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:

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:

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:

You must stay excited when the market constantly disappoints like this one has!!! Let’s review what happier days look like to remind you of the great wealth creating possibilities that can be out there even in late stages of a bull market.

[2008.12.02 02:17:45] JoshuaHayes: December 2005 top holdings:
[2008.12.02 02:17:49] JoshuaHayes: Longs Outperforming Market: GMXR-170% BCRX-120% RES-106% PETS-100% EMKR-92% ICON-86% LCC-79% ACR-69% NRPH-64% CVO-59% NWRE-57% CBG-56% TSCM-53% MIDD-46% ECLG-42% GOL-42% SMTS-42% LCRD-37% GRS-37% EAGL-34% LDSH-33% AUY-32% FWLT-29% TEVA-27%
[2008.12.02 02:22:41] JoshuaHayes: March 2006:
[2008.12.02 02:22:45] JoshuaHayes: Longs Outperforming Market: PNRG-62% ERS-223% CLZR-50% STRL CYBS RUTH LPSN NTES NVDA-78% ASF-210% ILSE UIC-46% RATE-143% AKAM-83% ATHR-104% VTS VIMC-93% ASVI BOOM-409% WNR CBG-111% PEC RMBS KEYS-32% TMI SEAB FRGB EAGL-59% ROK SAY-34% NTAP BWLD CHE NGPS MMK-42% AAU TWPG QCC SPWR-44% MEK-49% RBY SMSI-52% TGE TWTC-139% TGB-25% GIGM-100% TFSM-37% TOMO TMTA KNOL-55% AUY-99% RNAI-37% FDRY-35% FMTI MDII
[2008.12.02 02:23:37] JoshuaHayes: April 2006:
[2008.12.02 02:23:40] JoshuaHayes: Longs Outperforming Market(number is % gain since initial purchase): BOOM-507 ERS-453 WIRE-188 CBG-130 SLW-134 BBD-132 ASF-228 VGZ-128 TWTC-151 BWNG-132 TSCM-110 NXG-179 RBAK-245 VIMC-93 ICTG-95 COGO-60 STRL-47 BGC-72 TTES IFO ILSE IVAC-34 VPRT SNDK AAPL ASPV CORS LTM KEX-43 MDCC-47 WF AXE-40 TMI-26 TRAD-58 UIC-68 ZEUS-78 BAS KDN-25 SHFL IHS-45 NMR-42 LRCX-41 RUSHA CTXS-54 PKE VLG NTAP TXCO-64 HEI
[2008.12.02 02:24:45] JoshuaHayes: Feb 2007:
[2008.12.02 02:24:50] JoshuaHayes: Top Holdings - Signal Date
PTT 344% - 11/16 KNOL 265% - 1/12/06 AKAM 251% - 9/30/05 CVO 166% - 8/17/05 SVNT 136% - 8/24 TTEC 124% - 8/25 MA 116% - 8/2 CCOI 111% - 9/27 AOB 111% - 9/12 ICE 110% - 9/21 CPA 108% - 9/15 CLEC 105% - 9/25 CHINA 103% - 8/16
HMSY 93% - 6/23 IGLD 93% - 10/26 OMTR 89% - 9/15 HRZ 88% - 9/27 TRCR 84% - 1/12

Stay positive, don’t give up, and if you stick around these gains can be yours also. You just have to pick a handful, you don’t have to be long all of them. I am just trying to show you in bull markets I will be 4-for-5 out of the stocks I take and will be about 4-5-to-1 with gains vs. losses. You can’t predict which ones will go up 500% and which will go up 50% but the way the chart looks and how green it is can play a major influence.

Trust me, we will ride this out. And even if only 5 stocks are moving, we will be long them or will have our eye on them.

Stay strong my friends. I just wanted to post a reminder that even in late bull market runs, you can still produce some huge gains. These are not going to be fresh bull market gains like the returns in 1999 or 2003, but as you can see they get the job done. For the returns on my top holdings in 1999 and 2003 you may go to my Past Big Winners page.

Don’t give up in this bear market, keep your powder dry, and make sure you are AT LEAST reading this page every day so that you know exactly where the market stands.

As you can see via my returns now and from the past, you do NOT need to predict or know the future to make a lot of money NOW. Trust me making that money now is going to be very important in the future. If ever there was a time to start learning to make money in the market it is right now.

Seriously, if you are for real about taking control of your financial future and you really want to know how the market works please take advantage of this deal we are running now on the site. Come join us in beating the market. It isn’t about making money, it is about being right and investing well. When you love the game and learn to play it disciplined and treat it like a business, you can create great financial wealth, even in horrible markets like the market we are going through now.

Times are tough now. But they will not always be. Make sure you are ready so you can get the returns you see in my top holdings from 1999 and 2003. You will notice all the chart patterns have that similar look of great price action, strong accumulation, and green to max green BOP. There are some of these now but it is still too early. When these crop up again and no one is interested, we will be.

Stay positive everyone. I felt compelled to pen this due to the level of negativity that I am still constantly hearing out there.

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:

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.

Big Wave Trading wishes everyone a safe and Happy Holiday Season!  Merry Christmas!

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:

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:

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: