Nasty Reversal Below The 50 Day Moving Average Telegraphs Just How Weak This Market Is
July 31, 2008 | Leave a Comment
It is never good to have a solid day that has so many people feeling contempt on higher prices reverse hard and show investors losses. But that is what we got today. Nothing short of the word disappointing can describe today’s price action. The reversal intraday of the good price action was a major disappointment to investors across the board.
However, if you are me, you actually welcome it because you know it promotes disgust which will eventually lead us, if not to a new bull market, at least a strong bounce. However, the even better news is that the one stock that I have been promoting for weeks to my paid subscribers in the platinum chat room was up over 3.5% today. That is a nice divergence and continues its nice path of beating the market. This is not the only long like this. I am also long a swath of medical stocks that are doing well. Including one stock that has setup in a POTENTIAL (nothing is for EVER for sure) powerful bullish pattern that could make us subscribers even more money in this nasty market.
I am hearing so many UNsuccess stories of this market from players on message boards and free chat rooms that I wonder why people can not just stop trading. It is so simple to just wait for a bull market. If you are unhealthy, use this time to go to the gym and get a book on tape of some of the books I recommended last night or have in my book section. If not that, take the time to go to the gym and read IBD. Whatever you do, do not force yourself to watch this market intraday unless you must. We have quite a few professionals in my chat room that can handle watching the market go from euphoria back down to reality and sometimes the other way where a bad day turns into an incredibly bullish day. We can watch this without having the prices effect us. But too many of you live and die by the latest tick. That is a sure way to the nut house in this market environment.
How I Deal With A Market That Does Not Reward Trend Following
July 30, 2008 | Leave a Comment
I definitely, first off, do NOT watch CNBC. This should be the last thing all of you newer investors should do. A lot of people that watch CNBC tell me that they do not have enough time to read Investors Business Daily and instead find it easier to listen to the raving madness of Cramer. This is baloney. All you need is 20 minutes a day to read ‘the big picture,’ ‘the investors corners,’ and any of the other investors education articles.
If you do this every day, I realize that it will not be fast, but eventually you will learn the right way to make money in the market. The same way the greatest traders ever, which were detailed year by year by John Boik in his fabulous books, traded is the same way you should invest. If the greatest all invested a certain way, shouldn’t you to?
Some of you believe that you can outsmart the market or you are lazy and believe that a method that has been PROVEN not to work (using P/E ratios to buy and sell stocks) will work especially for you. This idea must be dropped and you must learn that some very smart people have learned that the best time to invest is ONLY when the market is in a clear uptrend. A few of the greatest of all time know to be long certain stocks even in a bear market. For instance, the smart money managers are long biotech and medical stocks right now while they sell financials. This is clear to those that are experienced but for the newbies this can be very confusing.
ARE YOU LOSING MONEY AND YOUR SANITY IN THIS MARKET?
July 29, 2008 | Leave a Comment
I am going to post a column shortly on how and what to do in a market like this to make sure that you do not go crazy. I am getting some emails from a FEW!!! people that are losing their minds. However, my subscribers all feel alright and know that a new bull will come. I will expand on this later. Just learn to do more fun things when times are tough. You only live once. 
Follow Through Day Hits The Indexes On Day 10; Remember, No Bull Market Has Ever Started Without A FTD. But Not All FTD Leads To A New Bull Market
July 29, 2008 | 2 Comments
This is one of those terms (FTD) that throw people for a loop when they here it. Most think that it means it is automatically time to go into the markets buying stocks. However, a FTD has to be accompanied by a few things to be a real FTD for me. First the selloff must lead into the FTD on low volume. We did not have low volume on the pullback this year. Second when I see a FTD the first thing I look for is the explosion in volume. How much volume was in on the FTD? Today, it was around a 16% to 18% increase in the indexes and while that is close to what I look for it was no where near the 20% increase in volume that I like to see.
For a perfect example of what I am talking about go back to 2003 and take a look at that FTD. The volume was huge and the price gains were enormous following a lower volume selloff. We do not have that this time and the fact that medical stocks are still the only stocks leading has me still not convinced we have a real follow through day here. Even if we do there will be plenty of time to jump on the bandwaggon and make a lot of money. Just study my 2003 and 2000 winners before the top. They showed up well past the initial follow-through day and still made me and a few investors very wealthy. It will happen again. Trust me. So if this is for real we will have plenty of time to get involved. And as you subscribers know I will be in the stocks that will be moving the most during the next bullish phase of this market.
Worden Telechart - My Most Powerful Investing Tool
July 28, 2008 | 2 Comments
There is simply no better software that I use to scan the market than Telechart. This program allows me to consistently beat the market by using the proper price and volume tools that this program gives you for such a low price. It has not been named best software under $500 a year for almost 15 years in a row for no reason.
This software comes with the proprietary indicators of TimeSegmentVolume, Balance Of Power, and Moneystream that you can not get in any other software package. Though I do not use these indicators alone to justify a long or short, I do use them with the price and volume to make sure that everything is lined up and that the buying is on my side (or selling if I was looking to go short).
The bottom line is that this IS the finest software available. It is the ONLY tool that I could NOT do without. If I did not have my Telechart program to scan the market to find the best candidates, I do not know how I would trade. Honestly, I guess I would, but it sure would be difficult to not have those proprietary indicators helping me along with my usual price and volume commitment.
Low Volume Selloff Doesn’t Effect Big Wave Trading Members One Bit As We Know Cash Is King Here
July 28, 2008 | Leave a Comment
This market is starting to really show its true colors as the action is getting down right dreary. My long scans that I use to find stocks are returning fewer than they have since 2002. This is my clear indication that we are in for some rough times. Luckily, like always, we do have a few stocks moving up that are making us some money so it isn’t all that bad. What is bad is how bad the media talks about today’s times like it is the end of the world. Somehow deep down I feel that this will lead to a mother of buying opportunities. But not just yet.
It has been a rough market for those that think every dip must be bought as we are in a market enviornment where every dip should NOT be bought. Instead every low volume rally should be sold until some real leadership and real nice charts set up. I know they will come around again. Heck you can see stocks like QLGC setting up nicely which proves there are still stocks out there that want to set up and run despite what the overall market is doing. The problem is making money in stocks like that. It is a tough time for investors of any type right now.
I am so proud of my platinum and gold subscribers right now because it is clear that they have listened to me and have gone to cash. By going to cash you protect your capital from the death that could be caused by being long a stock like MTL which Putin’s power grab has once again reeked havoc on a once shining enterprise. The fact that market action like this is the norm right now should have everyone scared to invest there money.
Don’t Let The Stock Market Blues Get You Down; Another Bull Market WILL Come. They Always Do
July 27, 2008 | 2 Comments
The kind of market that we are in right now is obviously not the kind of market environment I prefer to invest in. There are so many “smart” fundamental guys that tell you to buy this bargain now that the price is depressed here or there. But I am here to tell you that if you did not cut your loss (like we did; plus take out some big gains) on MTL you can see how buying a bargain can quickly turn into a bloody mess.
This market is a market that should be avoided by all but the ultimate professional. These pullbacks are not to be bought until we get some accumulation to follow the lows. There are very few charts out there that look like MANT or ARST, for example, but there are a lot of MTL type of charts out there. That is my cue to stay far away. I know when to get heavily long on full margin and I know when the storm is coming and it is time to batton down the hatches. In November I sold all of my mutual funds and told all of my subscribers that we were in for a top. I did not think the top would be so odd. I thought it would be easy to make money on the short side, similar to 2000-2002. However, I am very wrong. This is the most difficult market I have personally seen since 1996. This is way more difficult do to the daily volatility in some individual trending stocks. This kind of wild action used to not occur. Now it does.
So what is an investor to do? Easy. Do nothing until things shape up. The charts are ugly and there are not too many ARST, MANT, and XSI type of setups out there. Even then the chances that it last is very low. These kind of hot patterns have a tendency to fail right when they are supposed to take off. So buying them up here can be very dangerous. Thus this is how it is in a bear market. A market that has seen the Nasdaq come off 20% since the November top.
Oil Stocks Selling Off And A Decent Bear Market Will Lead To A Much Better And Easier Chance To Make More Money Later On; It Is Hard Now, But It Will Not Be Forever
July 23, 2008 | 5 Comments
Despite the fact that I have not been doing much the past week-plus thanks to Doctors orders to stay off my feet, there has been one event that has happened that makes me very happy, yet sad. Oil stocks coming off their highs on huge volume signals that we might have seen the top for oil stocks. I hope so personally as it would just be a lot healthier for the world markets if the stock market of the USA was doing well. The fact that there is weakness world wide will eventually lead to some great buying opportunities. As long as we have population growth, in the future, we should be moving higher as we go along our little lives.
Those that have just recently gone long in the oil arena needs to realize they are going long a sector that has been in a cyclical uptrend since 2001. We are almost eight years into a very long bull market for oil stocks. It does appear that the top has come with the recent selloffs on the huge volume across the board on stocks like XOM and NBL. Even the speculative beauties like PDO and REXX have lost that special luster. This should be bullish for equities in the future. Not any time soon but eventually. Right now, there still is more work that needs to be done.
Dangerous Market For Trend Followers
July 22, 2008 | 2 Comments
Those that practice what they preach are usually pretty happy whenever they see that everything they have been warning about is being practiced by so many. Raising cash during this troublesome market has proven to be very intelligent and despite the 20% from the top in November by the Nasdaq this market still has not rewarded trend following short-sellers like it has in the past. This is making it a very difficult market for anyone who has a time frame over one day or for someone who does not actively invest and trades off the monthly charts instead.
My personal favorite system/methodology is the CANSLIM system and those that have been following it have remained in cash avoiding the many investing pitfalls that many will, sadly, have to learn the hard way on their own. Me, lol, I have seen this before. Never in such quality stocks. But heck if we are turning into a global world then a global economy is what we are probably in store for. So don’t get too depressed, this too shall pass. The grass is greener on the other side of the fence until it isn’t. Right now, I have to continue to press hard that those that love to invest in the market to score the big hits in a nice relaxed amount of time continue to wait for better moments. The best bottoms are built with a rising VIX, a rising put/call, and a falling stock market on lower volume. Not like the big volume we are seeing now. No, it rarely is that simple. This is more complex than we know. I just pray that this is not a Japan 1989 with the Nasdaq in 2000. Hopefully, it is not, but still there is plenty of room to grow.
Be careful out there, keep that cash high, and remember do not go back in until we are given clear “buy” or “sell” signals. For now, everything is muddy. Keep out of the water. Crocodiles and sharks flourish in this environment. And I am not talking about the good sharks either. The great white man-killers of all great promise that cost too much commission and too little in invested capital. Pray for a better market. It will come.
Market Opens Lower on AAPL and Earnings news
July 22, 2008 | Leave a Comment
Once again AAPL beats estimates but is conservative with its estimates. We’ve seen this song and dance with AAPL since the early 2000s where the company guides conservatively only to beat those estimates next quarter. Monday night’s release showed that playing earnings can be very dangerous. Use history, more importantly use CAN SLIM developed by William O’Neil. He has taught us that the big money is made during fresh bull markets. Unfortunately, we do not have a new bull market…yet! Time to continue studying Josh’s past big winners, cash heavy, and keep our losses small!
Aloha
