Big Intraday Gains Turn Into A Bearish Close As Stock Market Indexes Lose All Of The Gains Closing In The Red
October 18, 2008
I am going to make this weekend’s market commentary a short one because it gets old, for me, saying the same thing over and over and over and over. Right now, with the market continuing to give me short candidates and not long candidates, the same thing that I have been saying since this downtrend started still applies. The trend is down and thus the correct way to play this market is still on the short side.
The funny thing is is that some people actually want to buy stocks here. The problem with that is what? What stock is out there that you want to buy so bad that you feel you have to buy it now? MSFT? DELL? YHOO? EBAY? No, let me guess…GOOG, AAPL, RIMM, and BIDU. Am I right? It doesn’t matter. The fact that you will waste your time with these PAST LEADERS proves to me that your returns will be very weak EVEN IF THIS IS THE BOTTOM. Why is that? Because PAST leaders are never the NEW leaders of the next true bull market.
Instead of WASTING your time and money on these OLD leaders, you would serve yourself much better by building a watchlist of stocks that hold up well in this market and sport some accumulation while the distribution hits this market. The truth about getting the huge returns in the market comes from being patient and waiting for stocks to come to you. Not in you going out and buying a “bargain” which almost always ends up being a “trap.” Instead of buying the trash that this market has dumped on us, you would do yourself A HUGE FAVOR by waiting for a proper price pattern with strong accumulation to setup. Once this leading stocks sets up in a strong chart pattern, the smart thing to do would be to wait for a breakout and buy the stock as it breaks out. If you chase it, however, this method will not do you any good. You have to buy it within a safe area past the breakout (usually below 10%) pivot point or you will have to wait for a low volume pullback to the pivot point area or 50 day moving average.
If you do not believe this is the right way to invest in stocks, why don’t you take some time to go review ALL of my ‘Past Big Winners’ from 1999-2008. By reviewing those chart patterns and subsequent price action you should have ALL the confidence you need to start learning how to use this method to make a lot of money. If my returns are not enough to get you excited, you should go out and buy ‘How to Make Money in Stocks’ by William J. O’Neil, ‘How Legendary Traders Made Millions’ by John Boik, ‘Monster Stocks’ by John Boik, and ‘How to Profit in a Bull Market and Bear Market’ by Stan Weinstein. If after reviewing my longs and reading these books you are still not convinced to start learning this method ASAP, I guarantee you that you will FOREVER be DOOMED to a life of mediocre to poor returns.
So remember, all those inexperienced people that are telling you to buy stocks now are the same people that think a 100% return is something “amazing and incredible.” They think it is because not only can they not fathom a 2,500% return in a stock, they have no clue how to find it anyways. Once you learn this methodology, it is impossible to ever go back to a life of lame and weak returns. Those kind of lame gains are reserved for those that refuse to learn history and refuse to learn how the greatest stocks of every year for the past 110 years have acted. I suggest, if you do not know this CANSLIM methodology or any form of proper growth investing that uses cut losses, to go to all of my free strategy sections to first learn how I go about finding or scanning for my stocks, then study ALL of my ‘Past Big Winners,’ and then make a mad dash over to the Investors Business Daily Learning Center. This will start you on your path to big profits.
I think the most important thing to remember here is that the best bottoms are made when people are not looking for it and are not calling it. All day on Friday, I heard from my resources that CNBC had a LOT of people on declaring, or at least speaking of, a bottom. Not only does this bode poor for the rally but I am hearing from a LOT of subscribers, including myself here on Maui, of people, friends, and family that want to go long this market. The simple fact that these NON-professionals, who do NOT even KNOW that shorting exist or even what it is, are calling a bottom and want and/or are buying stocks is my most accurate sentiment gauge that this is not a bottom.
Now could I be wrong? Of course! But even if I am, there is NOTHING in ANY of my scans or in my CANSLIM list that is showing a proper pattern that can be bought on the next breakout. The fact that I ONLY! have three longs (all are in defensive sectors) and still have 25 short patterns with 22 of those shorts showing 15%+ gains tells me that the downtrend is still my friend. If this bottom was for real, I would probably have at least 5-10 longs and would have 20 shorts with 15 or so giving me very bullish profit taking signals. Since NONE of my shorts are giving extremely bullish full or partial cover signals, I have to think that the trend down is here to remain a while longer. That conviction of the trend was made even more convincing after Friday when a new short position was signaled. That made it one new short and ZERO new longs. Since the follow-through day there have been no longs. If this is a bottom, this would be the FIRST ONE that I have been in where not only could I not find any stocks to go long based off of my definitions of what I like to go long but there are ZERO stocks setting up in a potential buy position. Well, the truth is there might be one that could be a long, if it breaks out. But even if it does, the chart is not “perfect (tons of accumulation, no distribution in the base, perfect price pattern, and max green BOP the last 20 days) and would not be a stock I would “load-up” on here.
Remember, folks, history PROVES (and you can EASILY backtest this!) that if you ONLY go long the market when the price of the indexes are above the 50 and 200 day moving average and go short or to cash when the price of the indexes are below the 50 and 200 day moving average, you WILL outperform the MAJORITY of the public who stays fully invested in bull and bear markets. With that kind of investing strategy, it is no wonder those same people think buying stocks here is smart. They thought that in April 2000, August 2000, January 2001, October 2001, and the summer of 2002. After that last rally attempt fizzled out, everyone finally gave up. Come that October 2002 bottom, do you know how many bulls there were? Almost none. But guess what? It got worse!!!! AFTER the rally off those lows. Everyone was FOR SURE the market was going to rally back over to its lows. So right before the market followed-through in March 2003 (btw, there were beautiful charts setting up and breaking out ALL OVER!!) the crowd got even MORE bearish. So I take it with mom and pop wanting to buy stocks right now, I doubt we have seen the ultimate bottom.
When will we have bottomed? That’s easy! When I can walk around my friends and not hear “is it a good time to buy stocks” and I hear confirmation from my subscribers that people are no longer asking them to go long, I will know we are close. During this time, I will begin to not only see beautiful chart patterns start to be created but I will be going long a few of these that breakout early BEFORE the FTD (follow-through day). To go along with these beautiful charts, there will also be leading sectors that are in growth related industries that have leading stocks with top notch fundamentals setting up and breaking out. When these beautiful chart patterns show up, CANSLIM chart patterns show up, stock market indexes rally back over the 50 and 200 day moving averages, sentiment is right with the crowd not only ultra bullish but FEARFUL to buy stocks, and I hear from the mass public that all rallies should be sold, then and only then will I put it out there that the market has bottomed.
Until then, I will continue to take BIG profits on my shorts as they cross the 25%, 50%, and hopefully the 75% to 99% levels, and wait for those pretty charts to setup that will help signal that the coast is clear.
Don’t forget EVERYONE, nothing that I do is based on my opinions. Everything I do is based on facts. The charts might not know all (thanks to Regulation FD) but they know ALMOST everything. By using proper money management rules and putting the odds in your favor by studying history, you not only take control of your financial future but you also increase the odds exponentially on the chances that you will outperform the market in the bad years and KILL IT during the good years. Why can’t you kill it during the bad years? Because shorts only go down 99.9%. On the other hand, CSCO rallied 90,000% from 1990-2000. Since shorts go down faster than longs rally (fear is more powerful on the short term), it is still possible to have huge returns. Still, it is more rare.
Great luck everyone on the upcoming week, I hope you had a great weekend, and how about those Tampa Bay Rays. They were a 200-to-1 odds at the start of the year to go to the World Series. $100 is now $20,000. I wonder if anyone made that bet. Nice! I’ll stick to poker and the stock market. Sports gambling is a losing game. Gambling period is a losing game. Especially in the stock market. And I can not think of a bigger form of gambling than daytrading…wait a minute! I sure can…buy-and-hold investing. That is the riskiest form of stock market gambling I know. What goes up ALWAYS come down. ALOHA!!!!
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Comments
3 Comments
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Excuse me but you are still short after the indexes are up 17.5% since a major reversal bottom? That must suck alot for you?
Long & Strong baby boyeeeeeeee
Wow, Frank, you are a HUGE IDIOT. I am short from August and September 24 stocks that have 30% to 60% gains. I have covered over 1/2 of all of my shorts, AT THE BOTTOM.
YOu are long and strong? Then I DEFINITELY KNOW WE ARE GOING LOWER.
And by the way jerkoff, I have 95% cash. Anyone that is long here, IS A HUGE IDIOT AND IS CLUELESS ABOUT THE MARKET. After 13 years of HUGE gains and my returns, you are going to say “it must suck for me?”
Wow, you are a freaking idiot Frank!
You didn’t know that I covered over 1/2?
You didn’t know I was 95% cash?
You didn’t know that I am long 4 stocks?
Not only do I feel sorry for you but it must SUCK TO BE YOU!!!!! Try reviewing my PAST BIG WINNERS. Have you ever held a 500% winner? or a 1000% winner? How about a 2,000% winner? I already the answer. You NEVER have.
Frank, your stupidity is quite sad and everyone can thank you. Due to your ignorance and lack of facts, you have ruined comments for everyone. Comments are now closed until the market rollsover and our friend Frank becomes the next infamous moron that tries to insult me without knowing all the facts.
Frank you are an IDIOT. Not only will you NEVER get the gains THAT I JUST GOT ON THE SHORT SIDE!!!!! YOU WILL NEVER MATCH MY RETURNS ON THE LONG SIDE IN A BULL MARKET.
If you are long now, that means you just lost 40% right before the selloff. How stupid do you have to be to not know that the best time to go long is AFTER THE GENERAL MARKET IS ABOVE THE 50 and 200 DAY MOVING AVERAGES. Have you EVER studied your market history????? OBVIOUSLY NOT.
Frank, if you are bullish, I now DEFINITELY KNOW THAT I SHOULD BE 100% short and not long anything.
Tell me what you are long and I will short the HELL OUT OF IT. If you are long anything right now…YOU ARE LONG LAGGARD LOSER STOCKS.
Frank I feel sorry for you and your SAD returns.
Comments are closed. My returns speak for themself, nobody can match my returns on the long or short side who insults me, and if you took the time to get all the info before you open your ignorant mouth maybe you will learn that the right side has been the short side. Not the long side. 17% rally douchebag…AFTER a 40% CRASH!!!!!!!!!!!!!!!!!!!! Idiot!
Frank, you really come across as the resident MORON of this blog. You are so STUPID and IGNORANT about market history and how to make the big money it isn’t even funny. How could you be long here and what in the heck were you doing during the downtrend? Going long the whole way? Are you trying to “talk” your stocks up?
If you are a newbie, please just keep your mouth shut! I have thirteen years of KILLING THE MARKET. If you take the time to look at my PAST BIG WINNERS, you will quickly see why people like Frank come across as HUGE DOUCHEBAG MORONS!!!
I am done with idiots like Frank. Thanks to Frank, comments are now closed until further notice.
frankiej@gmail.com
Your email address is on file. I hope you know how to do more than run your mouth, boy!
Because you will NEVER be allowed to subscribe to this site.
If anyone out there thinks FrankieJ could EVER hold a 2000%, 1000%, 500%, or even a 100% winner, you are crazy.
If this schmuck is long this market now, you can GUARANTEE he will not be trading/investing in stocks 1 year from now. I give this JERKOFF 1 year and he will be out. In fact I am sure when this LAME BEAR MARKET SHORT COVERING BOUNCE is over, he will still be long his stocks as they fall another 40%.
The past big leaders that are now present LAGGARDS will never return to their old highs and if this fool would study his history JUST GOING back to 2000, he would see this. Remember, MSFT DELL CSCO SUNW?????? I guess Frank forgot.