to get fully long right here.
I, to this day, will never understand why people can not be long stocks in an uptrend ONLY and be short or in cash in downtrends ONLY. It blows my mind that people actually think that holding on to losers and "averaging down" is actually a good strategy. Ask Cramer, Madoff, Miller, Heebner, and every other loud-mouth fundamentalist-only kind of investor if they have positive returns this year. I guarantee with 100% certainty that every one will say they have losses. Nothing is wrong with losses, AS LONG AS THEY ARE SMALL. You can come back from a 10% loss, you can't come back from a 99.9% loss.
Now, I obviously don't want everyone to think I am some raging bear. Obviously, I prefer to be long over being short, but I am a realist and do what the ACTUAL MARKET tells me to do. I don't listen to Cramer, Fleckenstein, Miller, Heebner, Madoff, or anybody else besides my charts. It has worked for me for over 13 years in a row now. I am about to start my 14th year of trading in April and I can tell that I still have that same passion today that I had my first day when I started. How do I know this? You should have seen me when I actually found a new long tonight that actually looked "pretty." :)
It was a very nice surprise.
I am going to go ahead and wrap this post up with this. Even though the market is in a downtrend, I am 95% cash and 4% short, doesn't mean that I am not preparing for a possible rally. As I just told you, I have a new long tonight that has strong fundamentals. Its chart stuck out and said "buy me" so I am going to buy it. When more stocks can setup into patterns this stock has, then and ONLY then will I be bullish.
But until then, there are quite a few stocks building bottoms and I thought I would just list some for everyone. Some of the stocks that I am watching, that appear to be building potential bottoms, include HITT, ACM, CTO, GTE, CFL, CPLA, PSMT, VFC, and PPD. There are a few other longs that look like they are setting up in bases and might be ready to be a long soon but I will leave those for paying members.
There will be a 10 minute video of Part One posted whenever my video technician post it. But if you are a Gold or Platinum member you can go to the Gold forums and watch video 1, 2, and 3 in its full size version Saturday morning. I will producing them tonight.
I know it is early but I love this holiday a lot! HAPPY CHANUKAH AND MERRY CHRISTMAS EVERYONE!!
I pray for everyone's safety in the bitter New England cold this weekend. Be safe and I hope to see you all on Monday. For those not around today, our prayers are with you and we will keep you in our thoughts. Hope you all are warm!!! Aloha!!!
top longs/(shorts) w/ total returns since purchase: ANCI 52% QCOR 30% (IPHS 35% MOS 64% SPG 44% LLL 27% CEO 24% CEDC 60% K 16% RDK 18% CASY 22% RIMM 62% OKE 37% CAJ 34% AAPL 41% CETV 80% GGB 56% CYT 60% SBAC 49% ARB 76% ATHR 43% SPW 69% PLCE 21% APD 47% POT 59% CPRT 26% AMX 42% SDA 75%) 26 of my current 37 shorts. The other are not up 15% or more yet. For longs those are two of my four holdings. The other two are not up 25% yet. I cut ALL losses on large cap stocks at 7% or less, on medium cap stocks at 10% or less, on quality small caps at 10%, and on speculative small/medium caps at 20% (I take small positions in speculative small/medium caps). Before any stock is even down 10%, we will usually be out of AT LEAST half of it. It either works out right away or we cut our losses. NO QUESTIONS ASKED. There is no need for predictions or speculation. Just disciplined smart-work.
DON'T FORGET THIS IS THE ONLY TIME OF THE YEAR I WILL BE RUNNING A 25% OFF SPECIAL. SO IF YOU WOULD LIKE TO GET A DISCOUNT FOR THE WHOLE YEAR OR GIVE SOMEONE AN INVESTING GIFT OF A LIFETIME FOR CHRISTMAS/CHANUKAH, I WOULD DO IT NOW. A GIFT THIS GOOD COMES ONLY ONCE A YEAR. HO HO HO! :)
Enjoy your weekend everyone!
These low volume rallies might look good to those that trade the market for short quick hits. But for investors and active-investors that like to build positions in their best leading stocks, this market is still not giving any clear sign that it wants to actually make any significant move higher.
History has proven, throughout every bull market run, that you need to have large accumulation or just any accumulation, period, to continue moving higher for more than just a few weeks to a couple of months. To get the really big gains in stocks with a nice uptrend in the indexes, you must see strong volume on the up sessions in the overall market.
Continuing to see heavy volume selloffs followed by lower volume rallies, the market indexes being rejected at the 50 day moving average, and the inability of any leading group to actually give leading stocks that can maintain a nice clean uptrend has me still very very cautious on this market.
I must make it clear that if this market was healthy, I would not just have 3 stocks in my two long-scans that I do nightly. During the early bull run that started in late-2002, there were at least 10 MINIMUM in each of these scans while the indexes at the start and by the time 2007 rolled around it was not uncommon to see 200-300 stocks in the scan that deals with stocks with volume over 100,000. So history tells me that if this run really had any REAL staying power that not only would I have more stocks to look at in my longs I would also have more longs showing up in my pre-breakout scans.
The fact that these long-scans continue to have very few stocks, the few that I do go long with nice chart patterns fail, and I continue to not have a SINGLE one of my shorts from before the downtrend took off in September give me a FULL cover signals to me that there is still not one good reason to say that the November lows were the actual lows of the stock market.
Heck, if that was even the bottom, my biggest question is this: if that was the bottom, where was the capitulation volume? If that was the bottom and there was no capitulation (but instead was a "quiet" bottom) why is there no heavy accumulation as the market rallies off the lows? I'll tell you why. Because we probably by well over a 50% margin have not seen the lows.
If we had seen the lows this is what you could expect. Not only would I have current shorts with gains over 40%+ give me full cover signals, I would have more and more nice looking charts show up in my long scans, the few stocks I am going long would work immediately and would give us a 20% gain within a few weeks, and we would be seeing very strong volume on the rallies.
You know what else we would see, if this was a bottom? Not a single person calling a bottom! What are people thinking? Granted, and I do see it, the selling is not as extreme as it was and, yes, more people do think we are going lower than at the lows in September and October. But until you actually see evidence of an actual bottom via huge volume in stocks that are below both averages, and breakouts that happen on strong volume and continue to climb higher, you can be sure that it would be extremely dangerous to get fully long right here.
I, to this day, will never understand why people can not be long stocks in an uptrend ONLY and be short or in cash in downtrends ONLY. It blows my mind that people actually think that holding on to losers and "averaging down" is actually a good strategy. Ask Cramer, Madoff, Miller, Heebner, and every other loud-mouth fundamentalist-only kind of investor if they have positive returns this year. I guarantee with 100% certainty that every one will say they have losses. Nothing is wrong with losses, AS LONG AS THEY ARE SMALL. You can come back from a 10% loss, you can't come back from a 99.9% loss.
Now, I obviously don't want everyone to think I am some raging bear. Obviously, I prefer to be long over being short, but I am a realist and do what the ACTUAL MARKET tells me to do. I don't listen to Cramer, Fleckenstein, Miller, Heebner, Madoff, or anybody else besides my charts. It has worked for me for over 13 years in a row now. I am about to start my 14th year of trading in April and I can tell that I still have that same passion today that I had my first day when I started. How do I know this? You should have seen me when I actually found a new long tonight that actually looked "pretty." :)
It was a very nice surprise.
I am going to go ahead and wrap this post up with this. Even though the market is in a downtrend, I am 95% cash and 4% short, doesn't mean that I am not preparing for a possible rally. As I just told you, I have a new long tonight that has strong fundamentals. Its chart stuck out and said "buy me" so I am going to buy it. When more stocks can setup into patterns this stock has, then and ONLY then will I be bullish.
But until then, there are quite a few stocks building bottoms and I thought I would just list some for everyone. Some of the stocks that I am watching, that appear to be building potential bottoms, include HITT, ACM, CTO, GTE, CFL, CPLA, PSMT, VFC, and PPD. There are a few other longs that look like they are setting up in bases and might be ready to be a long soon but I will leave those for paying members.
There will be a 10 minute video of Part One posted whenever my video technician post it. But if you are a Gold or Platinum member you can go to the Gold forums and watch video 1, 2, and 3 in its full size version Saturday morning. I will producing them tonight.
I know it is early but I love this holiday a lot! HAPPY CHANUKAH AND MERRY CHRISTMAS EVERYONE!!
I pray for everyone's safety in the bitter New England cold this weekend. Be safe and I hope to see you all on Monday. For those not around today, our prayers are with you and we will keep you in our thoughts. Hope you all are warm!!! Aloha!!!
top longs/(shorts) w/ total returns since purchase: ANCI 52% QCOR 30% (IPHS 35% MOS 64% SPG 44% LLL 27% CEO 24% CEDC 60% K 16% RDK 18% CASY 22% RIMM 62% OKE 37% CAJ 34% AAPL 41% CETV 80% GGB 56% CYT 60% SBAC 49% ARB 76% ATHR 43% SPW 69% PLCE 21% APD 47% POT 59% CPRT 26% AMX 42% SDA 75%) 26 of my current 37 shorts. The other are not up 15% or more yet. For longs those are two of my four holdings. The other two are not up 25% yet. I cut ALL losses on large cap stocks at 7% or less, on medium cap stocks at 10% or less, on quality small caps at 10%, and on speculative small/medium caps at 20% (I take small positions in speculative small/medium caps). Before any stock is even down 10%, we will usually be out of AT LEAST half of it. It either works out right away or we cut our losses. NO QUESTIONS ASKED. There is no need for predictions or speculation. Just disciplined smart-work.
DON'T FORGET THIS IS THE ONLY TIME OF THE YEAR I WILL BE RUNNING A 25% OFF SPECIAL. SO IF YOU WOULD LIKE TO GET A DISCOUNT FOR THE WHOLE YEAR OR GIVE SOMEONE AN INVESTING GIFT OF A LIFETIME FOR CHRISTMAS/CHANUKAH, I WOULD DO IT NOW. A GIFT THIS GOOD COMES ONLY ONCE A YEAR. HO HO HO! :)
Enjoy your weekend everyone!
A Failure At The 50 Day Moving Average Combined With Breakdowns And Reversals In Leading Issues Tells Us That We Need To Be Ready For The Reality Of N
Tonight I think I will save everyone some time and just give everyone two videos so you all know exactly where we stand in this market. I can't fit all I wanted to talk about into a 10 minute video (youtube limit) so I decided to do two parts for everyone.
The only thing I wanted to add that I forgot to talk about refers to the end of video two. Fleck is closing his short fund. Why now? Why not wait till you are FOR SURE the market has bottomed and then close it? Why close it now, when so many stocks are breaking down and so many others are failing right at the 50 DMA? I just don't understand. He missed the huge winners on the way up in 98, 99, and early 00 and he missed the entire four year bull market from 2003-2007 and now wants to close up his short fund when the market is still in a downtrend and looks to be starting a new leg down? How do these guys get so much money?????? It blows my freaking mind!!!! When will the regular Joe learn that you have to a little work to INVEST in the stock market.
If you can't do that give it to a great mutual fund manager or don't invest at all. Sad to say, 1999 wasn't real. This is what happens when you have a bubble constantly move from asset to asset to asset (stocks, real estate, commodities). Very painful bear markets follow.
Part One:
Part Two:
The only thing I wanted to add that I forgot to talk about refers to the end of video two. Fleck is closing his short fund. Why now? Why not wait till you are FOR SURE the market has bottomed and then close it? Why close it now, when so many stocks are breaking down and so many others are failing right at the 50 DMA? I just don't understand. He missed the huge winners on the way up in 98, 99, and early 00 and he missed the entire four year bull market from 2003-2007 and now wants to close up his short fund when the market is still in a downtrend and looks to be starting a new leg down? How do these guys get so much money?????? It blows my freaking mind!!!! When will the regular Joe learn that you have to a little work to INVEST in the stock market.
If you can't do that give it to a great mutual fund manager or don't invest at all. Sad to say, 1999 wasn't real. This is what happens when you have a bubble constantly move from asset to asset to asset (stocks, real estate, commodities). Very painful bear markets follow.
Part One:
Part Two:
Wednesday, December 10, 2008
Stock Indexes Pause At The 50 Day Moving Average; Another Long Bites The Dust Indicating This Isn't A Bottom Yet
I normally find low volume days productive in a market. However, today has thrown me a monkey wrench in that thought process as my short scans had more stocks in them than my long scans. That tells me that despite today's gains, the market was quite weak underneath.
One of the biggest tells to me that something is still wrong is the fact that NONE of my shorts from May-September have given me full cover signals via a huge volume move above the 50 DMA or a move above the 200 DMA. This fact alone should have everyone questioning EVERYONE that is calling this a bottom.
The other clear problem is coming from the recent few longs that have actually setup in nice patterns. Yesterday I had to fully cut one for not moving higher immediately and now another stock today has failed by gapping lower to the downside on very strong volume. That makes 2 longs down out of 5 in two days. Now I only have three stocks and two of those are still longs from BEFORE the selloff started. So, since October 1st, I have gone long 8 stocks and ONLY ONE IS STILL WORKING. The other seven have hit me with cut losses.
I hope this proves to everyone that going long in a bear market, EVEN LEADING STOCKS, is a dangerous proposition. That is why I have continued to say ALL YEAR LONG that CASH IS KING. This is exactly why. Longs are not working, unless you are flipping them over in a few days. Unless you are flipping them which will cost you in the long run when a real bull market starts, you are probably suffering ugly losses.
Those ugly losses can be seen in funds run by smart people that have blown up their previous results. I read a WSJ piece on Bill Miller today that SHOCKED ME to the core. I had no clue he blew up his fund 58% this year. Do you see why cutting your losses is important? Or how about Calamos Growth fund that used to be AT THE TOP of the list for growth mutual fund performance since 1994. It has gone from a permanent spot at the top the past five years or so to NOT EVEN BEING ON THE LIST OF 20. Amazing stuff and a testament to the power of cutting losses.
There is not much more to say that I have not gone over the past few sessions, as we continue to dance right below the 50 day moving average. I know I have said that I believe the indexes will break above them but with two out of five longs giving me full cut loss signals and zero big-winning-shorts giving me full cover signals I have to throw up serious doubts about that guess now. So please do not get fully margined to the long side here. You could suffer the wrath that so many mutual funds have suffered this year.
There is one key reason I will be around FOREVER: I CUT ALL MY LOSSES. I NEVER LET LOSSES RUN. The other key traits that will keep me around forever is that I love beautiful green charts and making a lot of money in them, I love researching for future big winners, and I NEVER GIVE UP! NEVER!! I never ever quit. No matter how long this bear last, when it ends, I WILL BE THERE. No doubt. :)
I want to apologize to everyone about the chat room today. Chatblazer lost its server today and according to records is the FIRST problem since August 6. So if we can only have one problem every quarter, I will be more than happy with that. Still I do apologize and I was around the Gold Forums the entire last hour of the session (after running important errands) and have been on since. So if the chat room is still down, just go to the Gold Forums and you can find me there. I do apologize for this. I wish technology was perfect but there will always be problems. Chat Blazer is the best software for all the different operating systems out there but they still have work to do to be a PERFECT chat hosting software. They are getting much better as once a quarter is much better than what it used to be during the early days of Chat Blazer.
Aloha everyone, stay positive, keep that cash level high, and remember being short is the only way to make big money right now (unless you are long ultrashort ETFs). I will see everyone tomorrow in the chat room and if you need to ask questions now you can go to the Gold Forums and post your questions there. It's almost Friday already...THANK GOD IN HEAVEN!
Part one and two full size videos available on the Gold Forums. Part one youtube version will be available when we get it posted on youtube:
One of the biggest tells to me that something is still wrong is the fact that NONE of my shorts from May-September have given me full cover signals via a huge volume move above the 50 DMA or a move above the 200 DMA. This fact alone should have everyone questioning EVERYONE that is calling this a bottom.
The other clear problem is coming from the recent few longs that have actually setup in nice patterns. Yesterday I had to fully cut one for not moving higher immediately and now another stock today has failed by gapping lower to the downside on very strong volume. That makes 2 longs down out of 5 in two days. Now I only have three stocks and two of those are still longs from BEFORE the selloff started. So, since October 1st, I have gone long 8 stocks and ONLY ONE IS STILL WORKING. The other seven have hit me with cut losses.
I hope this proves to everyone that going long in a bear market, EVEN LEADING STOCKS, is a dangerous proposition. That is why I have continued to say ALL YEAR LONG that CASH IS KING. This is exactly why. Longs are not working, unless you are flipping them over in a few days. Unless you are flipping them which will cost you in the long run when a real bull market starts, you are probably suffering ugly losses.
Those ugly losses can be seen in funds run by smart people that have blown up their previous results. I read a WSJ piece on Bill Miller today that SHOCKED ME to the core. I had no clue he blew up his fund 58% this year. Do you see why cutting your losses is important? Or how about Calamos Growth fund that used to be AT THE TOP of the list for growth mutual fund performance since 1994. It has gone from a permanent spot at the top the past five years or so to NOT EVEN BEING ON THE LIST OF 20. Amazing stuff and a testament to the power of cutting losses.
There is not much more to say that I have not gone over the past few sessions, as we continue to dance right below the 50 day moving average. I know I have said that I believe the indexes will break above them but with two out of five longs giving me full cut loss signals and zero big-winning-shorts giving me full cover signals I have to throw up serious doubts about that guess now. So please do not get fully margined to the long side here. You could suffer the wrath that so many mutual funds have suffered this year.
There is one key reason I will be around FOREVER: I CUT ALL MY LOSSES. I NEVER LET LOSSES RUN. The other key traits that will keep me around forever is that I love beautiful green charts and making a lot of money in them, I love researching for future big winners, and I NEVER GIVE UP! NEVER!! I never ever quit. No matter how long this bear last, when it ends, I WILL BE THERE. No doubt. :)
I want to apologize to everyone about the chat room today. Chatblazer lost its server today and according to records is the FIRST problem since August 6. So if we can only have one problem every quarter, I will be more than happy with that. Still I do apologize and I was around the Gold Forums the entire last hour of the session (after running important errands) and have been on since. So if the chat room is still down, just go to the Gold Forums and you can find me there. I do apologize for this. I wish technology was perfect but there will always be problems. Chat Blazer is the best software for all the different operating systems out there but they still have work to do to be a PERFECT chat hosting software. They are getting much better as once a quarter is much better than what it used to be during the early days of Chat Blazer.
Aloha everyone, stay positive, keep that cash level high, and remember being short is the only way to make big money right now (unless you are long ultrashort ETFs). I will see everyone tomorrow in the chat room and if you need to ask questions now you can go to the Gold Forums and post your questions there. It's almost Friday already...THANK GOD IN HEAVEN!
Part one and two full size videos available on the Gold Forums. Part one youtube version will be available when we get it posted on youtube:
Tuesday, December 09, 2008
Stocks Selloff On Lower Volume As The Major Market Indexes Hit Resistance At The 50 Day Moving Average
The stock market has pretty much been drifting around the past month or so but in the short-term the trend has been up and until today a lot of people were "for sure" the bottom was in. Now they are starting to think maybe it is not, now that the indexes have failed at the 50 day moving average.
The key here is, however, that they have not failed yet. A failure at a moving average involves a lower volume rally to the averages that is followed by a heavier volume decline. The fact that this decline today was on lower volume lends hope to the bulls that the uptrend can continue once a little fight at the 50 day moving average is over.
The bad part, for bulls, is not the 50 day moving average. It is the amount of resistance the market must deal with the past year and the 200 day moving average. I think this line is more important to watch as a market that is even able to get above the 50 DMA right here will probably not be able to get above the 200 DMA without retesting the lows. So I wouldn't get too excited about the uptrend here in the short-term but I wouldn't get too bearish either with the market getting halted today at the 50 DMA.
The key and most important thing is to watch stocks with strong fundamentals. Do they appear to be putting in a bottom by rallying on higher volume with green BOP up the right side of a base or are they still trending lower with distribution and weak BOP? I see some stocks building bases out there but the shape and structure of these bases does not give the FULL confidence that I get when the right charts setup. If there were 50-100 stocks doing what certain stocks are doing now (watch my part two videos tonight and last night to learn which stocks those are), then I would be getting VERY BULLISH and would be preparing for a STRONG RALLY. However, there are only a few that have the chart patterns that get me excited and to be honest they are not that great. The few stocks that were looking great have lost a bit of that luster and a recent long was cut for a small loss today. That tells me we are not out of the woods yet.
I am going to keep this short tonight, as there really was not a lot to talk about today. Volume was lower, we are still below the 50 DMA and still above the recent lows, stocks are still not running without any problems (hence HTS today), and my scans were very dry tonight. The good news tonight is that we finally have a real setup to play on the short side. We had three sessions in a row without any longs or shorts. That HAS to be a record in my investing life. I don't think I have ever gone three full days without ONE possible short or long. I am sure that isn't true as 2001 had to have had a few days but I am not checking my diaries right now as it is not important really. It just is letting you know that right now the market is just drifting without any real direction.
Remember, we are still in a very long term downtrend, an intermediate downtrend, a sub-intermediate consolidation range, and short term uptrend. That leaves for a bit of a rough market with mixed returns. Longs and shorts both do mixed in these environments. Hopefully, we can get some new longs soon in some of the stocks I have listed as possible future longs in the last two part-two-videos. If you watch those and review those stocks you will know why I am looking to go long these stocks in the future. For now, I have only 4 longs and 36 shorts that make up only 7% of my account. The other 93% is in cash and ready to be put to work on either the long side or short side.
The only thing I am regretting this late into the year is that I did not load up on all of these shorts that I am currently short (number that follows is the total % return since I went short): SPG 36% CETV 80% AMX 43% LLL 26% SDA 76% PLCE 15% RDK 18% K 15% CAJ 34% CYT 58% OKE 38% CEDC 62% CASY 21% SBAC 51% CPRT 29% RIMM 60% SPW 70% ARB 74%. If I would have gone heavily short all of these plays, I would have anywhere from a 50% to 150% return this year. Instead my top account is only up 25%. Thankfully, that is beating EVERY SINGLE ONE of the growth mutual funds this year, putting me in the top 1% of all growth mutual funds. And to be honest, that is all I want to do, as I am already too hard on myself. I expect perfection but know it is impossible to achieve. Still I try, for my wallet and yours.
Full size version of Part 1 and Part 2 available in the Gold Forums. Small YouTube video of Part 1 will be available shortly:
The key here is, however, that they have not failed yet. A failure at a moving average involves a lower volume rally to the averages that is followed by a heavier volume decline. The fact that this decline today was on lower volume lends hope to the bulls that the uptrend can continue once a little fight at the 50 day moving average is over.
The bad part, for bulls, is not the 50 day moving average. It is the amount of resistance the market must deal with the past year and the 200 day moving average. I think this line is more important to watch as a market that is even able to get above the 50 DMA right here will probably not be able to get above the 200 DMA without retesting the lows. So I wouldn't get too excited about the uptrend here in the short-term but I wouldn't get too bearish either with the market getting halted today at the 50 DMA.
The key and most important thing is to watch stocks with strong fundamentals. Do they appear to be putting in a bottom by rallying on higher volume with green BOP up the right side of a base or are they still trending lower with distribution and weak BOP? I see some stocks building bases out there but the shape and structure of these bases does not give the FULL confidence that I get when the right charts setup. If there were 50-100 stocks doing what certain stocks are doing now (watch my part two videos tonight and last night to learn which stocks those are), then I would be getting VERY BULLISH and would be preparing for a STRONG RALLY. However, there are only a few that have the chart patterns that get me excited and to be honest they are not that great. The few stocks that were looking great have lost a bit of that luster and a recent long was cut for a small loss today. That tells me we are not out of the woods yet.
I am going to keep this short tonight, as there really was not a lot to talk about today. Volume was lower, we are still below the 50 DMA and still above the recent lows, stocks are still not running without any problems (hence HTS today), and my scans were very dry tonight. The good news tonight is that we finally have a real setup to play on the short side. We had three sessions in a row without any longs or shorts. That HAS to be a record in my investing life. I don't think I have ever gone three full days without ONE possible short or long. I am sure that isn't true as 2001 had to have had a few days but I am not checking my diaries right now as it is not important really. It just is letting you know that right now the market is just drifting without any real direction.
Remember, we are still in a very long term downtrend, an intermediate downtrend, a sub-intermediate consolidation range, and short term uptrend. That leaves for a bit of a rough market with mixed returns. Longs and shorts both do mixed in these environments. Hopefully, we can get some new longs soon in some of the stocks I have listed as possible future longs in the last two part-two-videos. If you watch those and review those stocks you will know why I am looking to go long these stocks in the future. For now, I have only 4 longs and 36 shorts that make up only 7% of my account. The other 93% is in cash and ready to be put to work on either the long side or short side.
The only thing I am regretting this late into the year is that I did not load up on all of these shorts that I am currently short (number that follows is the total % return since I went short): SPG 36% CETV 80% AMX 43% LLL 26% SDA 76% PLCE 15% RDK 18% K 15% CAJ 34% CYT 58% OKE 38% CEDC 62% CASY 21% SBAC 51% CPRT 29% RIMM 60% SPW 70% ARB 74%. If I would have gone heavily short all of these plays, I would have anywhere from a 50% to 150% return this year. Instead my top account is only up 25%. Thankfully, that is beating EVERY SINGLE ONE of the growth mutual funds this year, putting me in the top 1% of all growth mutual funds. And to be honest, that is all I want to do, as I am already too hard on myself. I expect perfection but know it is impossible to achieve. Still I try, for my wallet and yours.
Full size version of Part 1 and Part 2 available in the Gold Forums. Small YouTube video of Part 1 will be available shortly:
Monday, December 08, 2008
Impressive Rally Across The Board On Higher Volume Sends The Indexes To Their 50 DMA; Some Stocks Are Looking Much Better And Making Bases
Today was very impressive. I was so nervous early on for the market that I actually stepped away for a few hours to take a big long nap. Thankfully, when I woke up, I saw the market holding the gains but sadly EVERYONE and their mom was calling a bottom. That makes me think twice about the longevity of the rally in the future. However, for now, it was very nice to see.
Some of you may be a little confused with me being happy about a rally since I have so many shorts to longs. You have to remember that I am in 90%+ cash and now carry as much short as I do long even though I have 7x more shorts than longs. I have taken most of the BIG gains of 50%+ off the table and now only have a portion of the remaining shorts short to possibly take advantage of another selloff.
However, at the same time, I have five longs that are looking good and would prefer to rally much higher as the long side historically provides much larger gains. Considering my best short ever gave me a 98% gain and my best long gave me a 2,390% gain tells me that I should look to the long side for big returns over the short side.
Still, I am an unbiased active-investor that makes all of my decisions based on the fundamentals and technicals of stocks in the broad market. If the market is moving up on heavy volume and nice charts with great technical patterns and strong fundamentals abound, I will be margined to the T long. If the market is moving down on heavy volume and ugly charts reign supreme, then I will be short and in cash, until things look better.
Right now, the market is in a downtrend on a long-term, intermediate term, and sub-intermediate term time frame. The only time frame the market is up is the short-term time frame. So there is no way I can get extremely bullish here when only 1 of the 4 trends in the general market are up. To go along with that, the indexes are running into resistance right at their 50 day moving averages. The DJIA went above it but closed right on it, the SP-500 was halted right at the line intraday, and the Nasdaq/Nasdaq 100 are still slightly below the average.
With this being the case, there is no way ANYONE should be VERY BULLISH YET. If all of these indexes close over the 50 day moving averages, then yes I can understand SOME turning bullish. But still with the market in such a heavy downtrend the past year, you have to be smart and take the uptrend as it is. It is a start of something. It is not a proven rally yet. To be that we need to see the indexes above the 50 and 200 day moving averages, with the 50 DMA attacking the 200 DMA, and leading stocks in leading sectors (more than one sector at a time; multiple leading industries) moving higher out of proper patterns.
So for now, we have something to work with but it hasn't proven itself to be a bottom yet. The most important tell for a bottom that I have EVER had was with my long-term shorts that have produced gains of more than 50%. I have about 25 out of 35 shorts up over 40%+ and not a single one of them retook the 50 day moving average today on HUGE volume or closed above the 200 day moving average.
When the market is ready to bottom, not only will I see a lot of potential future longs setting up in beautiful bases but I ALWAYS have long-term winning shorts give me FULL COVER signals by having huge up days on huge volume or closing above the 200 day moving average. The fact it was such a strong day in the market, and so many more stocks are showing up in my scans with potential bases, yet none of my big winning shorts gave me full cover signals is a big hint to me that we probably have not seen the bottom just yet.
Do I hope that we have? Of course. Review all of my Past Big Winners that I have posted (I have many 100% winners from 03-07 not posted that can be found and reviewed in my past blog postings at mauitrader.blogspot.com). If you do that you can see some of the HUGE gains in short amount of times you can get when charts and, most of the time, fundamentals line up.
I am going to cut this short tonight as I have made THREE videos. The first one is on the general market, the second one is on the longs building potential bases, and the third is on the leading industry in this current rally. All three videos are available in their full size on the Gold Forums and the free YouTube video of part one will be posted soon below. Have a great night!
TOP LONGS/(SHORTS) W/ TOTAL RETURNS UP TODAY: QCOR 47% (CASY 19%)
Some of you may be a little confused with me being happy about a rally since I have so many shorts to longs. You have to remember that I am in 90%+ cash and now carry as much short as I do long even though I have 7x more shorts than longs. I have taken most of the BIG gains of 50%+ off the table and now only have a portion of the remaining shorts short to possibly take advantage of another selloff.
However, at the same time, I have five longs that are looking good and would prefer to rally much higher as the long side historically provides much larger gains. Considering my best short ever gave me a 98% gain and my best long gave me a 2,390% gain tells me that I should look to the long side for big returns over the short side.
Still, I am an unbiased active-investor that makes all of my decisions based on the fundamentals and technicals of stocks in the broad market. If the market is moving up on heavy volume and nice charts with great technical patterns and strong fundamentals abound, I will be margined to the T long. If the market is moving down on heavy volume and ugly charts reign supreme, then I will be short and in cash, until things look better.
Right now, the market is in a downtrend on a long-term, intermediate term, and sub-intermediate term time frame. The only time frame the market is up is the short-term time frame. So there is no way I can get extremely bullish here when only 1 of the 4 trends in the general market are up. To go along with that, the indexes are running into resistance right at their 50 day moving averages. The DJIA went above it but closed right on it, the SP-500 was halted right at the line intraday, and the Nasdaq/Nasdaq 100 are still slightly below the average.
With this being the case, there is no way ANYONE should be VERY BULLISH YET. If all of these indexes close over the 50 day moving averages, then yes I can understand SOME turning bullish. But still with the market in such a heavy downtrend the past year, you have to be smart and take the uptrend as it is. It is a start of something. It is not a proven rally yet. To be that we need to see the indexes above the 50 and 200 day moving averages, with the 50 DMA attacking the 200 DMA, and leading stocks in leading sectors (more than one sector at a time; multiple leading industries) moving higher out of proper patterns.
So for now, we have something to work with but it hasn't proven itself to be a bottom yet. The most important tell for a bottom that I have EVER had was with my long-term shorts that have produced gains of more than 50%. I have about 25 out of 35 shorts up over 40%+ and not a single one of them retook the 50 day moving average today on HUGE volume or closed above the 200 day moving average.
When the market is ready to bottom, not only will I see a lot of potential future longs setting up in beautiful bases but I ALWAYS have long-term winning shorts give me FULL COVER signals by having huge up days on huge volume or closing above the 200 day moving average. The fact it was such a strong day in the market, and so many more stocks are showing up in my scans with potential bases, yet none of my big winning shorts gave me full cover signals is a big hint to me that we probably have not seen the bottom just yet.
Do I hope that we have? Of course. Review all of my Past Big Winners that I have posted (I have many 100% winners from 03-07 not posted that can be found and reviewed in my past blog postings at mauitrader.blogspot.com). If you do that you can see some of the HUGE gains in short amount of times you can get when charts and, most of the time, fundamentals line up.
I am going to cut this short tonight as I have made THREE videos. The first one is on the general market, the second one is on the longs building potential bases, and the third is on the leading industry in this current rally. All three videos are available in their full size on the Gold Forums and the free YouTube video of part one will be posted soon below. Have a great night!
TOP LONGS/(SHORTS) W/ TOTAL RETURNS UP TODAY: QCOR 47% (CASY 19%)
Saturday, December 06, 2008
Stocks Rally On Higher Volume Than The Day Before; Indexes Are Still In A Downtrend And Below The 50 Day Moving Average
Today was a clearly bullish session for market participants considering the horrible headline numbers on jobs that came out this morning. Those numbers which saw 533,000 jobs lost in November, including an increase in the number of jobs lost in September and October, helped push the unemployment rate up to 6.7% which was below the consensus 6.8%.
Still the bigger shock is when you combine those three months of job losses and find out that those are the highest numbers (1.3 million lost in 3 months) since World War II. That means that the past three months have been worse than 9/11 when we lost 1.6 million jobs during the recession of 2001. These job losses are clearly stunning.
So how did the market take these numbers? Not well. The indexes fell around 3% following this announcement but in its usual roller-coaster ways, the stock market rebounded erasing all of the losses and ended with the indexes higher across the board anywhere from 3.1% to 4.3%. It was truly a very bullish turnaround, on top of some very bad news.
This turnaround with such bad news has more people calling for a bottom. All I have to say to them if that was the case why do we still have no leaders shaping up? Why are there no new IPOs coming to market? Why did we not have the amount of volume on the indexes like we did in September and October? Why are all of my shorts with gains over 50% still giving me zero full cover signals? Why is the put/call not hitting new highs? Why is the VIX not hitting new highs? Why are there still no nice charts? Why are the indexes still below the 50 day moving average? And why am I not seeing anything in stocks or the market to make me bullish? I will tell you why. I am 99.9% sure this is not a bottom.
There is only one leading group and that is the education stocks. Education stocks historically lead in bear markets. I know, I was there in 2000-2002 the last time these stocks led. What is another group that leads with crazy charts in a bear market? Small cap thin bank stocks. Those are also holding well and leading. This completely tells me that there is no way that we can have a bottom with these leaders.
Others sentiment indicators include the put/call ratio which hasn't touched the highs seen in March 2008, the VIX not getting over that October intraday high, the investors intelligence survey still does not have a new record number of bears and new record low in bulls. When I see these three sentiment indicators line up, then I will start to believe there is a bottom. But still the market and leading stocks have to confirm the three sentiment indicators.
Another thing that is very important is to just listen to people. I still have people coming up to me asking me "are stocks cheap to buy here?" As long as these neophytes to the stock market continue to ask me for stock advice like now is a good time to buy or something, there is no way I can see the right amount of fear in the public that is needed for a bottom.
People are supposed to be very pessimistic, like they were before the election on November 4th. They were pessimistic then, but the sentiment indicators and leading stocks did not come. Now that the sentiment indicators are getting close to extreme levels, we now have a flock of people that were initially bullish about their future finances following the election. This bullish attitude does not allow the proper fear to set in that must set in to mark a bottom.
My opinion is that since we have lost 50% in the market already, people have seen their portfolios destroyed, and yet they still want to buy GE, GM, or F because it is cheap means that we have a long time to go.
The good news about this for us that are short is that we probably will end up with some 85% to 95% gains before we fully cover our shorts. The other good news is this allows you RIGHT NOW, if you can, to save money to have more money available to use in the next bull market. Those fresh bull markets, THAT I NEVER MISS thanks to proper follow-through day analysis, is where you find the stocks that can move 300% to 3,000% in 12 months or less. If you have your head in the sand or are out doing something else because the market "was too depressing" or "it was too hard," you can be sure that when the turn comes like it did in 2002 to early 2003, you will miss the next SINA SOHU NTES and TASR not to mention SIGM HIL EPIC EVOL USNA SSYS FMDAY EGHT and so many other big winners that are always there after a bear.
The bad news for people like me that make our living off of profits in the stock market is that we may have to thank God that we saved some money during the good times so that we can survive the bad times. As long as the bad times is in a nice calm downtrend with small low volume rallies it is never hard to make money in a bear like you can make money in a bull. However, when 50% moves happen in days and you only get one chance to get short when you used to get two to three times to get short a good setup. The no uptick rule has helped us make money fast when we are right but at the same time it has unfortunately left us in a position where we must get in fast or miss it and not get in at all. Stocks like RIMM, AAPL, and GRMN are all great examples. Every one of these shorts have given me over 50% gains. However, I wanted to load up on IBD's top past big winners, on the short side, when that time came. Well it came, but it came too fast in late 2007 and now in the June to now period in 2008 they have setup too fast and failed too quickly again.
Lately, neither longs or shorts have been doing well, still that is OK because investors that use the CANSLIM methodology know and understand right now that the SMARTEST investors are either fully in cash or have a mixture of short positions and cash. Some might have a few longs but in this bear market, besides personal winners like QCOR and ANCI, there are not any stocks that exist to make you money. That is why over the past 12 months you can not find one growth mutual fund with positive returns. And if you are calling that arbitrage fund of Gabelli a growth fund, please stop. The next fund on the list is the top growth fund. This means, right now, the best growth mutual fund is down 30%. So much for going long the few strong stocks in a bull market.
I think the returns from hedge funds, mutual funds, pension funds, and TV "superstars" like Cramer prove that buying "value" stocks, "averaging down," and "bargain hunting" are all metaphors for LOSING MONEY. The best hedge funds are down 40% this year, the best mutual funds are down 30% this year, and Cramer is down 45% this year. I was given an account in November with 4x1 margin and it is now down 11% (new long is holding but not moving up). Without margin that is a 3% loss. My accounts are down 11%, down 5%, up 9%, up 12%, and up 25%. Combined the gains are around a 15% gain compared to a market down almost 55% at one point this year. I am up 15% and Cramer is down 45%. Why are you watching him again?
Seriously, everyone, the best Christmas present you can get yourself isn't even a subscription to my website so you can make serious money. The best Christmas present you could give anyone this year to change their life forever would be a subscription to eInvestorsBusinessDaily (eIBD). If you want to learn how to save all your money in a bear market and return some amazing gains in a bull market without ever having to worry about another sleepless night again, IBD is the cure to your ails.
I can't stress this enough. Without the rules CANSLIM has taught me, I am sure 2000-2002 and 2008 would have completed their assault in knocking me out of the market. Instead armed with the knowledge of nearly 14 years experience in the market and Investors Business Daily you can be sure I will NEVER EVER EVER be knocked out of the stock market. Only a horrible medical accident will ever end this truth telling blog.
If you can not afford IBD, this site, or Telechart, due to a MAJOR loss in the stock or real estate market, you should at LEAST prepare yourself for the future by buying the books that are on my reading list on this site. Also make sure you study every single one of the Past Big Winners of my longs and shorts on the .com site and go to the IBD Learning center and learn EVERYTHING that is on that learning center. Go over it, over and over, until it is like breathing.
It was a bullish week but the lack of volume completely kills any and all buzz that was received off this rally. A rally built on low volume is like a house built on sand. It looks nice RIGHT NOW but once a real storm comes the foundation will crumble. Be careful out there, realize that shorts and longs being taken now are not working real well, and that means only one thing: CASH IS KING S T I L L !!!!!!!!
I can't wait to get fully margined long again, however, the charts have to setup with those beautiful patterns that I have been used to my entire investing life. Until those charts reappear cash is going to be my best friend. That is unless a perfect short setup comes along. Then, with this market still in a very clear downtrend on the long-term, intermediate term, and sub-intermediate term, I would be more than happy to catch more short moves before the bull starts again.
Stock Market Wrap Up part one and part two full size available for Gold/Platinum members in Gold Forums. Silver/Free Stock Market Wrap Up part one small youtube edition:
Still the bigger shock is when you combine those three months of job losses and find out that those are the highest numbers (1.3 million lost in 3 months) since World War II. That means that the past three months have been worse than 9/11 when we lost 1.6 million jobs during the recession of 2001. These job losses are clearly stunning.
So how did the market take these numbers? Not well. The indexes fell around 3% following this announcement but in its usual roller-coaster ways, the stock market rebounded erasing all of the losses and ended with the indexes higher across the board anywhere from 3.1% to 4.3%. It was truly a very bullish turnaround, on top of some very bad news.
This turnaround with such bad news has more people calling for a bottom. All I have to say to them if that was the case why do we still have no leaders shaping up? Why are there no new IPOs coming to market? Why did we not have the amount of volume on the indexes like we did in September and October? Why are all of my shorts with gains over 50% still giving me zero full cover signals? Why is the put/call not hitting new highs? Why is the VIX not hitting new highs? Why are there still no nice charts? Why are the indexes still below the 50 day moving average? And why am I not seeing anything in stocks or the market to make me bullish? I will tell you why. I am 99.9% sure this is not a bottom.
There is only one leading group and that is the education stocks. Education stocks historically lead in bear markets. I know, I was there in 2000-2002 the last time these stocks led. What is another group that leads with crazy charts in a bear market? Small cap thin bank stocks. Those are also holding well and leading. This completely tells me that there is no way that we can have a bottom with these leaders.
Others sentiment indicators include the put/call ratio which hasn't touched the highs seen in March 2008, the VIX not getting over that October intraday high, the investors intelligence survey still does not have a new record number of bears and new record low in bulls. When I see these three sentiment indicators line up, then I will start to believe there is a bottom. But still the market and leading stocks have to confirm the three sentiment indicators.
Another thing that is very important is to just listen to people. I still have people coming up to me asking me "are stocks cheap to buy here?" As long as these neophytes to the stock market continue to ask me for stock advice like now is a good time to buy or something, there is no way I can see the right amount of fear in the public that is needed for a bottom.
People are supposed to be very pessimistic, like they were before the election on November 4th. They were pessimistic then, but the sentiment indicators and leading stocks did not come. Now that the sentiment indicators are getting close to extreme levels, we now have a flock of people that were initially bullish about their future finances following the election. This bullish attitude does not allow the proper fear to set in that must set in to mark a bottom.
My opinion is that since we have lost 50% in the market already, people have seen their portfolios destroyed, and yet they still want to buy GE, GM, or F because it is cheap means that we have a long time to go.
The good news about this for us that are short is that we probably will end up with some 85% to 95% gains before we fully cover our shorts. The other good news is this allows you RIGHT NOW, if you can, to save money to have more money available to use in the next bull market. Those fresh bull markets, THAT I NEVER MISS thanks to proper follow-through day analysis, is where you find the stocks that can move 300% to 3,000% in 12 months or less. If you have your head in the sand or are out doing something else because the market "was too depressing" or "it was too hard," you can be sure that when the turn comes like it did in 2002 to early 2003, you will miss the next SINA SOHU NTES and TASR not to mention SIGM HIL EPIC EVOL USNA SSYS FMDAY EGHT and so many other big winners that are always there after a bear.
The bad news for people like me that make our living off of profits in the stock market is that we may have to thank God that we saved some money during the good times so that we can survive the bad times. As long as the bad times is in a nice calm downtrend with small low volume rallies it is never hard to make money in a bear like you can make money in a bull. However, when 50% moves happen in days and you only get one chance to get short when you used to get two to three times to get short a good setup. The no uptick rule has helped us make money fast when we are right but at the same time it has unfortunately left us in a position where we must get in fast or miss it and not get in at all. Stocks like RIMM, AAPL, and GRMN are all great examples. Every one of these shorts have given me over 50% gains. However, I wanted to load up on IBD's top past big winners, on the short side, when that time came. Well it came, but it came too fast in late 2007 and now in the June to now period in 2008 they have setup too fast and failed too quickly again.
Lately, neither longs or shorts have been doing well, still that is OK because investors that use the CANSLIM methodology know and understand right now that the SMARTEST investors are either fully in cash or have a mixture of short positions and cash. Some might have a few longs but in this bear market, besides personal winners like QCOR and ANCI, there are not any stocks that exist to make you money. That is why over the past 12 months you can not find one growth mutual fund with positive returns. And if you are calling that arbitrage fund of Gabelli a growth fund, please stop. The next fund on the list is the top growth fund. This means, right now, the best growth mutual fund is down 30%. So much for going long the few strong stocks in a bull market.
I think the returns from hedge funds, mutual funds, pension funds, and TV "superstars" like Cramer prove that buying "value" stocks, "averaging down," and "bargain hunting" are all metaphors for LOSING MONEY. The best hedge funds are down 40% this year, the best mutual funds are down 30% this year, and Cramer is down 45% this year. I was given an account in November with 4x1 margin and it is now down 11% (new long is holding but not moving up). Without margin that is a 3% loss. My accounts are down 11%, down 5%, up 9%, up 12%, and up 25%. Combined the gains are around a 15% gain compared to a market down almost 55% at one point this year. I am up 15% and Cramer is down 45%. Why are you watching him again?
Seriously, everyone, the best Christmas present you can get yourself isn't even a subscription to my website so you can make serious money. The best Christmas present you could give anyone this year to change their life forever would be a subscription to eInvestorsBusinessDaily (eIBD). If you want to learn how to save all your money in a bear market and return some amazing gains in a bull market without ever having to worry about another sleepless night again, IBD is the cure to your ails.
I can't stress this enough. Without the rules CANSLIM has taught me, I am sure 2000-2002 and 2008 would have completed their assault in knocking me out of the market. Instead armed with the knowledge of nearly 14 years experience in the market and Investors Business Daily you can be sure I will NEVER EVER EVER be knocked out of the stock market. Only a horrible medical accident will ever end this truth telling blog.
If you can not afford IBD, this site, or Telechart, due to a MAJOR loss in the stock or real estate market, you should at LEAST prepare yourself for the future by buying the books that are on my reading list on this site. Also make sure you study every single one of the Past Big Winners of my longs and shorts on the .com site and go to the IBD Learning center and learn EVERYTHING that is on that learning center. Go over it, over and over, until it is like breathing.
It was a bullish week but the lack of volume completely kills any and all buzz that was received off this rally. A rally built on low volume is like a house built on sand. It looks nice RIGHT NOW but once a real storm comes the foundation will crumble. Be careful out there, realize that shorts and longs being taken now are not working real well, and that means only one thing: CASH IS KING S T I L L !!!!!!!!
I can't wait to get fully margined long again, however, the charts have to setup with those beautiful patterns that I have been used to my entire investing life. Until those charts reappear cash is going to be my best friend. That is unless a perfect short setup comes along. Then, with this market still in a very clear downtrend on the long-term, intermediate term, and sub-intermediate term, I would be more than happy to catch more short moves before the bull starts again.
Stock Market Wrap Up part one and part two full size available for Gold/Platinum members in Gold Forums. Silver/Free Stock Market Wrap Up part one small youtube edition:
Thursday, December 04, 2008
Late Day Selloff On Lower Volume Shows The Bulls Are Not Ready To Run; A Test Of The Lows Might Be Needed To Get A Real Bounce
Today continued a pattern that we have seen lately and that is mainly last hour insanity. We had a pretty dull day going but in the last hour the market completely puked it up and in the last few minutes another little nutty rally helped take the market off the lows. The good news about the selling was that it was on lower volume. The bad news about the selling is that it seemed to hit the few strong stocks that were out there. This could be bad news for a potential rally.
If leading stocks can not get anything going and keep it going it is going to be very hard for this market to hold up and produce the gains that so many are looking for. I think that so many think this market is oversold that we have to rally. I hate to tell some of these people this little tidbit but if mutual, pension, and hedge funds continue to get daily redemption calls and momentum investors continue to abuse the no uptick rule it could be a while before that magical bottom that has been called repeatedly the last year. I think there have been at least 5-6 MAJOR bottom calls by the media and NONE of them have been right. Eventually they will get it right but at what cost to your portfolio.
I will simply never understand why those who decide to get involved in the stock market in the first place will not do more homework and can not grasp the idea that you should be long a market moving up and either short or cash in a market moving lower. Selling stocks higher in anticipation of them falling and buying stocks crashing to earth because they are too cheap barely made sense to me when I read my first book on investing. I find it impossible to believe, now, that so many people still believe in this mantra.
If you don't think they do, think of how many people have asked you if stocks are "cheap" enough to buy now. If you are in the business like me and live somewhere where people are basically walking tools of whatever the newest trend in thinking and believing is you will quickly find out that everyone wants to know if stocks "are cheap enough to buy." Not only that but they seem to want to buy the stocks hit the hardest trading around $1 to $5. This proves, yet again, that basic history has not even been studied.
If anyone would actually do the research or even look-up the data that IBD did on this they found out that stocks making fresh 52-week highs do MUCH BETTER in one year than stocks that make fresh 52-week lows. History has PROVEN that stocks hitting new lows for the first time continue to do so for some time in the future, the majority of the time. On the opposite end, in bull markets, stocks that hit fresh new 52-week highs continue to go on to make new 52-week highs. This is NOT my opinion. These are facts from IBD. I obviously can not give you the number as I do not have the most recent data on this. However, my own experience has ABSOLUTELY PROVEN this to be the case. Just reviewing my blog going back to 2005 can prove this.
The point of this conversation is to make sure that you do not get "bored" or "antsy" and decide that CANSLIM investing is not working now so I must switch. Unless you are a pro and KNOW that you can switch back once a REAL follow-through day with leaders popping up everywhere shows up, there is no way I want you to force trades. Now, if you decide that CANSLIM investing is not for you and you do want to bottom fish, I can guarantee two things.
The first thing I can guarantee is that in bear markets, you will get SLAUGHTERED. Look at ALL of the mutual funds this year that are forced to be long most of their account and are forced to buy stocks that pullback to "bargain" levels because they are so big they can not chase stocks higher. Most of these funds are down anywhere from 30% to 70% this year. So bear markets WILL KILL you using a "value" way to investing. Just look at Jim Cramer's Action Alert Portfolio. That is a 45% loss mess. I don't know about you but I can't lose 45%. If I lose 45%, I can't make a living doing this anymore. So I will keep ALL my losses HOPEFULLY to 10%/8%/5% or less.
The second thing I can guarantee is that you will not be holding any winners up 500% to 3000% in under a year, in a bull market. That is for sure. Buying stocks near the lows means that you are buying a stock with overhead resistance. This overhead resistance usually leads to a choppy upward move when it does rally. Most "value" stocks are down in the dumps because they have normally already had their growth stage and big price run up. Check out JDSU, QCOM, MSFT, DELL, and WMT. Do you think they will EVER get to their old highs? And now some of you think RIMM, AAPL, BIDU, and GOOG will. That is a farce and if you are buying AAPL and RIMM because it is cheap you have not done ANY RESEARCH ON HISTORY. OLD LEADERS ARE NEVER NEW LEADERS AGAIN!!!!!!!! Look at CSCO and all the other stocks I just listed. Back in 2000-2002 EVERYONE on CNBC said to buy these as they "were the leaders." Too bad these guys didn't understand the definition of leader in the stock market.
Leader does not mean the biggest with the big price run already BEHIND it. A leader is a stock with great EPS and sales growth that is breaking out from a beautifully sound chart pattern that has NOT already had a HUGE price run up. A 20% move from the lows to the base that it builds is OK. But if the stock has gained 3000% and sets up again, you can be sure it is not going to be a safe long. You want fresh new highs. Not old constant new highs.
So if you want to make the big money in the bull market and save your money in a bear market, you DEFINITELY NEED TO LEARN THE CANSLIM SYSTEM!!! Once you have that down and know you got the system down, then you can try to daytrade the ETFs or futures or try your hand at options. But until you get the best methodology down to make big money, the other systems will eventually cost you a heavy tuition. Cutting losses fast is the ONLY way to prevent oneself from going broke in the market. If you only use 5-20% per long/short in your account, do you know how many 5% cut losses it will take before you go broke? You are right! A long time. But if you put 100% in a stock like DMND and at the close you check on it and see it is down 21%, you are going to be in a LOT of pain. A few more like that and you will be broke. A 98% loss takes a 1,900% gain to come back. A 5% loss takes a 5% gain to break even. A 10% loss takes just over 11% to break even.
To me it makes COMPLETE sense to cut my losses short and not to let them get out of hand. This is basics. But sadly many NEVER learn this. That is their loss and our gain. This is why when this volatile market is over, CANSLIM investing will end up returning HUGE gains to those ready. It always has and it always will.
God bless you William J. O'Neil and thank you W. Scott O'Neil for taking the torch. I will be a subscriber for life! If you don't have a subscription to IBD I HIGHLY recommend it and if you want to become a member of this site I would take advantage of this offer now because it will not be back for another 12 months and then there is no guarantee it will even be back if we get too big.
Thank God tomorrow is Friday. It has been a very dull week, overall. top longs/(shorts) up today and their total returns since purchase: QCOR 44% (APD 50% ENB 15% MOS 69% SBAC 57% AMX 48% K 18% LLL 29% TITN 53% SPG 44% CYT 62% AMSG 17% SPW 70% CEDC 65% RIMM 62% AAPL 45% ARB 73% RDK 19% PLCE 24% GGB 65% ATHR 47% CAJ 38% POT 69% CEO 41% OKE 42% IPHS 37% CASY 19%)
Aloha!!!
Stock Market Video Wrap part one and part two are available on the Gold Forums. Part one small version will be available here for Free and Silver members:
If leading stocks can not get anything going and keep it going it is going to be very hard for this market to hold up and produce the gains that so many are looking for. I think that so many think this market is oversold that we have to rally. I hate to tell some of these people this little tidbit but if mutual, pension, and hedge funds continue to get daily redemption calls and momentum investors continue to abuse the no uptick rule it could be a while before that magical bottom that has been called repeatedly the last year. I think there have been at least 5-6 MAJOR bottom calls by the media and NONE of them have been right. Eventually they will get it right but at what cost to your portfolio.
I will simply never understand why those who decide to get involved in the stock market in the first place will not do more homework and can not grasp the idea that you should be long a market moving up and either short or cash in a market moving lower. Selling stocks higher in anticipation of them falling and buying stocks crashing to earth because they are too cheap barely made sense to me when I read my first book on investing. I find it impossible to believe, now, that so many people still believe in this mantra.
If you don't think they do, think of how many people have asked you if stocks are "cheap" enough to buy now. If you are in the business like me and live somewhere where people are basically walking tools of whatever the newest trend in thinking and believing is you will quickly find out that everyone wants to know if stocks "are cheap enough to buy." Not only that but they seem to want to buy the stocks hit the hardest trading around $1 to $5. This proves, yet again, that basic history has not even been studied.
If anyone would actually do the research or even look-up the data that IBD did on this they found out that stocks making fresh 52-week highs do MUCH BETTER in one year than stocks that make fresh 52-week lows. History has PROVEN that stocks hitting new lows for the first time continue to do so for some time in the future, the majority of the time. On the opposite end, in bull markets, stocks that hit fresh new 52-week highs continue to go on to make new 52-week highs. This is NOT my opinion. These are facts from IBD. I obviously can not give you the number as I do not have the most recent data on this. However, my own experience has ABSOLUTELY PROVEN this to be the case. Just reviewing my blog going back to 2005 can prove this.
The point of this conversation is to make sure that you do not get "bored" or "antsy" and decide that CANSLIM investing is not working now so I must switch. Unless you are a pro and KNOW that you can switch back once a REAL follow-through day with leaders popping up everywhere shows up, there is no way I want you to force trades. Now, if you decide that CANSLIM investing is not for you and you do want to bottom fish, I can guarantee two things.
The first thing I can guarantee is that in bear markets, you will get SLAUGHTERED. Look at ALL of the mutual funds this year that are forced to be long most of their account and are forced to buy stocks that pullback to "bargain" levels because they are so big they can not chase stocks higher. Most of these funds are down anywhere from 30% to 70% this year. So bear markets WILL KILL you using a "value" way to investing. Just look at Jim Cramer's Action Alert Portfolio. That is a 45% loss mess. I don't know about you but I can't lose 45%. If I lose 45%, I can't make a living doing this anymore. So I will keep ALL my losses HOPEFULLY to 10%/8%/5% or less.
The second thing I can guarantee is that you will not be holding any winners up 500% to 3000% in under a year, in a bull market. That is for sure. Buying stocks near the lows means that you are buying a stock with overhead resistance. This overhead resistance usually leads to a choppy upward move when it does rally. Most "value" stocks are down in the dumps because they have normally already had their growth stage and big price run up. Check out JDSU, QCOM, MSFT, DELL, and WMT. Do you think they will EVER get to their old highs? And now some of you think RIMM, AAPL, BIDU, and GOOG will. That is a farce and if you are buying AAPL and RIMM because it is cheap you have not done ANY RESEARCH ON HISTORY. OLD LEADERS ARE NEVER NEW LEADERS AGAIN!!!!!!!! Look at CSCO and all the other stocks I just listed. Back in 2000-2002 EVERYONE on CNBC said to buy these as they "were the leaders." Too bad these guys didn't understand the definition of leader in the stock market.
Leader does not mean the biggest with the big price run already BEHIND it. A leader is a stock with great EPS and sales growth that is breaking out from a beautifully sound chart pattern that has NOT already had a HUGE price run up. A 20% move from the lows to the base that it builds is OK. But if the stock has gained 3000% and sets up again, you can be sure it is not going to be a safe long. You want fresh new highs. Not old constant new highs.
So if you want to make the big money in the bull market and save your money in a bear market, you DEFINITELY NEED TO LEARN THE CANSLIM SYSTEM!!! Once you have that down and know you got the system down, then you can try to daytrade the ETFs or futures or try your hand at options. But until you get the best methodology down to make big money, the other systems will eventually cost you a heavy tuition. Cutting losses fast is the ONLY way to prevent oneself from going broke in the market. If you only use 5-20% per long/short in your account, do you know how many 5% cut losses it will take before you go broke? You are right! A long time. But if you put 100% in a stock like DMND and at the close you check on it and see it is down 21%, you are going to be in a LOT of pain. A few more like that and you will be broke. A 98% loss takes a 1,900% gain to come back. A 5% loss takes a 5% gain to break even. A 10% loss takes just over 11% to break even.
To me it makes COMPLETE sense to cut my losses short and not to let them get out of hand. This is basics. But sadly many NEVER learn this. That is their loss and our gain. This is why when this volatile market is over, CANSLIM investing will end up returning HUGE gains to those ready. It always has and it always will.
God bless you William J. O'Neil and thank you W. Scott O'Neil for taking the torch. I will be a subscriber for life! If you don't have a subscription to IBD I HIGHLY recommend it and if you want to become a member of this site I would take advantage of this offer now because it will not be back for another 12 months and then there is no guarantee it will even be back if we get too big.
Thank God tomorrow is Friday. It has been a very dull week, overall. top longs/(shorts) up today and their total returns since purchase: QCOR 44% (APD 50% ENB 15% MOS 69% SBAC 57% AMX 48% K 18% LLL 29% TITN 53% SPG 44% CYT 62% AMSG 17% SPW 70% CEDC 65% RIMM 62% AAPL 45% ARB 73% RDK 19% PLCE 24% GGB 65% ATHR 47% CAJ 38% POT 69% CEO 41% OKE 42% IPHS 37% CASY 19%)
Aloha!!!
Stock Market Video Wrap part one and part two are available on the Gold Forums. Part one small version will be available here for Free and Silver members:
Wednesday, December 03, 2008
Nice Rally Today Too Bad It Was On Below Average Volume
Today's rally, while it probably made you feel all nice and warm on the inside, was still as cold as the grips of a long term bear market. Why? The leadership, silly. The leaders are all still coming from groups that reside in the bottom 25% of industry groups. When you have a real bull market from a bottom you can be FOR SURE that the top 25% of industry groups based on price performance will be leading the way.
Right now, there is only one area of leadership, and I am sorry folks that is not going to cut it. That group is the education stocks which are being helped by the only recent IPO out there in LOPE. Besides that we really do not have any amazing group leading. Business Services is such a diversified area that while some stocks look great some look horrible. The facts of a bull market show that in a real bull market rally leading stocks in leading groups help lead the market higher.
What we could have here is a bear market bounce. If that is the case, I am more than willing to play the long side. That is why I have four longs with a fifth one being added tonight. However, while I am willing to play the longs, I will make sure that I do not dump my short positions. And speaking of dumping short positions, if we really were turning into a new bull, I would have more long term winning shorts giving full cover signals. Instead, I am only having recent shorts fail which is not unexpected when you were so far extended from the 50 and 200 day moving average in this downtrend.
Today's rally also only gave us one new possible long and there is a problem with it. While the longer base may appear long enough on this stock, the right side is still not symmetrical with the left side which always increases the chance of failure in a stock. Therefore, I can not load up on this stock. I have to remain cautious and keep it small.
Now, if I would have had a few shorts with 50%+ gains give me full cover signals and I would have had 3-5 new long candidates then I might decide to go heavy into a certain long. However, that can not happen as long as this market is trending below the 200 DMA with the 50 DMA leading it lower. To go along with that poor action, the price has steadily remained below the 50 DMA since June making for one very ugly stock market.
Until the indexes can even get above the 50 DMA, nobody in their right mind should think of dropping 20%+ of one's account into any one position. When we have a real turn and "hot" charts are popping up everywhere, then you can feel free to go about and buy heavily the BEST breakouts. Not the stocks "bouncing" off "bottoms" below the 50/200 DMA. Those stocks will never produce for you the kind of gains stocks like NTES, SOHU, SINA, and TASR can after a bear market. QCOM and JDSU can be used as examples in the 98-00 rally following LTCM. GE sure didn't come close to QCOM during that time. This is why you got to stick with the leaders. If you do that you can still get some nice gains:
top longs/(shorts) and their total returns that were up today: QCOR 39% (CAJ 34% MOS 68% AMX 47% ARB 72% GGB 63% SPW 69% SDA 78% POT 67% CETV 83%). Right now, in a volatile market, you can trade around cheap stocks that will go to zero and make good money. But when the next bull market starts, and you can trust me there WILL BE another bull market, you will be stuck trying to trade the laggards while the real winners go racing higher without you.
Make sure, if you are new to the stock market, you understand one style before switching to the next. Unless you think something is completely not for you, switching styles just because it is not working RIGHT NOW is seriously very very stupid. Only the ignorant do something like that. Every person reading this should understand not every system works all the time. Every methodology/system will have times that things are not going perfect. This is why cutting losses is the most important thing. Don't forget, if you lose 7%, you just need a 7.5% gain to get back to even. However, if you lose 50%, you need a 100% return just to break even. Worse, if you lose 98%, you will need a 1,900% return just to break even. Still think "averaging down" (a LOSERS game) is a smart decision?
The greatest average up not down. Livermore, Baruch, Loeb, Dreyfus, Wyckoff, O'Neil, Darvas, Roppell, and every other successful active-investor I know right now, all cut their losses fast and let their winners ride while adding to their best positions. Stay positive and if you really want to get in the game and learn how to beat the market year in and year out you should be happy to know you are in the right place.
Stock Market Wrap video one and two full size version available to Platinum and Gold subscribers on the Gold forums. Free youtube small version available below:
Right now, there is only one area of leadership, and I am sorry folks that is not going to cut it. That group is the education stocks which are being helped by the only recent IPO out there in LOPE. Besides that we really do not have any amazing group leading. Business Services is such a diversified area that while some stocks look great some look horrible. The facts of a bull market show that in a real bull market rally leading stocks in leading groups help lead the market higher.
What we could have here is a bear market bounce. If that is the case, I am more than willing to play the long side. That is why I have four longs with a fifth one being added tonight. However, while I am willing to play the longs, I will make sure that I do not dump my short positions. And speaking of dumping short positions, if we really were turning into a new bull, I would have more long term winning shorts giving full cover signals. Instead, I am only having recent shorts fail which is not unexpected when you were so far extended from the 50 and 200 day moving average in this downtrend.
Today's rally also only gave us one new possible long and there is a problem with it. While the longer base may appear long enough on this stock, the right side is still not symmetrical with the left side which always increases the chance of failure in a stock. Therefore, I can not load up on this stock. I have to remain cautious and keep it small.
Now, if I would have had a few shorts with 50%+ gains give me full cover signals and I would have had 3-5 new long candidates then I might decide to go heavy into a certain long. However, that can not happen as long as this market is trending below the 200 DMA with the 50 DMA leading it lower. To go along with that poor action, the price has steadily remained below the 50 DMA since June making for one very ugly stock market.
Until the indexes can even get above the 50 DMA, nobody in their right mind should think of dropping 20%+ of one's account into any one position. When we have a real turn and "hot" charts are popping up everywhere, then you can feel free to go about and buy heavily the BEST breakouts. Not the stocks "bouncing" off "bottoms" below the 50/200 DMA. Those stocks will never produce for you the kind of gains stocks like NTES, SOHU, SINA, and TASR can after a bear market. QCOM and JDSU can be used as examples in the 98-00 rally following LTCM. GE sure didn't come close to QCOM during that time. This is why you got to stick with the leaders. If you do that you can still get some nice gains:
top longs/(shorts) and their total returns that were up today: QCOR 39% (CAJ 34% MOS 68% AMX 47% ARB 72% GGB 63% SPW 69% SDA 78% POT 67% CETV 83%). Right now, in a volatile market, you can trade around cheap stocks that will go to zero and make good money. But when the next bull market starts, and you can trust me there WILL BE another bull market, you will be stuck trying to trade the laggards while the real winners go racing higher without you.
Make sure, if you are new to the stock market, you understand one style before switching to the next. Unless you think something is completely not for you, switching styles just because it is not working RIGHT NOW is seriously very very stupid. Only the ignorant do something like that. Every person reading this should understand not every system works all the time. Every methodology/system will have times that things are not going perfect. This is why cutting losses is the most important thing. Don't forget, if you lose 7%, you just need a 7.5% gain to get back to even. However, if you lose 50%, you need a 100% return just to break even. Worse, if you lose 98%, you will need a 1,900% return just to break even. Still think "averaging down" (a LOSERS game) is a smart decision?
The greatest average up not down. Livermore, Baruch, Loeb, Dreyfus, Wyckoff, O'Neil, Darvas, Roppell, and every other successful active-investor I know right now, all cut their losses fast and let their winners ride while adding to their best positions. Stay positive and if you really want to get in the game and learn how to beat the market year in and year out you should be happy to know you are in the right place.
Stock Market Wrap video one and two full size version available to Platinum and Gold subscribers on the Gold forums. Free youtube small version available below:
Tuesday, December 02, 2008
Stocks Rally On Mixed Volume As Yet Another Day Of Insane Volatility Comes To An End
Stocks had a very interesting day of wild volatility today as stock rose on mixed volume. However, IBD reports that volume was higher on both exchanges and thus the SP 500 is in an official FTD rally.
I however have a problem with this as I do not have to be completely scientific about calling a move a FTD. Just like in October 2005 when everyone was refusing to believe in the rally that I was going long and making money in, I will be refusing to believe that this is a bottom simply because a FTD has been announced by IBD.
The problem with this FTD is that the volume is not an extreme example of heavy accumulation. Without this huge accumulation in the indexes, it is impossible to say that funds are heavily accumulating shares. Instead it looks like more continued short-covering rally that is trying to squeeze the excesses out of the shorts.
The other clear problem with today's FTD is that, once again, on another FTD in 2008 we have no leaders. Unless you are happy with one industry group (education) filled with nothing but sloppy stocks, then there is no way that this rally can be good for the market long term. Not only is there only one group leading with stocks in an uptrend but there are not even stocks setting up ready to take the lead from or with the education stocks.
So the lack of leadership, the inability to find ANYTHING to go long that is leading (even in the education sector) the market higher in a leading sector, and the fact that I STILL do not have any shorts with long-term gains giving me full cover signals is my clue that there is no way I should get excited about calling a bottom.
The other thing that must come with a bottom, besides new groups of leading stocks setting up and breaking out of bases, is that old laggards with dividends that have been around a long time will build bottoms. When I look at GE, YHOO, MSFT, AAPL, or any other stock that people call a leader all I see is a big consolidating mess or a stock in a severe downtrend. I don't see ANYTHING that appears to be putting in a bottom besides GM. F doesn't even look like it wants to bottom. And remember I am not saying GM bottomed, I am just saying that it has the huge volume off the lows after a long downtrend that indicates a possible bottom.
Until I see more of that, have to cover 1/2 my short positions due to final cover signals, start to find tons of hot stock chart patterns showing up with leading stocks in leading industries setting up and breaking out, and see a market rally on STRONG volume WELL ABOVE the 50 day volume average and see a market rallying over the 50 and 200 day moving average, there is no way I am calling ANOTHER BOTTOM with all the wrong talking heads.
Let's see...they were wrong in November 2007, January 2008, March 2008, July 2008, September 2008, October 2008, and now they are supposed to be right in November 2008? These are the people some of you are getting your information from and it is time to STOP and STEP UP to the Big Wave Trading way of investing. YOU SERIOUSLY DESERVE BETTER! Stop listening to the liars, cheats, scam artist, and momo monkeys on CNBC. They do not have your best interest in mind, they have theirs. That is why they are all down 30% to 70% this year.
The era of buy and hold is OVER and has been OVER since 2000. Active investing is the only way to make big money on the up and down side and KEEP IT! Buy and hold is the biggest gamble and daytrading only works in volatile markets. To make the big money you need to learn to hold the best stocks in the right environments. Now is the perfect time to learn because this is not the right environment.
Stock market wrap up part one and part two full version are available to Gold and Platinum subscribers on the Gold forums. Free youtube version small will be available after it is uploaded:
I however have a problem with this as I do not have to be completely scientific about calling a move a FTD. Just like in October 2005 when everyone was refusing to believe in the rally that I was going long and making money in, I will be refusing to believe that this is a bottom simply because a FTD has been announced by IBD.
The problem with this FTD is that the volume is not an extreme example of heavy accumulation. Without this huge accumulation in the indexes, it is impossible to say that funds are heavily accumulating shares. Instead it looks like more continued short-covering rally that is trying to squeeze the excesses out of the shorts.
The other clear problem with today's FTD is that, once again, on another FTD in 2008 we have no leaders. Unless you are happy with one industry group (education) filled with nothing but sloppy stocks, then there is no way that this rally can be good for the market long term. Not only is there only one group leading with stocks in an uptrend but there are not even stocks setting up ready to take the lead from or with the education stocks.
So the lack of leadership, the inability to find ANYTHING to go long that is leading (even in the education sector) the market higher in a leading sector, and the fact that I STILL do not have any shorts with long-term gains giving me full cover signals is my clue that there is no way I should get excited about calling a bottom.
The other thing that must come with a bottom, besides new groups of leading stocks setting up and breaking out of bases, is that old laggards with dividends that have been around a long time will build bottoms. When I look at GE, YHOO, MSFT, AAPL, or any other stock that people call a leader all I see is a big consolidating mess or a stock in a severe downtrend. I don't see ANYTHING that appears to be putting in a bottom besides GM. F doesn't even look like it wants to bottom. And remember I am not saying GM bottomed, I am just saying that it has the huge volume off the lows after a long downtrend that indicates a possible bottom.
Until I see more of that, have to cover 1/2 my short positions due to final cover signals, start to find tons of hot stock chart patterns showing up with leading stocks in leading industries setting up and breaking out, and see a market rally on STRONG volume WELL ABOVE the 50 day volume average and see a market rallying over the 50 and 200 day moving average, there is no way I am calling ANOTHER BOTTOM with all the wrong talking heads.
Let's see...they were wrong in November 2007, January 2008, March 2008, July 2008, September 2008, October 2008, and now they are supposed to be right in November 2008? These are the people some of you are getting your information from and it is time to STOP and STEP UP to the Big Wave Trading way of investing. YOU SERIOUSLY DESERVE BETTER! Stop listening to the liars, cheats, scam artist, and momo monkeys on CNBC. They do not have your best interest in mind, they have theirs. That is why they are all down 30% to 70% this year.
The era of buy and hold is OVER and has been OVER since 2000. Active investing is the only way to make big money on the up and down side and KEEP IT! Buy and hold is the biggest gamble and daytrading only works in volatile markets. To make the big money you need to learn to hold the best stocks in the right environments. Now is the perfect time to learn because this is not the right environment.
Stock market wrap up part one and part two full version are available to Gold and Platinum subscribers on the Gold forums. Free youtube version small will be available after it is uploaded:
Monday, December 01, 2008
Stocks Resume Selloff As Distribution Day Rattles Investors Who Bought Last Weeks LAME Rally
Do people not pay attention to volume at all? I am starting to begin they don't after listening to all the typical talking loud-mouths this weekend. They all clamored and were happy the indexes were up 15% to 20% last week. Yet not a single person anywhere mentioned that volume was lower and lower each day as the rally went along. They also did not mention that we were right near/at the 50 day moving averages which are in a downtrend on all the indexes. Leaving these two key facts out made anything they said irrelevant.
There was always a possibility of waking up and seeing a market running away today but the truth is this market is predictable yet insanely impossible to trade unless you are a daytrader. After my initial short positions before the selloff really started, things have been harder to manage as shorts are not going down in a smooth line like they should in a bear market. This is making for a very difficult trading environment and why unless your timeframe is 10 seconds it is not wise to get very long this market.
The fact that after a holiday short week of light volume that we can come back and selloff so violently should have more people concerned than there are. But with the put/call ratio under 1.0 and the VIX still not at new highs, we simply do not have the fear needed to get this selloff over. Instead too many are "hoping" that economic moves made recently will help the market. In my opinion, it only prolongs it.
If it is golden parachutes, ridiculous bonuses via options, program trading, online trading under $5, decimalization, dark pool trading, Regulation FD, Sarbanes Oxley, no uptick rule, or the government interfering in the stock market, the truth is that we do not have the free market that we once did. This is why we are seeing the recent volatility that we have seen since September.
Until this volatility ceases to be a problem, there is no way new shorts or new longs are going to be safe enough to load up on here. Instead small positions are STILL the call of the wild and there will be no way I place anything over 5% in my portfolio in one issue unless it is a PERFECT short setup or a PERFECT long setup. I am sick of taking small losses and only buying/shorting a few shares of the stocks that do well. Until my patterns show up, it is going to be a long dark period of cash holding.
However, holding cash now, after all the gains we got in the bull from 2003-2007 and the short positions that we still have on now like SPW 71% SPG 53% GGB 64% MOS 70% SDA 79% AMX 47% AAPL 44% LLL 31% RDK 17% RIMM 59% K 18% ARB 72% CAJ 37% POT 64% CEO 40% ATHR 46% AMSG 23% CPRT 31% APD 53% CETV 83% OKE 41% PLCE 23% TITN 53% CYT 64% SBAC 57% IPHS 35%, is OK with me.
I am a very patient trader and have recently fell into a trap where my largest positions don't do as well as the less-sure smaller positions do. This has been happening almost all year and started last year after the successful AFSI/TESO investments of 2007. Since then there have been too many cut losses compared to those gains above and with the gains on the long side with DGLY, PDO, and APPY, I just can't see pushing anything here. Cash is my main weapon as I wait better setups.
Putting the odds in your favor is what I do. When I am right, I am more than 4-to-1 right to wrong. When the market is in an uptrend 4/5 stocks will work in a new bull. In a bear, however, it is hard to be more than 50% right. I have some subscribers that have done very well with my shorts. However, the odds haven't been with me and yet I STILL have a 25% gain in my top account and only a 10% loss in my worst account given to me in November 2007.
I tell you this much, that 10% loss is still killing the top growth mutual funds (I do not count Gabelli ABC fund due to it being an arbitrage fund). For the past six months the top growth stock mutual fund (excluding the arb Gabelli fund) is the Fidelity Select Consumer Staples growth fund. Not only is that a fund directly involved with one area but it is still down 28% the past six months and 30% the past year. So according to my personal goals of ALWAYS WANTING TO BE IN THE TOP 1% OF GROWTH MUTUAL FUNDS with my subscribers being at LEAST IN THE TOP 5% OF GROWTH MUTUAL FUNDS, we have succeeded. They are down 30% and we are up anywhere from 25% to down 10%. And if you are like a few of my Platinum subscribers, you are up over 50% and I am VERY jealous of you.
This has been a very rough year and a month is left. Still don't think that I EVER would consider giving up. I still see some pretty charts that are trying to form out there. As long as that accumulation via tall green bars and green to max green BOP can show up (which it is on a FEW stocks), that is enough to keep me interested and prepared for the next leg up or the next leg down. As for sideways (consolidation) markets: I am very patient and can wait for a trend to start.
Don't forget I am running a Christmas special and suggest if you want the discount rate to go for it now. There will not be another deal until next Christmas and there is no guarantee it will run the whole month next year. That will be up to the economy. However if you would like to get some of these returns in a bear market: SPW 71% SPG 53% GGB 64% MOS 70% SDA 79% AMX 47% AAPL 44% LLL 31% RDK 17% RIMM 59% K 18% ARB 72% CAJ 37% POT 64% CEO 40% ATHR 46% AMSG 23% CPRT 31% APD 53% CETV 83% OKE 41% PLCE 23% TITN 53% CYT 64% SBAC 57% IPHS 35%. And you would like to get the returns you see in my Past Big Winners Longs and Shorts, then make sure you sign up while there is a deal. I am also doing family packages and for ex-Vets and students, this 25% can be used on top of the current deal that I give Veterans and students already.
I hope everyone is surviving out there. If you are not, remember, I am always here to help, even when the geniuses of wall street have left you a shell of your former self. Those liars have nothing on the truth of the charts. Nobody can predict the future and those telling you to buy the bottoms now, WERE TELLING YOU TO DO THAT IN MARCH!!! It's time to wake up people to the truth. :)
Part one and part two full size version of my stock market wrap video are available in the Gold forums. The small part one Youtube version will be available later:
There was always a possibility of waking up and seeing a market running away today but the truth is this market is predictable yet insanely impossible to trade unless you are a daytrader. After my initial short positions before the selloff really started, things have been harder to manage as shorts are not going down in a smooth line like they should in a bear market. This is making for a very difficult trading environment and why unless your timeframe is 10 seconds it is not wise to get very long this market.
The fact that after a holiday short week of light volume that we can come back and selloff so violently should have more people concerned than there are. But with the put/call ratio under 1.0 and the VIX still not at new highs, we simply do not have the fear needed to get this selloff over. Instead too many are "hoping" that economic moves made recently will help the market. In my opinion, it only prolongs it.
If it is golden parachutes, ridiculous bonuses via options, program trading, online trading under $5, decimalization, dark pool trading, Regulation FD, Sarbanes Oxley, no uptick rule, or the government interfering in the stock market, the truth is that we do not have the free market that we once did. This is why we are seeing the recent volatility that we have seen since September.
Until this volatility ceases to be a problem, there is no way new shorts or new longs are going to be safe enough to load up on here. Instead small positions are STILL the call of the wild and there will be no way I place anything over 5% in my portfolio in one issue unless it is a PERFECT short setup or a PERFECT long setup. I am sick of taking small losses and only buying/shorting a few shares of the stocks that do well. Until my patterns show up, it is going to be a long dark period of cash holding.
However, holding cash now, after all the gains we got in the bull from 2003-2007 and the short positions that we still have on now like SPW 71% SPG 53% GGB 64% MOS 70% SDA 79% AMX 47% AAPL 44% LLL 31% RDK 17% RIMM 59% K 18% ARB 72% CAJ 37% POT 64% CEO 40% ATHR 46% AMSG 23% CPRT 31% APD 53% CETV 83% OKE 41% PLCE 23% TITN 53% CYT 64% SBAC 57% IPHS 35%, is OK with me.
I am a very patient trader and have recently fell into a trap where my largest positions don't do as well as the less-sure smaller positions do. This has been happening almost all year and started last year after the successful AFSI/TESO investments of 2007. Since then there have been too many cut losses compared to those gains above and with the gains on the long side with DGLY, PDO, and APPY, I just can't see pushing anything here. Cash is my main weapon as I wait better setups.
Putting the odds in your favor is what I do. When I am right, I am more than 4-to-1 right to wrong. When the market is in an uptrend 4/5 stocks will work in a new bull. In a bear, however, it is hard to be more than 50% right. I have some subscribers that have done very well with my shorts. However, the odds haven't been with me and yet I STILL have a 25% gain in my top account and only a 10% loss in my worst account given to me in November 2007.
I tell you this much, that 10% loss is still killing the top growth mutual funds (I do not count Gabelli ABC fund due to it being an arbitrage fund). For the past six months the top growth stock mutual fund (excluding the arb Gabelli fund) is the Fidelity Select Consumer Staples growth fund. Not only is that a fund directly involved with one area but it is still down 28% the past six months and 30% the past year. So according to my personal goals of ALWAYS WANTING TO BE IN THE TOP 1% OF GROWTH MUTUAL FUNDS with my subscribers being at LEAST IN THE TOP 5% OF GROWTH MUTUAL FUNDS, we have succeeded. They are down 30% and we are up anywhere from 25% to down 10%. And if you are like a few of my Platinum subscribers, you are up over 50% and I am VERY jealous of you.
This has been a very rough year and a month is left. Still don't think that I EVER would consider giving up. I still see some pretty charts that are trying to form out there. As long as that accumulation via tall green bars and green to max green BOP can show up (which it is on a FEW stocks), that is enough to keep me interested and prepared for the next leg up or the next leg down. As for sideways (consolidation) markets: I am very patient and can wait for a trend to start.
Don't forget I am running a Christmas special and suggest if you want the discount rate to go for it now. There will not be another deal until next Christmas and there is no guarantee it will run the whole month next year. That will be up to the economy. However if you would like to get some of these returns in a bear market: SPW 71% SPG 53% GGB 64% MOS 70% SDA 79% AMX 47% AAPL 44% LLL 31% RDK 17% RIMM 59% K 18% ARB 72% CAJ 37% POT 64% CEO 40% ATHR 46% AMSG 23% CPRT 31% APD 53% CETV 83% OKE 41% PLCE 23% TITN 53% CYT 64% SBAC 57% IPHS 35%. And you would like to get the returns you see in my Past Big Winners Longs and Shorts, then make sure you sign up while there is a deal. I am also doing family packages and for ex-Vets and students, this 25% can be used on top of the current deal that I give Veterans and students already.
I hope everyone is surviving out there. If you are not, remember, I am always here to help, even when the geniuses of wall street have left you a shell of your former self. Those liars have nothing on the truth of the charts. Nobody can predict the future and those telling you to buy the bottoms now, WERE TELLING YOU TO DO THAT IN MARCH!!! It's time to wake up people to the truth. :)
Part one and part two full size version of my stock market wrap video are available in the Gold forums. The small part one Youtube version will be available later:
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