Ben The Fool Lost His Cool And Now We Are Going To Pay For It; Markets Suck In The Last Hopeful Bulls And Slams The Door In Their Face
January 30, 2008
Today was easily one of the nuttiest days I have had in a long time as a brand new subscriber shows his true colors by pumping ETFC after we had multiple private conversations about the stock. It is funny how these guys show up at the end of bull markets and during bear markets that they think are just another pullback. That kind of amateur crap, along with the shooting star chart pattern on the indexes today’s daily charts, just continues to reconfirm over and over that this market is screwed.
I definitely could be wrong, but so far I have not been. The worst part is that the market got exactly what it asked for, and insted of holding on to the gains, the market reversed after sucking in all the believers who were FOR SURE that the bottom was in shortly after 215pm EST. That kind of action convinced everyone that the bottom was in and had me prepared to call a follow-through to the market attempt. The point of that follow-through would be nothing as there are absolutely no charts that look good in leading fresh sectors. FFH, LSR, SDTH, and CZZ are not high quality stocks. They are strong. But they are nothing to give your loved ones.
I am sure I am going to be a bit all over the place with this analysis but whatever I am a professional investor not a professional editor. Anyways, the point of today’s reversal was so clear that it makes the market look that much worse. While it is true that a follow-through would have made matters worse because it would have prolonged the agony, the way the market traded today was still just as bad. Pretend like today’s intraday action was the weekly chart. Then you see how the daytraders felt. These folks who line up the chat rooms with hardcore ignorance were all over the market with their longs declaring a bottom (minus the perma bears who have been bearish since I started monitoring these rooms 10 years ago–how they still exist, I do not know). When the rally failed they did not go back to embracing the bear side till the close. And then a lot did do well but most were left holding the proverbial bag.
But it wasn’t the chat room daytrading nuts (why nuts? Because I only know 1 guy out of 1000 that makes money all the time—his name is ‘gold) that made me so upset today. It was EVERYONE else on CNBC and Realmoney.com. How often is it that you see Marcin, Cramer, and Kass bullish at the same time? It isn’t often and even though Kass does have short positions in C, BAC, and JPM, he is still going long the XLF and FXI. Why? It seems he should be out of those trades. But the fact that Marcin and Cramer are so “for sure” that the market is a bargain here is really troublesome since Cramer is normally right with tops like in 1987, 1998 LTCM, and the top in 2000. This time however, it is like he is IGNORING the fact that EVERYTHING is falling and that nothing is rising.
I mean isn’t it concerning to these jerks (they are going to hurt a lot of people like he has with so many stocks already) that the Utility stocks are falling along with the market and that they did not move higher on the little rally we just had? If this market breaks out and runs I will eat my crow. I have no problem with that. But do you think I will still be short my stocks? Don’t you think I would cover them and go looking for longs? Right. So why isn’t Cramer realizing he is losing money in his longs and switch to short side? Same with Marcin! Doesn’t that schmuck no that individual investors can move faster than a $1 billion fund? I guess not. He is not helping you, he is helping the billion dollar funds.
Because people like us sure in the hell don’t need to trade like that. We can ride the bull trend up like 1997-2000 top (minus the 98 pullback), ride the trend down 2000-2002, and then ride the bull back up to the November 2007 top and then can ride the bear back down to…I don’t know 2009 somewhere-maybe 2010. Why do we need to buy INTC DELL MSFT YHOO and CSCO in 2000 like Marcin and Cramer would have been doing then, when they are not going to come back? Every year in every decade new leaders emerge. So the longs Marcin and Cramer want you to buy now are going to not only lose you money by them moving lower but by not having that money in shorts to then have more money to invest in the best fresh new leaders. So you actually lose money 3 ways.
Getting back to today’s market it is just sickening to me to watch the Fed cut 50 bp and the market treat it the way it should have been treated. Even more disturbing ONLY ONE dissented with the rest. I believe it was Richard Poole and he voted for only 25 bp. Which, honestly, should have been the move. Cutting rates this much is a clear warning that we are in a lot of trouble. To cut that much that soon and then think stocks are going to rally right away is so damn foolish it is beyond me how multi-millionaires can tell us this shit. If you can’t tell, it upset me. If inflation hits 10%, I will say I told you so. I had never worried about inflation until the last two rate cuts. The CPI and PPI was already starting to show some heavy increases with food and oil but after the 125 bp cut in the past three weeks–I think–I am now very worried about it. Inflation is rising, the market is falling, wages are falling, GDP is falling, and we might have a Democrat President come 2009. The market is forecasting some tough times indeed and the fact that Cramer says this is a bottom makes it that much more foolish.
OK, enough of my comments about Cramer. I have repeatedly supported him and had his back when other traders/investors would bash him remember not only his ability to miss those market tops but him SLAMMING the table so hard on K-Mart when it restructured itself under Eddie Lampert that I almost purchased some shares of KMRT. I wish I would have when I was considering it on 6/6/2003 because by the time the top came in 2005 it moved a little over 1000% which would have been wonderful to go along with all the other great stocks I was long. Besides that he had GOOG and that had me thinking he was a smart guy. But with him so bullish here when the tape is clearly telling us to be afraid seems so wrong. And the thing is is that this guy has been a bull since before the selloff. So it makes it that much worse. OK enough of my “Cramer is an ass” diatribe.
With today’s reversal (shooting star on your daily chart) on higher volume compared to the two prior day’s rallies it should be clear that the pattern of rising on lower volume and falling on higher volume continues to plague this market. This most recent action should be CLEARLY seen on your index charts and if you still can’t see it and you have a Realmoney.com subscription (why you wouldn’t now that I am writing columns is kind of odd if you ask me–only $20 a month with over 50 professionals besides me) you can look at the Nasdaq chart I posted with my column to see it with trendlines. This helps make it very visible that the rallies are where the retail crowd is bidding up the prices for the professionals to dump on. So not only do people believe that this pullback will lead to new all-time highs, they believe this despite the constant huge distribution and zero accumulation the ENTIRE! year.
Folks, I have to make it clear to all of you newbies that if you just suck it up and realize that you are coming into a market that is topping, this is going to be 100000 times easier to get through. The stock market is very hard and there is no reason to be investing all the time. I am in 50% cash (will not be after the open tomorrow 
) and when the market is moving lower in a more straight line again I will be near 100% invested with 80% of it at least in shorts. When this bear market (yes people this is one) ends and a new bull market starts, if you do not think that I am going to not only be there but that I am not going to be able to purchase the best of the best, you just do not know me at all. Which is fine but I have my past biggest winners from 1999-2002 posted on this site. When I am done with this list which should be by the summer, you will see that the same freaking patterns show up over and over and I know what to do when LMLP GNSS AFSI HRZ FMDAY and many more others show up. They will show up again, trust me. The only problem is that I do not know when. But what makes me feel better about that is that no one does either. There is no one HUMAN BEING ALIVE that can predict the future in the stock market or any other market.
The point is if you will just go and study the past bull phase that I have on my blog at mauitrader.blogspot.com from the start to now, you can see I hit HUGE winners EVERY year. Too bad blogs didn’t exist before 2005. If they existed in 2003, my following would have been HUGE HUGE HUGE by now. However, that fresh factor, is gone. But one thing that is not gone is my ability to pick these TASR stocks. I will get the next TASR. I was long QCOM in 99 but got rid of most of it well before the 1,800% gain was in from my breakout point on 2/23/99 (that is why it is not listed–most of the gains were taken around a 500% gain). I was still flipping them out a bit too early in 99. It was second half of 99 when I would say I solidified my way to the way I invest now (hence LMLP). It worked in 1999 REALLY WELL, worked in 2003 REALLY WELL, and will do again in the future. While my returns are 42% after taxes since 1996 had I focused more in 2003 instead of playing poker they would be over 50%. There is no doubt about that and should convince you how important it is to be ready in those kind of markets. I will not be in Vegas, next time!
Until that follow-through day and perfect moment comes, we must continue to focus on the short side. And that is only confirmed by my scans tonight that had over 15 stocks that made great shorts. After taking out the iffy stocks, I was still left with 8 new shorts, to go along with GOOG that I would like to add to. The fact that so many great short patterns exist after a low volume rally with so many people getting bullish thinking this pullback is different this time, it is a testament to how weak this market is. So many past leading stocks are cracking. It doesn’t matter where it is at. The last group I am waiting to crack is the official leader of the bull market: Chemical stocks.
The group that has spent more time at #1 during the entire run up and has been in the top #5 out of IBD’s 197 industry groups the past five years is the one to watch. When this group cracks if people are still bullish they need to be sent to the psych-ward. There is no way this market is going to hold up if these chemical stocks break. It appears they have topped and after looking at CF POT TNH TRA and MOS today, it appears their cracking is coming. When you look at their breakdown, with the poor action in Food, Tech, Banks, Retail, and Real Estate, it is safe to say that when they go this market is really going to go.
I mean hell if chemical stocks are the leaders and have been #1 to #5 the past five years, and are still holding up while the market is almost down 20%, when they go the market is really going to go. Leaders always break last. The tech leaders have started their break and now the chemicals are starting. The red sun in China better start rising a little higher or else the chemicals will have no reason to continue to rally and they will roll over with the market. And when they do I am getting short all of these.
But for tonight I have 8 new shorts I need to focus on and on that note I will wrap up this commentary. Oh, before I go, if anyone is considering upgrading from silver and gold to platinum….you better learn to keep your mouth shut for just a little bit. I have been attacked a couple of times, not due to my methodology but because I wouldn’t listen to their low odd/high risk gambling, that I now have to ask for a 30 day quiet period. If you are a newbie and have recently subscribed to the platinum this rule starts tomorrow and you guys are “sort-of” exempt. However, it is getting nuts that newbies with UNDER a year of actual trading experience on their own challenge my time tested and proven CANSLIM style. AAII has PROVEN this is one of the top two ways to invest (Martin Zweig is the other) and no daytrader will EVER be able to beat me year in and year out at the game of stock market investing/trading. No buy and hold guy (minus the few lucky bastids) can beat the active investing style of CANSLIM. So for those that think you are smarter than the market and HAVE NOT researched the greatest traders of all time…can you do me a favor….stay gold and silver. We don’t need you causing trouble in the chat room.
Aloha and I will see you in that chat room tomorrow!!!! I hope my coffee is still $5 tomorrow and not $6.
Comments
10 Comments »
Joshua,
The more commentary I hear from you the more right you are every time. If you make this site better organized you’ll be pulling in hundreds of subscribers. You’ve already made me enough to offset my subscription price a number of times over. Thanks and great call on SII.
more organized, LOL
uhm…it is pretty self explanatory. Not sure it is unorganized. We tell you where everything is. If you know that commentary is bronze….hmm…seems easy….and that silver is longs and shorts…..seems easy…..and that gold forums is where i have my sells…….seems easy…..and that plat is the chat…..seems easy.
unorganized? have you been to any other website that is based off that trader? seouljoe who used to charge $1000 JUST FOR THE CHAT ROOM. Or RevShark?
What exactly is unorganized and realize this site is for newbies yes….but not really…this site is to turn minor leaguers into major leaguers. If you are not even ready for A ball, YOU DON”T BELONG HERE!
But if you give me an example of how it is unorganzined i will let my crew know since i do not run this site.
Great headline today – love it!
Thank you veyr much! I appreciate the kind words.
The cuts already have created the steepest yield curve in nearly four years — a strong predictor of future growth.
that paragraph is from IBD Editorials and is at least one bullish technical development in this market full of bearish trends.
Josh,
Woops… anyways… I just signed up for your bronze service (I’m a student and am very poor or I would’ve got better access).
I like reading your commentaries and was wondering if I would be allowed to speak with you in private (email or whatever) about my recent trading experiences…
I’ve only been trading since Sept. 07 (great time to be starting out huh?)
I’ll be checking back here to see your response.. thanks
James
OMG. you are starting out very late. This is going to be very very difficult.
Sure send me an email at joshua_ncontrol@yahoo.com
BTW, today is a follow-through AND FOR NOW I AM ONLY LOOKING FOR LONGS IN THE SHORT TERM. But I do expect this to be like the 5 follow-through days in the last big bear market….which led to failures.
I will have a long commentary for tomorrow morning!