Market Stages A Follow-Through Day But The Lack Of Leadership And Nice Charts Suggest It Will Fail

Today might have been a follow-through day but the fact that ZERO nice charts and ZERO nice CANSLIM stocks exist tell me that this is not a FTD I have to worry about being left behind. Also, take in to consideration I had ZERO full covers out of my shorts and there is a lot of problems to be worried about if you are a perma-bull in a bear market.

A lot of people are very excited to see the market up today. While I am very happy that we are not crashing further to new lows, the fact that there are no longs for me to take tonight with zero shorts that need to be covered. If today’s follow-through day was for real, then not only would I have new longs to take but I would be seeing a lot of stocks setting up in bases. Right now, you can’t find a single chart that still has a tight pattern after the brutal thrashing the market has received the past two months.

If I had a lot of new longs or had a lot of full covers in my shorts then I would be more than happy to turn into a bull. Remember, stocks can go up as much as they want but shorts can only go down 99.99%. You can’t get more than a 99.9% return on a short. So obviously I LOVE to be long. For some odd reason a lot of people missed the true bull market of 2003 to 2006 and instead showed up in 2007 and 2008 which was the last leg up and the start of a new downtrend. This has caused many to be very impatient in this market environment.

After most of these guys have lost 30%+ in the stock market since October, they decide now that they want to be “smart” and they are going out buying stocks thinking they nailed the bottom. All I have to ask is what UGLY stock are you buying??? Nobody, should be buying stocks right now! Why? Because there are no leaders. ZERO! NONE! ZILCH! Nothing!! If you are going long stocks here that means you are buying something that has been destroyed. Not only that but you obviously have not learned that PAST BIG WINNERS ARE NEVER FUTURE BIG WINNERS. This is a true big bear market. That means when this is over there will be NEW LEADERS from NEW INDUSTRIES and NEW STOCKS.

Do any of you remember all of the oil bulls that attacked me when I said oil stocks were topping? Do you remember those people that came against me telling me that “you don’t understand dry bulk” and that DRYS was going to hit a new high in 2008? How have those trades turned out? Do you remember the crazy woman named Sandy who went after me telling me “you don’t know what you are talking about” and saying that the bottom was in back in March? She was buying bank stocks that “bottomed.” How do you think she is doing now?

The point I am trying to make is somebody just posted a comment that GOOG is going higher, AAPL is going higher, and that airlines are breaking out. None of these things are correct. GOOG and AAPL can rally to the 50 DMA as far as I am concerned. I will look to short both stocks on the next failure at these key moving averages. The downtrends that these PAST WINNERS are in are your typical post topping downtrends that we saw in 2000 in so many tech stocks. There is still a ton of room to the downside and if these stocks fail I will be more than happy to go short these two (I am already short AAPL with a current 40% gain).

Also airline stocks are no where near breaking out, unless you are looking at 1-minute charts. I don’t daytrade so I do not have any interest in this. All I have to say is take a look at those UGLY airline charts and UGLY GOOG and AAPL charts and tell me if they look like any of my PAST BIG WINNERS that produced 200%, 500%, 1000%, 1500%, 2000% gains. If you go look at ANY of the longs that I took in 99, 00, 01, 02, 03, 04, 05, 06, 07, and 08 for those big gains or research any stocks in the 1900-1998 period that was CANSLIM quality at the time of the breakout, you will quickly see that today’s charts look NOTHING like the winners of EVERY YEAR in EVERY MARKET throughout the ENTIRE HISTORY of the 1900’s stock market. The bottom line is that this is NOT a good follow-through day.

What if I am wrong? Then I will be more than happy to go long stocks WHEN THE PROPER SETUPS show up. Some of you still do NOT understand that even IF you do buy the exact bottom of this bear market you will be buying an INFERIOR stock. When the next TASR sets up and moves higher you will quickly see how badly your “smart” and “egotistical” gamble was. While I walk away with a 2,000%+ gain, you will think you were smart with your big 35% return in 12 months. So even if you buy the exact low SO WHAT? WHO CARES?? Not me. In fact by doing that I NOW KNOW that you will NOT be buying the next TASR. Instead you will be trapped in the next MSFT. How well as MSFT done since 2000? From 10/09/00 to 10/16/08 MSFT has moved a remarkably sad -0.49%. So as you can see going long PAST winners is a stupid trade, even IF you buy the exact bottom. You may think you are cool but in reality you are a laggard in a laggard stock.

If the market can hold these lows and move sideways to slightly up over the next 3 months and I start to see some CANSLIM quality and some beautiful charts in strong stocks then and ONLY THEN will I look to get long stocks on every breakout. Don’t forget I still have 3 longs that I am long but at the same time I have 25 shorts. Even at the 2002 low, I had more longs and saw a LOT MORE setting up in what could be potential good bases. By 2003, there was NO DOUBT the market was ready to go by the FTD in March 2003. Not only were there beautiful charts everywhere starting to setup and breaking out but the Nasdaq took out the 50 and 200 day moving average on the FTD. Where is the 50 and 200 day moving average of the Nasdaq now? Above the price. Then that means this isn’t right to go long yet. Have any of you that are not subscribers taken the time to study the market in relation to the 50 and 200 DMA? If you did you wouldn’t be looking to go long stocks here.

The US Dollar proves this too and so does the oil chart. Just look at the price action of these two and look at the price bar in relation to the 50 and 200 DMA. I think if you have any intelligence you will quickly see that it pays to go long when the price is above the 50/200 DMA and to go short when price goes below the 50/200 DMA. If everyone reading this would JUST DO THIS, you would save yourself a TON TON TON of pain. You would have been long the 2003 bull market and all the other uptrends till the top in Oct 2007 and you would have been out of the market and on the sidelines before all hell broke lose in the stock market.

Well I don’t have much else to say but this. If this was a bottom, I would have had multiple FULL covers, I would have had more than 6 partial covers, I would have had at least 2-5 new longs or stocks close to being a new long, and I would already be long more than 3 stocks. PLEASE PLEASE PLEASE, review my Past Big Winners in the Longs section at my .com site when you have free time and LOOK AT THOSE RETURNS!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Then go back to yesterday’s comments and look at the return on my shorts the past 1-4 months. Now why would ANYONE think that I am wrong this time. I have never been wrong at any MAJOR TURN since 1998. I started this in 1996 and by 1998 I was giving stock picks directly to TokyoJoe. Ever since then I have been long the uptrends and short the downtrends. I never fight the trend. When the market is moving up I am long leading stocks and when the market is in a real bear market I am short the past leaders that everyone wants to buy.

And to everyone that told me I was wrong about oil, banks, and DRYS, you can go freak yourself.

ALOHA!!!!!

Comments

12 Comments

Comment by Shaun

2008-10-16 16:48:08

Some charts are starting to turn around, Google is up to 400 almost afterhours, Apple might test the 116 mark from previous rally, if its break I wouldn’t want to be short.

Great site by the way, and keep up the good work!

Alot of techs are setting up nicely and the airlines are looking to break out here.

Whats your opinion on Gold?

Comment by Joshua Hayes

2008-10-16 18:04:16

First of all, I have already taken 70% of my profits in AAPL with around a 45-50% gain in under two months.

Second of all, AAPL would be a complete cover if it does close above the 50 dma on volume.

Third of all, AAPL and GOOG will NEVER EVER AGAIN!!!!! hit their old highs of the past bull market. I can’t believe people don’t understand this. Don’t you remember 2000!!!!!!!?????? CSCO DELL MSFT YHOO AOL…did any of these hit their old highs ever again. The leaders in one bull market are NEVER!!!! leaders again in the next bull. While you waste your time with these, you will miss all those big winners you see from me in my Past Big Winners! Just look at the homepage at the scrolling 10 performances that were my biggest trades with my most recent long that was a big winner. This is why so few can beat the market year after year after year after year. This is also why everyone I know has lost money…EXCEPT MY GOLD AND PLATINUM MEMBERS. They get all my buys and sells and thus know when it is time to go and leave.

Fourth of all, techs are NOT setting up nicely. This shows me that you can not tell what a really pretty chart looks like. You need to study my Past Big Winners before you become another trapped long in lagging stocks.

Airlines looking to breakout. Do you know what a true breakout is??????? There is not a SINGLE DAMN AIRLINE stock that is about to breakout of ANYTHING!!!!!! Do you even look at charts? I mean I have NO CLUE what you are seeing for them to breakout. If by breakout you mean they are about to move higher…then yes. But there is no breakout ANYWHERE!!!!!!!!!! Breakotus come from flat bases, cup with handles, ascending bases, double bottoms, and high-tight flags. There is no breakout in ANY of these airline stocks!!!! NOT ONE!!!! Every single airline stock is in a downtrend and can easily be seen in a downtrend by looking at a weekly chart. I don’t know what your time frame is but it must be 1-minute charts to see a breakout. I DO NOT TRADE INTRADAY so I don’t care about those. I go for the big money.

Fifth of all, Gold is crap and is in a downtrend. Price is below the 50 and 200 DMA so I obviously DO NOT LIKE IT. The US Dollar is in an uptrend and I have been a bull on it since it moved above the 50 and 200 DMA.

I hope this helps. Make sure you read my strategy section and study my Past Big Winners on my .com site. It is for free so I recommend going there. I see a lot of problems with your comment. It isn’t your fault, btw, but it is scary to read.

CANSLIM, CANSLIM, CANSLIM…get your but to the IBD learning center at http://www.investors.com

GREAT LUCK TO YOU SHAUN. BE careful!!!!!! This is still a bear market on the intermediate, sub-intermediate, and long-term. ONLY!!! on the short-term time frame is the market up.

Comment by Joshua Hayes

2008-10-16 18:07:19

The fact that EVERYONE is talking about Gold should be EVERYONE’s clue, that reads this blog, to stay away from gold.

Look at the TV, radio, and any newspaper. Everyone talks about gold. When everyone talks about it, it is NO GOOD.

Comment by LocanBBS

2008-10-17 01:58:34

Dear Joshua,

I don’t know if I got through. (Never used this before.) Just in case I didn’t:

I ran a scan in StockCharts and got:

Family Dollar

Does it fit your criteria?

Thanks!

LocanBBS

Comment by Joshua Hayes

2008-10-17 02:17:09

NOPE!!!! It is below the 50 DMA. How could I want to go long this stock? It is BELOW THE 50 DMA. I think I have made IT ULTRA CLEAR that ALL longs MUST be over the 50 and 200 DMA. GO STUDY MY PAST BIG WINNERS PLEASE.

and it is too noisy in its base. Bases SHOULD BE QUIET. Go to the IBD Learning Center. DLTR was a great long….from 1996 to 1998!!! NOT NOW! Find me something that isn’t 8 years old.

Right now, my friend, NOTHING is worth going long. NOTHING! DLTR is too old and everybody knows about this company. The best longs NO ONE knows about. They are UNHEARD of names. DLTR…find me one person who hasn’t heard of this company and I will give you $100,000 (not really).

Comment by LocanBBS

2008-10-17 02:38:35

I just checked out FDO again in StockCharts. Both dma and ema show it over 50 (just broke through). I think we’re talking about two different stocks. I just looked up again: DLTR is supposed to be “Dollar Tree”. FDO is Family Dollar (Stores).

Thanks for your help!

LocanBBS

Comment by Joshua Hayes

2008-10-17 02:23:05

All comments are screend, Locan. Sorry about that but too many A-holes come here and get smart mouths with me and then when they eat crow (think of Sandy with the banks, willps and that other guy about DRYS, and another idiot with oil stocks/oil) they never say “Joshua, you were right and I was wrong.” They NEVER say that. They just come here run their idiotic mouths because they have BIG EGO’s and like to start crap. I don’t put up with that anymore! So we have to screen all. Oh yeah recently some schmuck named Bob Maelstrom started crap with me about a something that isn’t even a problem. Some people will always be idiots and sadly because of idiots like Bob M. everyone has to be screened. I apologize but blame Bob M., Sandy from NYC, and the oil perma-bulls.

But never fear as long as you ask a question about a stock AND KNOW MY RULES OF OPERATION (read all the free material on this .net site and .com site before saying something) then you can ask all the questions you want.

But you are all good Locan! GREAT LUCK BUDDY and don’t be in too big of a hurry to put money to work. YOU HAVE PLENTY OF TIME, trust me.

Comment by Joshua Hayes

2008-10-17 02:25:00

What is up with all the INEXPERIENCED and NEWBIE “traders” or “investors” wanting to buy stocks after they just lost a lot of money. LOL. I will NEVER understand the crowd and the way they think.

Lucky to be me. Thank you GOD!

Comment by LocanBBS

2008-10-17 03:15:28

Joshua,

Anyway, you’re right. I should study up on CANSLIM. (Just signed up with IBD for a Free Trial on your suggestion!)

I have lost a lot of money in the past few years running with the herd. I am glad you offer an alternative! I will become a regular member of yours again IMMEDIATELY as soon as the stock market bottoms.

Sorry, right now I’m trying to conserve every cent so I can recoup my heavy losses when we go up again! I live in Germany, so puts/shorts on American stocks are not so easy to do here (limited choice, illiquid, expensive). Anyway, I suppose it’s too late to go short now, isn’t it?

Maybe it’s safer/better to just bring the cash home and stow it here until that time. Don’t like to leave it sitting around on my bank account, where “worms” and “cobwebs” or other “vermin” can get to it. Or do you think the banks are “safe” now and it’s worthwhile collecting a few percent interest (a year!)?

Thanks,

LocanBBS

Comment by kenneth

2008-10-17 11:02:24

Josh, like to know your thoughts on EBS with on a pull back to the 50DMA…

Like the site.

Comment by Ian

2008-10-17 20:23:11

I’m still holding small short positions in FSLR and ISRG. Even though I notice you seem to have covered both, I suspect there will be another leg down soon.

Comment by Author_Ego

2008-10-18 10:42:50

LocanBBS,

My friend, why on earth are you not a subscriber to IBD right now? Come on. Guys, it’s time to get serious. It’s your hard-earned money on the line! Forget the free trail! Invest in your education now. If you want to be a subscriber to IBD, I can get you and anybody else the deal of a lifetime…I work at IBD and will get you guys a HUGE discount.

NOW IS THE TIME, FOLKS! Now, not when the market finally turns…if you wait till the market turns then you’ll be playing catch-up trying to learn everything that you should be learning right now. I’ve gotten two e-mails this week from people that are taking advantage of this opportunity. I know, come the next bull market, they will be more than ready. The market is handing us a gift: time. Time to get up to speed….

Think of the stock market as a jungle. In that jungle is a treasure. Yet before you go get it, you need to learn how to survive in that environment; otherwise, no way you’re coming out alive. Would you walk into a jungle and try to learn to survive on the fly? Of course not. Then why would you get in the market if you haven’t properly prepared beforehand. You need to learn the rules, the chart patterns, how to hold a winner, etc.: you do that now, not when it’s time put what you know to work.

Like a guy I work with recently said: “There are things about trading I don’t even know that I don’t know yet.”

I have a feeling the next bull market, when it finally comes, it’s going to be one for the ages. There’s no way we won’t be ready. So don’t be left behind.

My e-mail is: john.authorego@gmail.com. Anybody and everybody is welcome to contact me.