Immediate Distribution Day On The NYSE And SP-500 Proves Bottom Callers Are Going To Be Wrong AGAIN; Now That They Have Hit The Current/New Leaders (Gold, Oil, and Chemicals) This Could Get Real Ugly
March 19, 2008
Wow is about all I have to say today after watching the market’s action. And the wow does not refer to the price reversal on the major market indexes. The wow has to deal with the action today in the top four leading industry groups in the IBD industry groups. They were simply rocked! Not only did they selloff hard, they did it on low volume. When the leaders are treated like this you can guarantee that there are some major problems stirring underneath.
Today quite a unique event happened today in the market that I have not seen the entire downtrend. And, imo, this is not good. The last time I saw this was in late 2000. That is when the bear market gained steamed and sent stocks much lower. Well, today, the chemical-fertilizer, metal ore-gold/silver, steel-producers, and oil&gas – US expl prod all fell between 5.9% and 6.9% which is just shocking. To see leading stocks in this really rough market get treated like this is the last thing from bullish as it can be. Only a politician could spin this as bullish.
5 out of the top 9 worst performers were in the top 10 industry groups. This is not how a market should act. Not only should the leaders be from more innovative areas of the economy, they shouldn’t be selling off when they are up there. If the weak stocks are getting CRUSHED (BSC TMA C etc..) and the strong stocks are getting crushed (GTU AUY BVN XEC EOG etc…) where is there to hide? The answer is no where. Only is cash or bonds the safe place to be. It is simply not a market any of the greatest traders today or of all-time would mess with.
This market is strictly for the foolish and gamblers. These people can go about and try to flip and trade stocks all they want. That has no interest in my camp, I would rather go driving looking for surf all day or read surfline and have a better time–and probably be more productive!
But for those that want to mess with this market, good on ya and great luck! You will need it. I am going to, instead, focus on the leaders until more technically sound charts set up in stocks with great fundamentals. Something tells me this is far away, via the fact that there is nothing setting up out there that looks ripe. Everything has just been destroyed. This market is jacked up and the red charts all over the place in massive downtrends prove this.
For those that enjoy buying stocks in downtrends (and losing money), this market is for you. But I must continue to preach to you all that raising cash is STILL the smartest thing to do. Even if your stocks are done going down, the chances are that you are now in a laggard. This will prevent your stock from accumulating any significant gains when the bull market starts. While I am out there grabbing the next TASR, TZOO, and AAPL’s, you will be trapped in your horrible HNSN long or BSC bargain.
The worst part is that if this bear market last a long time, your bargains now are only going to get cheaper which means you will have even less money to put to work when the market turns around. Basically, you screw yourself coming and going. I don’t like getting screwed or losing money, unlike my accountant who bought BSC and C all the way down. Instead I like making a lot of money when I am right and losing a little bit of money when I am wrong.
This market is killing me right now as the opposite is happening. However, I want to remind everyone, that just because you are not making money this year does not mean you suck. If you have lost more than 22% this year, then yes, you do suck. Because honestly, I have warned you over-and-over to go to cash and to get short this market after the November top. It has been extremely hard to make money in this market but it has not been hard keeping your money as there have been a ton of warnings to get out of the market. If you have done this, there is no way you should be under by anything more than 20% at most.
Now, I know how bad some people are doing. I get the emails. I have two emailers that have lost at least 80% with one losing it in one month, I know 3 that have lost 50%, and I know someone who has not told me how much he has lost this year but said it is $25,000 every month. So that must be over 20%. 
So keeping that in perspective and knowing that I always want to be doing as good as the top 5% of the top growth mutual funds, I am extremely happy that my worst performing account is only down 9%. The best performing account is only up 3.6% since November 1st. But if you compare that to the 22% loss in the Nasdaq, that is a 25% outperformance. And when this market bottoms and produces us our next perfect charts, that will be 25% more capital I will have to work with. For those that don’t see the important of this (my accountant who bottoms fishes when he sees my records with his own eyes!!!!!!!!!!!!!), there is nothing I can do to save you. LOL.
OH MY GOD, some of you might say, I am down?! Duh! Of course. This isn’t the first time and it definitely will not be the last. What is unique about this time to the others is for how long it has been since I have made a killing. Ever since APPY in September, there has not been one single perfect chart that has setup and broken out. Since AFSI in April, there has not been a single CANSLIM quality long setup, breakout, and then succeed. They few that have have all failed. In 2003, they all worked, in 2004, most worked, in 2005 most were still working, by 2006 1/2 worked, and come 2007 there were only 3 left. This was due to the length of this bull market.
The bull market went on a full 5 years from October 2002 to November 2007. This caused many stocks to get very parabolic and long in the tooth making it very impossible to make a lot of money. That being said, how anyone thinks a five year bull market can be fixed by only five months of a bear market, is beyond me. This is going to take at least a few more months to flatten out and create the round bases I need for stocks to breakout of. Right now my max green and green BOP scans don’t show anything working on a base. This is where these stocks show up first. They are not there and that tells me we are not “there” yet.
So without new leaders and with the current leaders cracking how do you think we are going to bottom? Especially when EVERY SINGLE talking head on CNBC and RealMoney.com was telling me this is the bottom! If everyone is looking for the same thing, the opposite will happen. That was JUST PROVEN in commodities.
As soon as everyone falls in love with commodities and as soon as everyone thinks that inflation is about to run away out of control (which is what I personally fear), we have a possible top. Now, the hard part about this for most is that they just saw me fall in love with AUY. Well guess what? AUY was a whore!!! AUY was sleeping with the market and now it has caught the market’s disease. So now it is time to breakup with her. In fact, it is time to breakup with the whole sector. I mean there was one stock out there that was “near-perfect” (well, it wasn’t really a stock) and even it got screwed. GTU broke down through the 50 day moving average, destroying its beautiful chart in one single day! This market is crazy and dangerous. This is the most obvious tell: GTU.
Gold fell a whopping 59 points to $945 and oil fell to $101.69 overnight in the Asia trading session. Not only do gold and oil have a topping look but other commodities do to. Look at arithmetic daily charts on a year long time frame (for the experienced this should show the climax move clearly). Corn, soybeans, coffee, sugar, gold, silver, copper, crude, heating oil, and nat gas all look to be putting in, if not “the” climax top, at least a short-term to intermediate term top.
But not only do the commodities look toppy, but the Yen, Euro, Swiss Franc, and Peso all look to be putting in some kind of possible topping pattern. This does not come as a total surprise to those that are at least on the ‘GOLD LEVEL.’ Those subscribers know that on 2/22 I posted DBA as a ‘parabolic chart.’ This was a warning to subscribers that if you are long DBA you need to be looking for a possible top soon as the stock is showing historical signs of being in a climax run. This was reiterated one more time on 2/26. And just like history has proven over and over, learning from it will make you a more powerful investor. DBA topped that day and has since rolled over with a 2.31% drop today. This is a very ugly double top on an arithmetic chart.
Now, not only have I warned paid subscribers to this, I have also warned of parabolic moves in DBS DBP FXA FXF SLV IAU DJP GLD and FXE on 2/28 and subsequently warned about them on other days in the forums and chat room. These were the ETF’s of the futures contracts and thus NO ONE who is a subscriber should have been shocked. The only thing that shocks me is that gold did NOT go into a completely psychotic parabolic climax run. But the fact I loved the GTU chart so much, in a bear market, and thought in my head that gold was going to 2000, I probably should have known better.
With the leaders being taken out, there not being any new leaders shaping up in my scans or in the IBD industry group list, and the put/call actually dropping to .94 from .97 yesterday when the market almost gave back all of its gains, there is no way I can join the jokesters, amateurs, pathetic liars, and fools in calling for a bottom here. I simply couldn’t lie to you if I wanted to. I might not be the most perfect person but my ethics are very high and people like Eliot Spitzer disgust me. Trust me, the last thing I WILL EVER do is give you money losing advice like Cramer is so good at doing.
His recent comments the past few months would have sent me to the poor house. I don’t think that is very good, no matter what the management at thestreet.com tells me. In fact, I think it is HORRIBLE that a man who has been around this long with access to IBD and the CANSLIM methodology preaches the way he does KNOWING that this system exist. There will never be too many people following this methodology for it not to work. There are simply too many stocks. So to watch CNBC or read thestreet.com so many times and never hear or read about the CANSLIM system is STUNNING!!!!!!!!!!!!!!!!!!!!!!!!
With there being 43 new 52-week highs to 238 new 52-week lows, I simply don’t know how anyone can say that new highs look stronger than new lows and that is why Cramer believes we are at a bottom. That statement combined with a subscriber making a similar incorrect statement that there are never more new highs than lows at a bottom show that people simply are COMPLETELY IGNORANT of their history. Sharp market corrections like a 20% drop in one month like in 1998 definitely is not going to have more highs than lows at the bottom. But long protracted bear markets will in fact have more highs than lows when they finally bottom.
I do not have the data but back in 2002 I know they were pretty much getting close to even and by that March 17, 2003 follow-through day, that sent many stocks on to breakouts from HOT HOT HOT max green chart patterns, there definitely were more new highs than lows. So this is just one more negative note to close this commentary out on. There sure is not a lot of positives to talk about in this market. And I do not know about you but when I am 55% cash, 30% short, and 15% long, you can be sure we are in a very UGLY market, since I only go long stocks that move higher and higher. I do not buy stocks that are falling. So being only 15% long is a huge clear warning to newbies that if you want to go long stocks right now you are nuts!
Now is definitely not the time to be going long! CASH IS KING!! Aloha and I will see you in the chat room where the bull market is still alive and well!!
Comments
7 Comments »
Was just informed via a subscriber (thank you, Vivek!) that Dennis Gartmann has sold 95% of his gold position the past three days.
Now, I am not sure if this is right or not. But if he has and knowing that combined with that chart pattern makes perfect sense. If he is out of gold, maybe we should be too.
DG out of gold, very interesting. That would blow away Jim Rogers’ commodity play! But, these things could also be consolidating from massive runs the past few months.
Exactly. They could base out and run again. But if they do that, I will not be along for the ride as the chart would not look good with too much HUGE distribution and red BOP. GTU’s near perfect setup is broken HARD. These charts even with another base, unless there is nothing but max green BOP and huge accumulation with no selling for the next seven weeks. I am pretty sure that wont happen but you never know. I think, for now, too many people see this play and that means it is over. Maybe it is for now or maybe it is “the” top. Either way the charts do NOT look good enough for me to get long again. My time here is over already.
Not a good market.
Big Wave Trading has set up a fantasy baseball league with a live draft!!! Its a few days away.
HURRY!!!!!!
League ID: # 51536
Password: stocks
http://baseball.fantasysports.yahoo.com/b1/register/joinprivateleague_league_select?.scrumb=
Just click on this link and enter the ID and password!
Best of luck.
If you like camaraderie amongst fellow friends or if you would like to see if you can beat me at another game, please sign up for fantasy baseball. I just started doing fantasy baseball and football two years ago and I enjoy it very much. I am glad I was introduced to this addictive hobby, LOL. I use a form of the CANSLIM system for this also.
TSCM management giving you a rough ride? I thought you might get some heat when you closed out one of your pieces over there with “Read more RevShark, watch less Mad Money”. I thought that was hilarious (and true)!
I think Cramer was calling for a straight run in gold to $1600 on Friday or Monday, can’t remember which.
As a British guy now living in Canada my baseball knowledge isn’t great but I’ll be giving it a try. I know more about football so if I suck in the summer I’ll see if I can pick it up for the fall!
BTW it’s great to see the commentaries from you and MS posted here daily. Much appreciated.
You are very welcome. Way to be a great sport. Baseball is MUCH harder to get people to play than football. We always have enough there. But baseball is like pulling teeth but it is still much fun!!
Thank you for your kind comments. At first I was 100% against this site but after many very smart people told me to do it, it appears to already be a success (via page clicks) compared to the .COM site which is something I don’t understand.
TSCM editors giving me a rough ride because they don’t understand people are only clicking on them becaue they have heard of their names before (Cramer, Kass, etc..) but if they had A LOT LESS PURE TRASH and more intelligent proven-track-record individuals writing it woudl be a LOT better…EVEN IF THEY WERE ALL JOSHUA HAYES (A NOBODY IN THE GRAND SCHEME OF IT ALL; A BIG “WHO???”). If they had more Rev, Helene, and me writing…like arms, dan, farley etc…it would be a much better site.
But wall street doesn’t pay for research that makes money….they pay for research that confirms their beliefs.