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:

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:

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:

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:

Half-Day Session Ends Like Most Holiday Half-Days End; Stocks Rise On Extremely Low Volume

There isn't much to say here either than I said on Friday we would have a week long holiday lower volume each day rally. That came and passed like clockwork. I had no clue the gains would be so huge in such a short amount of time but in this market you get used to anything and everything.

About the only thing that never changes the past few months has been the news. The news has been downright extremely negative and the negativity has reached a point that it is effecting me and might be having a negative impact in my trading.

I am not used to being a professional investor with a paid website. I am not used to having others be in my trades and see the same thing I see. Now many of you can see exactly what I see and I wonder if that is dangerous or if it is just the signs of the times of the market we are in.

I am sure when the market changes to a real bullish uptrend--and not this short-term short-squeezing lower volume each day rally we have now--we will see everything working again, like it should. However, for now things are a bit crazy and that has everyone a little sketchy despite the holiday season.

Well, yesterday, a very intelligent Gold subscriber posted a little gem on the forums that I think everyone should read only to know that no matter how bad you think it is the reality is much different than it appears.

Thank you, Eric for your contribution. I am sure many will find it very entertaining and hopefully a little enlightening. Things are only as bad as you make them. Thank you, Eric, once again. I will see everyone on Monday. Enjoy the post below and check back for the Free Youtube Video that should be up before Saturday morning. And don't forget if you want to give anyone the gift of learning how to invest for themselves and never having to rely on Wall Street for ANYTHING ever again, we are running a Christmas special for the month of December. I hope everyone had a great Thanksgiving! Aloha!

Post from Ericoleman on the Gold Forums, on Thanksgiving:

Hey guys.

Hope everyone is having a good day. I just thought I'd chime in with some thoughts and observations.

First, there is a lot of truth in the arguments of people such as Peter Schiff, and yes, unfortuantely they've been right on certain things. But I seriously don't think we should start comparing America to Zimbabwe.

Why? Well I've been to Zimbabwe and other parts of southern Africa and the comparison is just silly. For example, Zimbabwe is a landlocked country without any ports which makes international trade a lot more difficult. America has access to both the Atlantic and Pacific Oceans with many heavily travelled ports. Also, they've been an independent nation for less than 50 years, while America has been a nation for over 200 years with just one constitution.

Parts of southern Africa, like Botswana, have upwards of 30% of their populations infected with AIDS or HIV. I'm sorry, but we just don't have that problem here, which is very good. America is also one of the breadbaskets of the world, which means we can not only provide enough food for ourselves, but for export to other parts of the world. Zimbabwe cannot say the same.

The literacy rates in places like Zimbabwe and India are far below those of the USA, not to mention the fact that girls are actually allowed to attend school en masse. And despite problems in our education system, we have a wide variety of options for expanding our educations.

I've been to Singapore, too, and I can tell you, they geographically don't have the room for growth that we are capable of. Not to mention that to ever own a piece of property, which in all likelihood would be a condo or flat, you have to take a mortgage that lasts 40-100 years.

There are a serious number of challenges and imbalances that have piled up over the years, but we just pigeonhole ourselves by comparing ourselves to a place like Zimbabwe. And despite currency and market challenges, America has hell of a lot going for it. Even the perma-bears will eventually realize that pessimism leaves everyone broke. It may take over a decade to work off some of the excesses that have piled up and it probably won't be that fun. But I've been to almost every continent and over 30 countries, and I can say that America is unique. Remember that the turbulence of the 60's and 70's gave birth to some of the founders of America's greatest companies (Apple and Microsoft for example). So now is not the time to give up.

Anyways, just wanted to say that whatever may come, America has some serious competitive advantages and I think America is here to stay, even if a worst case scenario plays out. I'm also encouraged by Obama bringing Paul Volcker into the fold as well as keeping Robert Gates on, which is an encouraging sign of bipartisanship. I personally hope we get a new SEC chairman and can keep TRANSPARENCY in the market. Also, does anyone else think it is ridiculous that hedge funds and I-banks were allowed to leverage up 40:1, which is a big culprit in this whole mess?

Also remember that Peter Schiff was recommending the New Zealand dollar before it tanked and NZT at 15 (now at 6.50). Good luck everyone and thanks for all the hard work Josh.

Stocks Put In A Very Bullish Session Across The Board With One Big Problem: No Volume

Stocks put in a very impressive drive higher as another round of short-squeezing hit investors who were a little too heavily short coming into today. The reason why I would call this another short-squeeze rally is that, once again, volume has fallen on a day where the market rallies an extreme amount.

If you are playing the indexes on an intraday or very short term basis, the volume is not important and all you will need to focus on is the price action. Then you either move with the trend and/or use support and resistance on price charts to implement your methodology. However, when it comes to wanting to build stock/option positions over a period of time and reap the huge rewards that come to those who invest with those, you need to see volume expand on the rallies and retreat on the pullbacks before you can feel confident to go all-in long with full margin.

Until we find volume showing up on the rallies on the indexes, with pullbacks showing lower volume, and then while that happens see leading stocks at the top of the industry group list leading with the individual leading stocks in those sectors setting up and/or breaking out, there is no reason for active-investors who have a track record of making money on the long side in bull markets to go long.

Only once our setups come again (which a few are STARTING to show up) and then fulfill their basing period to launch off that springboard, will it be okay with me to tell you to start loading up your portfolio and watchlist with the best looking stocks.

However, this scenario does not appear to be happening off this low volume rally attempt off the lows. While it could lead to a possible higher high that could then help all of these stocks go from choppy and volatile patterns to nice and round pattern, the majority of stocks are still in very heavy downtrends.

Even banks that have been bailed out are bouncing on mediocre volume and even though BOP is turning green ultimately these stocks have to see massive financial investments by big money managers before they will finally settle and start to build higher highs. But not only are the banks very important to bottom before we can look for a rally but tech stocks must try to work on building bottoms before I can turn bullish. Why? technology is what brings us our most innovative companies.

However, the truth is, not until these stocks AND LEADING STOCKS at the top of the industry group list are rallying hard on the up days and either not losing money or gaining a little on down days, we just will not have a market that is going to be a long-term uptrend. A bear market rally can make us a lot of money. Go study my Past Big Winners from 2000-2002 to prove that even in a bear market, as long as it doesn't turn into a market like the 1930s and now, will always have a few stocks that make us big money.

While we didn't have any this downtrend, we did have DGLY and PDO that did fairly well from April to June. Since then, there has been NOTHING. I have never seen that before. The good news for me mentally, to prepare myself for this year, was last year. For the first time since late 2002, I started to have more "near-perfect" to "perfect" (only stocks like the one that starts with A and the one that starts with C are potential future candidates) stocks fail instead of rally. From 2002-early 2007, when a stock would setup in a pattern like HRZ, AFSI, or any of the others I posted, they would start to work and then fail. This was something I was not used to and scared me that my style was "known."

The great news is APPY, DGLY, and PDO ended up setting up in these near-perfect to perfect patterns after so many of the other failures and these ended up working anywhere from 60% to 100% to 350%. So as you can see even if I am 50% (which is only that bad in bear markets and the end of bull markets), if you have a 50% gain, 10% loss, 100% gain, 7% loss, 350% gain, and then 10% loss in your six picks in a bull market, you have just made a LOT of money. Do this consistently in a bull market and you will have no problem getting wealthy.

But for now we have to continue to wait for something to setup and breakout correctly before we close all of our shorts, stop going short, consider buying gold, consider selling the dollar short, and/or staying in cash. Only once I get a real Follow-Through Day in the stock market with leading stocks in leading sectors and BEAUTIFUL chart patterns like those that showed up in 99 and 03 will I even consider going long. For now the right side is the short side on the overall big trend. The very short term trader was smart to play the rally this week that I completely expected to happen since Thursday/Friday of last week. However, I didn't think the day before Thanksgiving would be such a huge day of gains. The good news is that some recent shorts are still setup for possible big gains. I sure would hate to see a short term rally kill some great potential short setups that just setup. There was a lot of downside potential.

However, you can guarantee I will be more than happy to take losses or less gains on my new shorts just to have a bull market where I could go heavily long again. I am ready to make my huge gains on the long side. However, at the same time, I love making a little bit of money and saving all of my money for those future moments when I can go fully long stocks like TASR, TZOO, SINA, SOHU, and NTES. Even if they are the HIL, EPIC, EGHT, USNA, SSYS, or FMDAY setups, I will be more than happy and very wealthy after seeing these patterns again. Pray that we do. I really hope the long side isn't dead for a long time. I love those gains and as you can see via the Past Big Winners it is obvious that being long is a lot more fun and pretty than being short. Even when you make money on the short side, you still don't feel good. Because you know so many financially foolish people are not only not short (because they do not even know what that means) but they are still almost fully long either mutual funds or stocks that they are getting matching contributions from in their 401k.

I tell you what, I sure would like to help everyone out and tell you that it is time to go long beautiful charts and CANSLIM stocks for some huge gains. But we are still far away from that and I will continue to make you as much money as possible in this market that is very hard for stock pickers to make money in. Even ETFs are not easy. There are only a FEW that can handle the short term movements of these instruments. STUDY ALL OF MY PAST BIG WINNERS IN THE RAGING BULL MARKETS and then the rest in the other markets. If you do this I hope you understand that messing with ETFs in a bull market will cost you a LOT of money. In bear markets, I can understand using 2x to 3x inverse short ETFs in your IRA to make money but unless you are nailing them and are fully confident investing like this, going short my shorts of past leading stocks breaking down has been proven HISTORICALLY since Livermore's time and even before that that is the best way to create wealth in a bear market. I don't think Livermore would have traded ETFs. :)

I just want to wish every a very HAPPY THANKSGIVING. I love everyone of you that read these daily market wrap ups. I also want to let you all know that Seeking Alpha has let me know it is good to start contributing articles and the more the better. So I plan on trying to write one to two a day. If they don't get published there, by chance, I will post them on other sites, so that everyone can read them. I will start this weekend with my Seeking Alpha post and I will also post 3-5 past shorts that made big gains in 07-08 and will show one short from 2000-2002. I will add many others from other downtrend periods to show you how to make money going short. But I will start slow and add when I have time to the Past Big Winners Shorts area.

This site takes over 6-12 hours to take care of on the Platinum, Gold, Silver, and Free side so I already work really hard. My own personal managing of my trading accounts take around 30 minutes to 2 hours depending on the market, so time as you can see is very hard to come by. But I'll find it someway. I am very thankful that I have a hard work ethic. Hopefully, I am saving you from the WS lies and at the same time making you a LOT of money. That is something you all are hopefully VERY THANKFUL for. Happy Thanksgiving!!! God bless!!!! and I will see you on Friday. :)

Part one and part two full size versions available on the Gold Forums, including a 35 minute part three from yesterday in .wmv format. You will need to download it to your computer or open it up to play it. Some have no problem going directly to the link but for others I provided the link to the .wmv file. Free part one small version available shortly:

Major Market Indexes End Mixed As Volume Declines As We Head For The Thanksgiving Holiday

Today was a mixed session for the indexes but I have to admit that underneath it all there were actually some short-term bullish developments. Now, before you get too excited, remember, we are in a very hardcore downtrend and our shorts from May-now have paid off extremely well. The bottom pickers have been destroyed and the "value" trap bag-holders tell you that in the future it will be higher. Yeah, right, Scott Rothbart. You are about as helpful as nothing to mom and pops. Thanks for helping make them go broke with your investment strategy. Try not attacking RevShark next time for his wise advice.

Oops, went off on another rant. LOL. Anyways, the bottom line is that the "value" trap guys have been wrong all year long and as you can see via mutual funds and 99.99% of them being lower for the year this advice has decimated peoples accounts. The great news, for those that are a bit more active in their money management, have done very well by following the advice of this site and a few other gems or by reading the technical picture of the market correctly on your charts.

Charts do work and any fundamental nut that is down over 40% plus this year that tells you they do not need to review my longs and soon my shorts on my site. By following the trend of the market and by learning how the biggest gainers and losers of the past acted, you too can become very wealthy at this game. And that for sure is one thing to be thankful for.

I don't want to spend much time here as I know everyone is strapped for time. If you want to know more about the general market picture and fill your brain with more TRUTHS and FACTS from the charts instead of fear and mongering (lol) by the media and news print, please watch the video. For those of you that are subscribers to the Gold or Platinum areas please make sure you watch video two tonight.

I am not sure if you watch every night as I know quite a few of you are extremely busy but tonight is a wise night to review the video because I will be going over the stocks that look good now (which are a lot more than we have seen the entire downtrend; a slight positive), the shorts, and then our new short and why it is almost perfect. It is the perfect test short for those investors to the site that are new and do not have much experience with shorts.

Also if you are new, you don't have to fear shorting. I had a subscriber mention to me they didn't understand margin or shorting. So while I was a bit surprised someone didn't know or understand this, which is very much okay, by the way (we were all new at once--this paid site is just a bit more advanced that is all and it was never seen before). If that is the case, then I do not want you to play around with any short even if it is a near-perfect setup. But as long as you understand what "a short" is and do know how margin works (helps to understand it the better so you never get "called in") the new short is a good test short.

Just remember, everyone, the market is very crazy right now, moving up and down on very mixed volume. Without a clear trend, institutional investors are not likely to get really active. But they can never sit still so eventually I will find some of the stocks they are still buying. The new long today might be one of those kind of stocks. CANSLIM investors feel free to do your research. There are a few gems out there. Just don't tell the idiots that have lost a LOT OF PEOPLE a LOT OF MONEY.

Remember everyone, wall street DISGUST ME! The lies and greed is disgusting and I have had enough of it!! I left NYC in 2000 when the Nasdaq topped and knew I got out while the getting was good. Even though I am relatively new to the whole investing scene, you can be sure that I will be here forever helping to make you a LOT of money with me, save your family from financial ruin during bear markets, and helping to make you an overall smarter investor so as you get older you will keep your money and not be hit with a big shock. Don't think I advise 90 year old widowers to buy 100% growth stocks.

Also, one other disclaimer, OBVIOUSLY not all of wall street is a crook. But come on. How many guys on TV told you to buy stocks that are now down 50% plus. Buy and hold. Nope. Buy and die. There is only one way to invest in the stock market. You must be an active investor and at LEAST look at it for 5 minutes a day. And that would be ONLY if you looked and bought my longs, shorts, and sold my sells/covers. You wouldn't learn anything but in time you would make money. But when I die, how will that have helped you.

I plan on doing this forever but tomorrow is never guaranteed. I am here to help with as much as fast as I can. I will be very thankful if just one of you in return helps others who are helpless and bound by wall streets fear, if I do die and can't do this.

However, I plan on living to be 100, if I can, so hopefully this is all just semantics. ;) If you are going to be on the road and will not see this till Monday, I hope you have a safe trip, God bless you, and I hope you stuff yourself silly with great memories and great food. Please, please, please, do not drink and drive. If you do that I promise to have past big winners of short examples when you return. :)

If you will be here the whole week, I'll see you in the forums or in the chat room. It is very nice to have only one full day left this week. All of us that have worked EVERY DAY during this downtrend (even when I had my MS flare-ups) deserve a full break. Even though I will be here on Friday, I will only be updating the longs, shorts, and partial forum sections. I plan on spending a lot of time this week away from the market. But after I get back from Church on Sunday, I plan on working my little butt off posting past shorts while watching football. There will be no commentary this weekend. Tomorrow will be the last written report for the week but there will be a part one video on Friday.

I'll see you tomorrow. If you are going to be traveling, be safe! Happy Thanksgiving.

Part one and part two are available on the Gold forums for Gold and Platinum members. Free small video is posted below:

No Suprises Here As Another Typical Lower Volume Short-Covering Holiday Session Ends With The Market Putting In Huge Gains

Wow. What a great two days we have had. Or so it seems from the outside to the neophyte. But to the experienced professional it was clear what we had here was your typical low volume short covering pre-Thanksgiving rally.

I might have said it here this Friday or not but I told my chat room that I expected us to rally all week long, this week, with volume contracting every day. So far we have started that right. We will see if this continues tomorrow with another up session on lower volume. As this rally goes along and gets closer to the 50 day moving average, we should see it put it smaller and smaller gains. If this happens, not only would I not be surprised at all but I will be preparing to take this market back to the short side if it does fail at either the key 50 or 200 day moving average.

The only real surprise would either be us closing lower for the week, which seems unlikely after today--but in this market anything is possible. The other surprise would completely be if we continued to gather steam on this rally and were soon taking out the 50 day moving average on strong volume. However, I would not count on that with the lack of leaders in this market.

About the only real good new to report about today's rally is that bank stocks participated, unlike on Friday. I honestly believe we must see banks stocks move higher along with us finding new leadership for us to build on to any real gains. Without the banks finding a bottom or leading stocks showing up, there is no way I can get excited and call a bottom.

And like I have said before, the fact that volume is lower on Thursday, Friday, and Monday compared to either the biggest volume day in September or October tells us a lot about this actually being a "capitulation" bottom. Let me give all of you a hint that will save yourself from looking real stupid: before you make any opinions on ANY move in the market, first look at the volume. I hate people calling bottoms or tops when either volume or the actual price action does not support the case for that comment at all. There is no greater way to look foolish than to try to call bottoms OVER AND OVER AND OVER.

There is one person who is not around much in the Platinum chatroom, and thus not surprisingly, is not in tune with the market and thus has attempted to call a bottom TWICE BEFORE THIS YEAR. That person can debate me on that but luckily we have chat transcripts and he is not on often so it will not be hard to prove that this is correct. The point being, by saying this, he has made himself look either foolish when it comes to the CLEAR history of the market or he is just so carefree he could care less. Either way, imo, it is very bad for business and your bottom line.

The bottom line tonight is: don't call this a bottom or a capitulation. There is no fear as evidenced by a put/call not hitting new highs, the VIX not hitting new intraday highs, and the investors intelligence survey showing more bulls and less bears than in October when the market was higher. This is one INSANE market and normal measurements of placing "values" (lies) on stocks is OUT THE WINDOW. What was once considered a "low" P/E is going to be in the future, more than likely, the "new high" P/E ratio.

Times are changing folks. Your lucky I can still find money making opportunities either with our ANCI long up 43% or our SDA short down (up for us) down 79%. No matter what this market does I am here to protect you from financial disaster and once (or if we ever) we see another bull market again you can be sure 300%, 500%, and 1000% gainers will be the outcome of our perfect setups that will appear once all the AMATEURS on and off wall-street are gone. I will be around. I just hope our market is to. I think I worry too much but nowadays I think that is a legitimate way to feel. Especially when you do this for a living and have a track record like mine.

Wall Street might not respect me but dang it if you care about your future I sure hope you do. I will save you from the lies of Wall Street. WS is full of crooks and I know how to beat them by being HONEST. It is a concept they should try. But that would ensure that they would lose money every year and be gone from the street.

Most of these crooks couldn't make an honest penny if their life depended on it. If not for commissions and up-front fees they would be BROKE and jobless. They aren't traders/investors, they are sellers of their own soul. Shame be on everyone that lost anyone money. You should be ashamed of yourself and pay back some of the losses you put your clients through. But that would be a moral stretch for those secular nuts on the Street. So don't expect that to happen.

Sorry for the editorial but after watching another bailout, I felt I deserved to express my opinion. That is if you can still do that in this country.

Part one and part two full size versions available on the Gold forums. Free small version of part one available below:

Stocks Produce A Beautiful Rally On Mixed Volume; Yesterday Was Not Capitulation As There Was Not Enough Volume Or Fear

Friday was indeed a very bullish session and the good news to some market players was that volume was higher on the NYSE and almost at the same level as it was on the Nasdaq from Thursday. The other good news to some was the fact that most of the indexes made up all the losses from the day before. This all seems bullish on the short term but I think it is wise to look at the big picture before jumping to any conclusions.

First off, I don't want to poo-poo on the rally we had Friday as I will admit I am just happy to see more green with a pickup in volume. However, we have to be realistic and look at history as our guide for the now and future. If we study history we will see that the best bull markets do not start with a powerful day one. No, instead, history shows that most day ones are a quiet new low, reversal, and then a higher up day.

Where the big gains come is normally on day two of the rally or on the Follow-Through Day. The fact that we rallied so hard after such a big down day shows me that this market is not making a low and in fact is still extremely confused. The fact that volume was lower on the tech heavy Nasdaq proves that institutional investors were not stepping all over each other to load up on stocks. But the higher volume on the NYSE did indicate that big investors did find some bargains with the NYSE/SP stocks.

Now with Friday's gains I heard a few people make mention that Thursday was a capitulation day. I am sorry everyone, if you are not experienced it is not your fault that you do not fully understand a capitulation day. Luckily, for you, I do. And what a capitulation day would look like on the index would be similar to the price and volume action in ARB. Forgetting Thursday and Friday, ARB put in a very nasty selloff on HUGE volume after being in a downtrend for a very long time. This appeared to me to be capitulation on the stock. However, in a very weak market, they can keep going lower and this one did. But, if that volume surge would have come on the indexes on Thursday, that came in ARB on Wednesday, then after Friday's gains, I could probably say that "yes, indeed, this was a capitulation day." Too bad I can't do that with the action on Thursday.

So what does this mean? Easy, it means that we are still in a very vicious downtrend on all time frames except the most short-term. Besides this very short-term time frame, the trend is still very much down from the October 2007 highs and with the general stock market indexes being so extended from the 50 and 200 day moving averages, it is near impossible to think a healthy rally can start any time soon with all that resistance above.

If we can continue to move lower on lower volume and then base out near the lows for a while, I would be much more bullish in a resumption of an uptrend. However, the damage keeps coming and every stock that continues to hold up in this bear market eventually gets taken out. This kind of action keeps the despair rolling and ensures that the capitulation fear that we need will not come.

When you have the indexes with D accumulation/distribution averages and the leading IBD indexes with low C's, you can be sure it is not time to go long stocks. I mean heck only 4% of all stocks are above the 50 day moving average, with only 3% above the 200 day moving average. Combine that with the constant inability of any stock to make a new 52-week high and we are looking at a market that can still go much lower.

Don't forget as we hit new lows on the index, the amount of new 52-week lows has only expanded to 2,300. Back in October when we had over 4,700 new 52-week lows. So until this number can take out the 4,700 new lows set in October, I doubt we have this bottom some are looking for right now.

The other problem is that the VIX is still below the old highs it hit when prices were higher. Now the VIX did have a new closing high at 80 but it still has not moved above the 89 level it hit in October. So until we go over 89 I can't see that we got fearful enough to have a bottom.

The last problem with calling a bottom here continues to be the MAIN TELL of mine that we did not bottom in October with an 89 VIX or 4,700 new lows. What is that? That is the put/call ratio which has always been an excellent gauge for judging fear. The problem here is that since the downtrend went into major effect in September the highest it has closed has been 1.25 I believe on Wednesday of this week (if I am a little off, trust me it is OK). Now, while that is over 1.00 and shows some fear what it does not show is nearly the levels of fear that was in the market back in March of 2008. Back then when banks were falling all over each other and the collapsing of BSC and LEH started, the put/call hit 1.50 to 1.60 (I can't remember the exact number but I do know the range). This extremely high reading did not have new lows, VIX, and investors intelligence confirm with it to give us a new low.

However, recently, we have seen extreme levels in new lows, VIX, and until recently the investors intelligence survey. The only thing missing this time was the put/call. And without the put/call confirming a bottom with the rest of the indicators, there is no way we can look for or call a bottom here. Especially with the lack of "hot" stocks building bases out there.

If you are a Silver, Gold, or Platinum member you have seen either on the longs website, videos, forums, or in the chat room a few stocks that I am keeping my eye on for potential bottoms with the possibility of working on the right side of a base. There are a few stocks with very pretty chart patterns but they are way too early and until they setup correctly and A LOT MORE STOCKS start showing up in nice bases with green BOP and heavy accumulation with low distribution there is no way I can look for any bottom here much less want to get long anything.

I tell you what, while everyone goes broke trying to find the bottom, I will continue to let my shorts run, will keep new shorts small as they are not acting right IMMEDIATELY, and will watch my long scans that bring up stocks making nice bases for potential future longs. Until a better setup comes with shorts or longs, I will continue to be happy being in cash on the sidelines. It is not returning much but it sure beats being down over 50% like SO MANY MUTUAL FUNDS ARE THIS YEAR.

I will tell you all the safest thing you can do, if you feel antsy to get long. JUST WAIT! Be patient. Wait for strong accumulation to enter the indexes, wait for the 50 DMA to trend up with price taking it out on the upside, wait for beautiful chart patterns to setup in top notch stocks, and wait to go all-in on full margin in the next uptrend until a "perfect" setup comes and breaks out. If you will just be patient here, let the downtrend take care of our shorts, and then wait to get long when the time is right you will be a much more wealthier investor than if you listened to Cramer.

I know I am hard on Cramer a lot but that fool cost a LOT of people their jobs at TSCM that deserved to still be there. What makes it worse is that his Action Alert Portfolio is down almost 48% this year alone and his average annual returns since 2002 is a terrific -26% which has turned a starting balance of $3,800,000 into $1,900,000. Yet this guy post 10 blog entries a day, is on CNBC left and right, and tells people how to invest in over 8000 stocks. This jerkoff has cost a TON OF PEOPLE A LOT OF MONEY and I find it INSULTING beyond all comprehension that this is the crap CNBC gives the public.

However, the public is to blame just as much for letting someone like this guy actually control their investing life. The public is the one that decides to watch this annually -26% and YTD down -48% fool give them advice on stocks. How are all those energy plays working out?

I don't know folks but with me up almost 36% in my top account and down -7.4% in the account that was given to me on November 2007 which is also not a shorting account due to safety reason (real safe huh), I find it sad that I can not reach more people to save them from the LIES and 100% DECEPTION of Cramer. He says he wants to make you money. It sure doesn't look like it. I, on the other hand, want to make you a TON OF MONEY and save you a TON OF MONEY in a bear market. I don't want you averaging down in stocks like GS, XOM, C, PNC, and anything else that is falling like a rock. He is long around 40 stocks and every single one is down. I am long 3 stocks and 2 are up while one holds onto support with small gains. On top of that I am short 37 stocks with major gains. Where are these shorts with ANYONE on TSCM?

Folks, it is truly sad the way wall street is. These people know how to talk SMART about stocks. But they have NO CLUE how to make money in the market. Fleckenstein nailed the 2000 crash in 1998. Too bad he didn't go long any of the 500% to 1500% stocks that moved that much in months during 98-the top in 00. He was right, yet OH SO WRONG. Same thing with Peter Schiff. Way to go! You nailed the future. But why are you down 40% YTD?

These guys can be right about the future a lot and they get major media play when their predictions finally come to pass. But what the morons in the media forget to tell you is that there were a TON of stocks that made big gains in 98 and 99 and there were a ton of stocks that made big gains from 05-07. Too bad these guys were predicting the worst, which is coming to pass, without profiting from it at all. The bottom line is: if you can predict the future with such amazing accuracy, you shouldn't be losing money in the market. What good are your predictions, if you can't make money off of them? Peter and others have been right, yet OH SO WRONG FOR SO LONG. When will the public learn? I don't know but I thank God every day for those of you that are at least reading this. You will continue to be saved, as long as you operate like me. You go against what I say, then you deserve to lose money. I have not missed a major market turn, by using charts, since 1997. I think after 11 years of accuracy it is time for more people to make sure they are in lock step with me.

Have a great weekend everyone, enjoy the upcoming Thanksgiving holiday, stay positive, and I will be back here on Monday with Monday's market wrap and video. ALOHA and Happy Thanksgiving to all of those of you who will be traveling. Gobble, gobble!

FULL SIZE VERSION OF PART ONE (10 MINS) AND PART TWO (20 MINS) ARE AVAILABLE IN THE GOLD FORUMS. FREE SMALL SIZE VERSION OF PART ONE BELOW:

Stocks Continue The Selloff With Volume Finally Picking Up On The Selling

Today can be called nothing other than nasty as most of the indexes made round trips back to either six-year or eleven-year lows, following a nasty selloff that came on very heavy volume. Volume picked up on every exchange as finally some signs of panic selling hit the market.

This selling took the markets off around 5% to 6% and a lot of stocks were just walloped. Now while I have continued to talk about the nasty downtrend this market is in and how well my shorts have been doing: top short holdings and total returns: IPHS 44% POT 65% GGB 72% SBAC 66% CYT 69% MOS 74% CETV 89% CPRT 28% AZO 24% RDK 17% AMX 49% PLCE 38% CAJ 34% SPG 52% CEO 51% AAPL 50% ENB 24% K 18% ARB 67% AMSG 20% SPW 77% RIMM 58% LLL 37% CEDC 65% APD 55% OKE 46% SDA 80% TITN 59% PAA 28%). I don't believe I have seen the market in such a bleak condition in a long time and think I need to tell you about the lack of bullish items out there.

To start it all off only 3% of stocks in the market are above the 200 day moving average and to make it worse only 4% of those stocks are above their 50 day moving averages. I personally have never seen numbers this low on both indexes. If I have, I can not remember it. To top that off, the amount of stocks hitting a new 52-week high compared to stocks hitting a new 52-week low really showed some extreme readings today. Now while we have had 4,700 new lows at one point just last month which signaled over half the market making new lows, there were still more than just one stock hitting new highs. Today, however, there was only one stock that hit a new high and there were 2,300+ stocks hitting new 52-week lows. This is just an incredible number.

What makes this selloff worse for bulls is also the fact that there is almost nothing setting up out there as possible future longs. Until yesterday and today, there was at least two handfuls left of stocks that looked like they could be longs in the future. After the past two days, it has become apparent that only COGT, a stock I am long, CWT, and HTX are the only stocks that still have that beautiful green to max green BOP, strong accumulation, and price above the 50 day moving average. This is such a low amount of possible future longs that I am just amazed that this can actually be happening.

The good news on the other side of this is my shorts and those great returns they are giving me. The only problem is that I did not have the time or the "near-perfect" setups to help me get more than 20%, on margin, short. Other subscribers with more guts than me have gains between 60% and 120%. Axman, Wutan, Author Ego, Mjjacobs, and myself all have strong gains of at least 30% and I have many other members with gains or small losses. Axman is by far the greatest of the great and that should be no surprise to those that know that he has been around since 1987. That kind of experience, as you can tell, has paid off. Now, if someone like Axman can get a 120% gain in a market that is down over 50% from the highs of last year, wouldn't you want to make the commitment to be the same trader/investor that he is? I know I want to and I know that I will. When I have the years of experience that this great trader has, I know I will get the returns he does.

My problem right now is that I did not expect this market to turn down so fast so I thought I had time to wait for better setups and I did not think it would be this bad this fast. Thus I missed out on really exploiting my gains to the fullest (which would be a 150% gain with the individual returns in my shorts) and now am waiting for a new bull market to start for me to get maxed out to the long side with the new CANSLIM leading stocks.

I will probably be waiting a while as the markets have E ratings on the NYSE, DJIA, and SP 500, a D- rating on the Nasdaq, and C+ ratings on the IBD 100 and IBD 85-85. Until these accumulation/distribution ratings in IBD hit A or B, it is definitely smarter to stay on the short side or if you are new or have taken a lot of your short profits to be heavily in cash. Nothing is wrong with being long cash right now. Since the US Dollar took out the 50 and 200 DMA the future alone is up 18%. I do not play the Dollar index futures but I assume in the futures market you could have made a lot of money by playing the Dollar like that.

This market is getting harder to handle day by day but I know the more we selloff and the higher the volume gets, the closer we get to a bottom. With that kind of positive outlook and a history of getting some amazing returns in fresh bull markets, there is no way I can give up on the market right here. I might be a little down, but I am never out.

Today was an incredibly tough day for me as I had a lot of little "life problems" happen left and right today. At least my shorts are taking a little care of me, even if the market isn't taking care of anyone. This is why the biggest gamble ever is buy and hold: F and GM. What a joke that whole story is.

This is a site designed to make you a TON of money in bull and bear markets. This is not a site to disect news and the automobile industry. All I can tell you is that I believe in extremely low taxes, free competition. little government regulation, and more incentives to have more IPOs come public. If that makes me a staunch Capitalist, then whatever and so be it. I know what it will take to turn this market around and I guarantee it isn't bailouts. On that note, have a great day/afternoon/evening/night and I will see you after the next closing bell.

Aloha from the beautiful island of Maui where traffic gets more and more congested every day.

Part one and part two, full size version, of the Daily Market Wrap Videos are available to Gold and Platinum subscribers on the Gold Forums. Free version below:

The Recent Rally Attempt Is Dead After Three Out Of Four Indexes Make New 52-Week Lows

It was a brutal day if you were a falling knife catcher as the market took those impatient bulls who believed the lows were in out and beat them silly with a 6.5% loss on the Nasdaq, a 6.6% loss on the NYSE, and a 6.1% loss on the SP 500. The losses were made even more damaging by the fact that they hit new lows from the recent rally attempt and volume picked up giving the market a very heavy distribution day.

This distribution day adds to the pressure the market is facing as each and every day passes. The market in terms of the Nasdaq and Nasdaq 100 are now down over 51% from the October 2007 highs. These losses have been extremely damaging to the psychology of many market players and has done some major damage to individuals portfolios.

This sad news is made even more sad knowing that the market does not appear to be near a low--at least as far as the market is currently concerned. This is obvious to me via the volume that is coming across the board on the indexes.

The volume is below average to average during this selloff and while that appears good for those expecting the market to turn around quickly, the fact is that low volume selling can last a long time and do some major damage to individual's portfolios. The low volume can go on for a long time and wear on people which can be much worse than a fast swooning market that hits bottom and turns on capitulatory volume. This turn is obvious to a lot of technicians and causes general excitement to enter the market. The lack of a turn like that prevents any excitement to enter the market and you are left with nothing but pain as the slow drop burns in.

I have produced two videos tonight that go into detail about how the current market looks, how the longs and shorts look, and how the capitulation in one of my wonderful short positions (ARB 65% gain in a little under two full months) is what we need the market to look like before we can call any drop capitulation. Even if we get a selloff around 10% across the board, if volume is just slightly above average, average, or below average, you can be sure that that action will not be called a capitulation day.

The most ignorant of market operators might call it capitulation but those of you wise enough to read this blog and protect yourself from the lies of CNBC know that we will need a massive volume surge like in 1987, or in ARB today for example, before we can even consider the market near a capitulation bottom.

Something tells me that simply is not going to happen because we have a very bad market environment out there. We have multiple banks racing toward zero, GM and F racing toward zero, and a failing airline industry that has every single one of the major airliners priced below $12 a share. This is not conditions that are good for a turnaround and instead, along with the horrible economic data coming out, is conditions good for a market that could easily lose another 20% to even 50%.

I know this is horrible to think but some of you are very smart and understand charts. I am not speaking to those that read this and do not understand what I am talking about. While I want to help them and would love to as they should see via my returns in shorts like GGB 68% ARB 65% CEDC 61% SBAC 61% SPG 51% SPW 73% CYT 63% POT 60% SDA 77% CETV 86% APD 50% RIMM 54% MOS 66% ATHR 53% TITN 54% CEO 47% AMX 47% CPRT 28% ENB 18% PLCE 35% IPHS 35% CAJ 37% LLL 30% RDK 16% OKE 38% PAA 18% AAPL 46%, I can not force them to listen to me if they are biased to buying bargains. My returns speak for themselves and if you review my best longs from 1999-early 2008 you can see using this methodology (at least learning this methodology; not necessarily listening to me) that you can make a TON of money on the long side and a LOT of money to the short side.

Now getting back to an important technical pattern I want you all to look at, I just want you to take a look at a quarterly chart of the Nasdaq. This chart will be very disturbing to look at for those that understand how important accumulation and distribution is. But we must look at it to prepare ourselves for the worst case scenario. All the while being prepared by watching stocks like COGT for a possible bull market. However, this chart paints a very ominous picture and it is clearly noticeable to good technicians after an immediate glance.

In case you are not good enough to see the disturbing situation let me try to describe it for you. While the market rallied all throughout the nineties you can see that as each quarter came and went the market would work its way higher on stronger and stronger volume. If it did have a down quarter it was on lower volume 5! of the 7 quarters the market actually pulled back from late 1990-2000.

Since the end of 1999, however, we have the almost opposite and an even more disturbing situation. Since the start of the new century the market started off down 10 of the first 13 quarters. Not only was it down but it was down on very heavy volume nine of the ten times. After five of six quarters of rallying, during a time the market was in an uptrend, the market managed to have four out of five down quarters yet the market still made slight progress. Three of the four down quarters had heavy volume and was much heavier than the one up week yet bulls overall held.

Right after that, there were six of eight quarters higher but the two quarters in the middle had very heavy distribution compared to the six quarters of the rally. After that, the Nasdaq had five quarters of flat to slightly down price action. During those five quarters, three of them showed very heavy distribution on slight down days. The heavy distribution was so heavy that it was the top three highest quarterly volume bars ever. All three were quarters where the price of the market finished lower than the quarter before.

All of this distribution is now very bearish but before the selloff you can see was a very bearish warning. Those that listened to the voice of the market (price AND VOLUME) could clearly see and hear that major distribution had taken over. Those big three down quarters of record volume has since been surpassed by one of the worst quarters ever in the history of the stock market since a 45% decline in the DJIA in 1932. That is this quarter's 42% loss on the Nasdaq on volume that is the largest EVER for quarterly volume. That largest volume ever with all those distribution quarters makes the Nasdaq look extremely sick.

And if you think there is much safety in the NYSE you are wrong about that. The NYSE had its highest quarterly volume ever during a down quarter in 2007. So while the quarterly volume selloff is not nearly as high as on the Nasdaq, the Nasdaq is full of technology and innovative growth companies that usually go on to make bigger price gains. That excitement and powerful gains was a hallmark of the Nasdaq during the 80s and 90s and was from 2003-2007 (mainly 2003 and 2004). Though the last rally during that time was NOTHING like the eighties and nineties, it still produced stocks like TASR that returned 2,390%.

Those kind of gains in a bull market combined with 86% gains from stocks like CETV in a bear market eventually leads to substantial wealth. Just do not forget about those taxes! I hope everyone had a good day, survived all the BS from the media, and with your updated watchlist are ready for tomorrow. Have a great day/afternoon/evening/night!



Part two (17 minutes) is available for Gold and Platinum members in the Gold Forums. Full size Part One is also available there.

Bullish Intraday Reversal On Higher Volume Sets Us Up For A Relief Rally

I don't know how long this rally attempt will last or if it will even last. What I do know is how to prepare for either a market that is about to rally or prepare for a market that is going to go right back to its usual downtrend before we know it.

Right now, the market is in a very long term downtrend but on the short term, after the market reset its rally attempt on Thursday, things have been looking a little better each day. On Thursday the entire market staged a bullish reversal and ended up closing higher on stronger volume. After a lower volume session on Friday followed by an even lower volume session on Monday, today came with another bullish reversal and pick up in volume.

While this is good on the short-term it still is not an "all clear" sign that the market's downtrend is over. Instead what we have is a market that is putting in its second up day on day four of the rally attempt. This now puts the market in a situation where we can look for a follow-through day.

To me, what I must see on a follow-through day is more than one index up over 2% on volume higher than the day before. I also want to see this happen before the 11th day of the rally attempt. Anything after day 10 is increasingly prone to failure. The other requirement for the rally attempt to last longer than a few weeks is that I must see leading stocks in leading industries setup.

That still is not the case as only 3 of the top 10 industry groups hailed from the top 25% of industry groups. That means that leading stocks did not lead today, just like they did not lead on Thursday. Instead stocks that have been beaten up or are not showing leadership are the stocks doing well. That is never a good sign for a market rally.

This can also be confirmed in my scans as my BOP scans that produce stocks before they show up in my price/volume scans have gone completely empty. Tonight was one of the worst readings from the four scans that I have seen in a long time. This shows me that there is not much out there setting up and ready to go long and therefore this rally attempt will probably not end well.

For it to end well it will probably have to lead to another lower volume pullback that is followed by another higher volume rally. What we have so far is still way too early to be of any use to those that follow the trend of the general market and look to make big money on the long side when things are good.

Right now there are only a tad over 4.25% of all stocks over the 200 day moving average and only 10% stocks above the 40 day moving average. The fact that only 4% of the market is over the 200 DMA means that not a lot of stocks are going to show up in my scans as all of my longs BEFORE I GO LONG AND BEFORE THEIR HUGE GAINS that I show you on my Past Big Winners section have the price above the 50 DMA with the 50 DMA over the 200 DMA. So only 4% of the market can even be considered by me to be worthy of a long. That is extremely low and is indicative of a market not ready to rally.

If those numbers did not convince you, then maybe the lack of new highs will. Yesterday there were only 2 new 52-week highs on the Nasdaq, NYSE, and Amex. Today there were only five. This lack of leadership is going to be costly to any rally attempt.

Now that I have completely depressed anyone who was getting excited about a possible rally I do want to say that I am rooting for a rally as I would ALWAYS prefer to be long over being short. I will never have a short up like my TASR's 2,300% gain. Much less a nice 300% gain like HIL in 2003. As you can see the start of bull markets with a high VIX (we are still over 67) can produce some huge gains that can make you rich for years. However, when it is not time to go long it sure would be stupid to say "get long." Wouldn't that make me Cramer? And wouldn't that mean you are now down 42% this year? Not good for mom and pop.

The other clue that makes me think it is not time to get long off this rally attempt is that I still have had ZERO shorts give me FULL cover signals. That makes it 14 sessions in a row where I have not had one short that was a full cover. To go along with not having any full covers here are some of the gains in my top shorts that produced gains for me today: GGB 63% APD 44% SBAC 55% MOS 63% CYT 59% ATHR 50% PLCE 23% TITN 50% ARB 53% CAJ 34% SDA 75% CEO 42% SPG 41% CEDC 57%.

When you have returns like this on your shorts, the new shorts you take keep working, you have no full covers hit your top shorts and new shorts, and the longs that are showing up are not working, you can be sure that the only right thing to do is to continue to be short. The time to stop shorting will come sometime in the future and I will know exactly what to do when that time comes.

Until max green BOP, huge accumulation, low volume pullbacks, RS and moneystream lines hit new highs, and excellent well rounded price patterns show up in stocks that are turning around their EPS and sales or are building beautiful perfect chart patterns, there is nothing to do but wait it out with high levels of cash. That is unless you are an experienced short seller. If that is the case, you definitely want to operate this market until it is time to go back to being a bull.

For now the bear claws are still out, even though the bull is trying to get out of the gate. Remember, cash is your best friend right now. The last thing you should be doing now is chasing shorts lower in an attempt to make up for major losses to your portfolio. If you are thinking of going short here, think twice. We have been down for way too long and after 13 months of a bear market and with so many stocks being so far extended from their 50 day moving average you really put yourself at a high risk to make a move here. The right play is cash. Great luck out there and I will see you in the chat room!! Have a great day/afternoon/evening/night.

Gold and Platinum Members can watch my Daily Market Wrap Videos Part One and Part Two full screen versions in the Gold Forums now. Free and Silver Members youtube version below:

Stock Market Indexes Start The Week Off With A Low Volume Selloff; All Indexes Are Holding Thursday's Lows

Stocks did what they have been doing for the entire past thirteen months and that was finishing with a lower close. This weak close was made worse in that it was yet another volatile late day move. This time it was a rollover to the downside with the indexes finishing right near their lows-of-the-day.

This very weak close was very nasty to see but some consolation can be taken with the low volume that came with the selling. That lower volume was the second straight day of a lower volume pullback that has come since the reset of the rally attempt on Thursday.

On Thursday the market dipped to new lows on a few indexes that reset the previous rally attempt. However, by the close, the market reversed to a very bullish close on much higher volume. That put market players who have been watching this selling for thirteen months now in a better mood.

The pullback the past two days have made some pretty upset that the market can't hold onto the gains. However, these people refuse to look close enough to even understand that it is on lower volume and that there is a chance that we could rally and move higher for God knows how long.

The only problem with moving higher here is that I am without ANY leadership. There has not been one pullback or bear market that I have been in where there isn't at least one sector with more than 1 or 2 stocks moving up. Right now I have two medical stocks up over 30% since I went long but there should be more showing up with better chart patterns if this was a true bear market leader. The fact none of the brother or cousin stocks are showing up for possible breakouts is a bit worrisome.

I do have a new long tonight but there are two major problems with this long. First off it is below $5 a share. There is not one single stock out there that is a leader that is priced under $5. Now in a new and fresh bull market you can find a lot of stocks turning around their EPS, sales, and stock via a really bad bear market (like some of my best longs in 2002 and 2003). The only problem is that if this is not going to turn into an uptrending market, it might fall hard. The last problem is the fundamentals. I think all I need to tell you is that the EPS rating is a horrible 5. If that doesn't tell you how bad the numbers are nothing will.

But I will play any near-perfect setup for some lunch money, in case this market turns. If it doesn't, well then, I will make a good amount of money. I am still short 34 stocks and 33 out of 34 show a profit. The only one that does not was my most recent short and it still has not given a full cover signal. So there is still time for it to fail and work out in the long term. Even if it doesn't work, shorts like CEO 40% OKE 39% SDA 73% AMX 44% LLL 27% POT 57% APD 44% SPW 69% MOS 63% AAPL 45% GGB 62% ARB 48% CPRT 25% SBAC 53% IPHS 30% SPG 40% and CETV 85% more than make up for it.

This market is still in a primary downtrend and it doesn't look like anything wants to move up just yet so until it does keep that powder dry and your cash level very high.

By the way, I submitted a Worden Report on how to "survive a/this bear market" and I really hope he publishes it. I do make one reference to a few of my subscribers being up 60% to 80% and that might prevent it from publishing. But if he does publish it, look for it sometime this week or next week, as he did receive a lot he said. If he does not publish it, I will not be sad, instead I will publish it here. :)

Have a great day/afternoon/evening/night and I will see you tomorrow in the chat room. Like always and almost all day long like usual.

Gold and Platinum subscribers can watch full size versions of part one and part two in the Gold forums. Free part one youtube version below:

A Potential Relief Bounce Gives Way To A Very Ugly Close; At Least Volume Was Lower Than Yesterday

I know it is not much of a consolation for those who were wanting more than one up day but at least we can say volume was lower on today's selloff. Still that doesn't mask the pain that some people (not my subscribers) are suffering as the market retreats to a near 50% decline on all the major market indexes. Those that are forced to be long in either retirement plans or via the direction of their stockBROKErs are hurting badly in this market and today did nothing to make them feel better.

The only thing that I can say about today is that it was not necessarily completely unexpected. While the rally yesterday was a beautiful way to start a rally attempt it was still only day one and like I said yesterday one day does not a new rally make. The fact is we have to see another up day then on the fourth to seventh (or even the tenth) day of the rally attempt we have to see a day where the indexes are higher by a very strong amount and do so on volume much higher than the day before.

Some people get excited over any and all follow-through day attempts. But when you come from a selloff on heavy volume, then have an up day of only 1%, and volume is only slightly higher than the day before, the chances are high that the follow-through day will fail. So you have to remember that this is a science and an art. I have learned how to correctly identify good rallies and bad by being involved in the stock market for almost fourteen years. The recent action yesterday was bullish but today was disappointing but not a final nail in the coffin.

What it was was a nasty pullback but not a deadly pullback. The trend all year long has been down and once again today was an extremely profitable day for my shorts (33 shorts and 32 produced gains! and this comes after the 32 for 32 winners on Wednesday) so you think I would be very happy that today was such a nice down day. That is the case for me monetarily but overall I am getting a little glum looking at all the red.

The worst part is that there is not a single one of my shorts that is giving me a full cover signal. Even after yesterday's rally attempt, there was a huge clue that the market was not going to blast off immediately. That clue was found in my personal shorts. Since almost all of them show decent to large gains, most of them are in a position where they are down enough that if a new rally were to start some obvious reversal patterns would emerge with huge price reversals, strong volume, and BOP going positive or green or even max green. when I see this I know it is time to leave my shorts. Yesterday, I did not see this and thus only covered a partial amount of my shorts and not covering the full amount of any of them. This payed off nicely today helping put my account at new YTD highs with a 31% gain.

I will admit that I am very disappointed with my gains because as you can see via my individual shorts I should be up over 100% this year had I used full margin. Here are the individual returns of my shorts after today. Included in the list is one long that was up today. ANCI 49% (SDA 72% SPW 71% SPG 35% GGB 60% ARB 46% RIMM 59% CPRT 20% TITN 50% RDK 15% MOS 62% PLCE 18% OKE 38% AMX 44% AZO 14% AAPL 44% CETV 80% ATHR 50% CEO 40% CYT 57% POT 56% CAJ 32% CEDC 56% APD 43% IPHS 23% LLL 26% SBAC 51%).

As you can see I have done very well this year shorting the market. If I would have used puts, I would have done even better. So why am I not up over 100% this year? Because the most short I have been in my accounts is 20%. I have not gone over 20% short because I was waiting for a "perfect" short setup like I saw in 2000, 2001, and 2002. So far I have not seen a "perfect" setup and thus have not taken a huge short position yet. They have all been moderate to small. This has cost me a lot of potential profits and I should easily be up over 100% this year.

Even though I am disappointed in myself, there are three subscribers that are up over 60% this year, that I know of. Wutan, Author Ego, and Axman are all up over 60% with a couple of them up 80%. This is due to them using a lot more of their account when they went short either the stock picks I made or the stock picks they made. Rather it was my pick or their pick, the bottom line is that they did everything right. They traded with confidence and kept their cut losses. I, on the other hand, decided that cash was the best bet as a bull would be here sooner than later. Now I am kicking myself for not being 200% to 400% short since the January to April rally fizzled. Live and learn, yes. Live and learn. Chances are very high that I will never be this cautious again. Especially in the next bull market. I will be very aggressive just like I was the last bull market.

Right now the market is still in a very deep down trend and until that trend changes there will be not a lot to do on the long side. I still think it is VERY IMPORTANT to keep your watchlist up to date with the top CANSLIM quality stocks just in case you get a great setup. Even in this market I still had a new long on Thursday. While it was not CANSLIM quality it was still a nice selection and with a good lower open today the stock stayed in a tight range with BOP slightly increasing. That is all I can ask for on such a nasty down day. Have a great weekend!

I have made two videos for Monday. The first one is 10 minutes and the second one is 16 minutes. Both are full of very important information that you need to know for this market. Gold and Platinum Members can view these full size version in the Gold Forums right now. The Free YouTube version of part one for Free and Silver members is available here:

A Very Bullish Intraday Reversal On Very Strong Volume Hints To A Possible Start Of A New Rally Or A Bear Market Bounce; Either Way Bulls Will Take It

There is no doubt that today was nothing but very special. I must admit when we were down over 4% on all the indexes, it looked very bearish and I have to admit it was a little depressing. Even though I never give up on the market, I have been watching this market almost from the start of the day to the end of the day every day since the election. And to be honest, the selling, even though it was profitable by far, was getting old. I needed a small break and decided to catch up on some sleep.

When I woke up about 1 1/2 hours later there was still 45 minutes left in the session and I was an extremely happy person to see that the red that has been such a part of this market all year long was finally green in a significant way. Not only was it green but I watched as it steadily rose higher and higher until finally the bell rang. When that bell rang it was obvious in my chat room, despite the gains everyone has made in this bear, everyone was very happy that we could put in such a huge reversal with the indexes going from down 4%+ to up 6%+. The Russell 2000 even staged a very impressive 8.49% gain.

The other great news about this rally was that for the first time since the January to March attempt of a rally I had more than just 10 stocks in my main long scan. In fact I had 29 which was the highest amount by far since the downtrend was started in earnest. That is when I began shorting and continued shorting. However, right now, I am more than happy to stop, raise more cash, and wait for a possible move higher.

The one thing that should be taken into consideration is that out of my 33 shorts all 33 are still below their 50 day moving averages. Since almost all of these show me gains, and since I run a very disciplined portfolio, I can not cover the full positions. However, if the stock had a reversal, the volume was large, and you can see BOP going green, you can be sure that I covered quite a lot and am happy with the profits I can use to either go long or short anything that shows up in my scans in the future.

I also think it is very important to remind everyone that today is ONLY day one of a new rally attempt. On the DJIA the indexes price action has managed to remain above recent support. But on every other index (SP 600, Nasdaq, Nasdaq 100, SP 500) the price was able to hit new 52-week lows today before staging one beautiful reversal.

Remember that no one day does a new bull market make. We must wait for confirmation via a follow-through day and we must not see the index produce any more distribution days. If the indexes give off a heavier volume selloff tomorrow then the bullish action today would be less meaningful. However a few days of low volume pullbacks followed by heavier volume accumulation would put the market in an uptrend.

Just remember not all follow-through days lead to a new bull market but no bull market has EVER started without a follow-through day. In other words don't believe every on will work. Instead look at the volume and price move on the indexes. And most importantly look around to see if the leading stocks are coming from the top quartile of the industry groups or the bottom. If it is the bottom, chances are it is just a bounce that will fail in the future. If it is the creme of the crop, then all engines are usually a go.

One index that I monitor that is in a follow-through day and has since had three days of strong accumulation and price action is China (SSEC-X on Telechart). The Shanghai index had a 3.7% rally last night and had very heavy volume to come with it (look in the Gold Forums for the chart; posted by MarketSpeculator). This price and volume action since the previous lows that also had accumulation looks very good with the low volume that preceded the recent price and volume action.

The thing to remember though is that we are coming from a very nasty downtrend with the Chinese stock market down at one point 72% and the Nasdaq down at one point 50% year-to-date. These kind of losses in just a year's time has made a lot of chart patterns very ugly and it is going to take more than just one move higher on strong volume. The accumulation we see in China must move the market higher and lead to another lower volume pullback that holds the lows. This must be followed by another follow-through day. If this happens I am very confident that we can come out of this sooner than later.

However, if that does not happen and the United States stock market does not basically do a repeat of what it did in 2002 to 2003 as it build upon higher highs before becoming a clear new bull market in March 2003 it is probably going to be bounce that is followed by stocks hitting past resistance levels and failing.

If that is what is going to happen, I will be more than happy to take a few longs on the way up if I can while the trend is up and then reverse my longs into shorts when that resistance and failure comes into play. The best thing that could happen is that I have to cover the rest of my remaining shorts and start to rebuild my IBD watchlist because calm price action, heavy volume, and green BOP charts start showing up in my scans. I sure miss those but I know they will come back. Heck we even have one now that has made us some money as we have taken some profits and still hold some as the trend is up. If you don't know QCOR, then you aren't following the market close enough.

I am going to wrap it up here and welcome you to watch the video so you can visually see the market and its price and volume action. Gold and Platinum members can go to the Gold Forums now and watch Part One and Part Two in a full size version.



Have a great day/afternoon/evening/night. :)