So Much For That “Bottom” As Stocks Crash For The Second Day In Three Sessions; Never Buy Stocks In Downtrends

September 18, 2008

Once again, there was too much to go over with the website and all the shorts that I had to deeply study if they were to going to be good shorts or if they were too extended to be a good short. Obviously, the majority of the shorts that were in the scans still have something not either right with them or they have already been taken out to the woodshed and chopped up to bits.

Sadly, for those that think we have seen enough downside, I hate to tell you but there is not a single sector leading right now. there were a LOT of medical stocks that were showing up in very bullish chart patterns but most of them decided to end their hot patterns today, like UTHR NPSP AMGN and DNA. The destruction in these charts now leaves almost nothing out there looking good except for small regional banks. These banks are not the greatest longs as they are known as better longs in bear markets that are long and drawn out. So the fact that they have moved up to the front of the top sectors list is not that bullish at all.

I have been saying it since the October top that this is a bear market. Back in January and February a couple of hardheaded JERKS tried attacking me and my members (without having their facts straight) and did not realize how much money we made on the long side from 2003-2007. Sadly for them they started recommending to me that I “load up” on MS, WM, AIG, LEH, GS, UBS, and all of these other banks that are getting destroyed like BAC. All I have to say for those fools that attacked me so viscously is “that I told you so.” “I TOLD YOU SO.”

I can not make this any more clear than I have in the videos. We are smaller individual investors. Even if you have one billion dollars you can move faster than the multibillion dollar firms that have to buy on the way down. The fact is that IBD and other famous traders have taught us ad naseum that if you buy stocks on the way down you are headed to the poor house. Do you think you can have your house fires start up, not put them out, and come back and your house will be ok? Of course not. The same way it is with stocks. If you buy something at 50 make sure you are out by 45. Once it hits 40, 30, 20, or even 10 analysis paralysis will hit you and you will not know what to do. You will instead hang on and waste putting more bad money after a bad investment.

In a bear market ALWAYS cut some of your loss if your shorts go against you immediately. Don’t waist your time by holding on to bad investments. In bear markets they either work or you get out of them. There are two kinds of longs and shorts: the first batch make you money and you HOLD THEM. The second set you don’t hold them and you dump them immediately with no questions asked. Sell off a part quickly if the indexes are so sick that they are dropping 5% a day and you can’t get a rally going. But if your stock holds up into the selling don’t sell it right away. Hold on to it and you can see how well it is doing in this nasty market.

Remember what I said about the price needs to be over the 50 DMA and the 50 DMA needs to be over the 200 DMA, not just on your stock, but also on the indexes. Well, most of you that have tried to go long the past year need to take a look at your index charts and take quick glance your charts. If this pattern is not residing in both, this is why you are lagging. In 2006-2007 China’s main index went up over 400% with price staying above the 50 DMA almost the ENTIRE TIME while the few dips it had held the 200 DMA. It was only once it finally crossed below the 200 DMA that the “death cross,” just like on the NYSE, DJIA, and Nasdaq, happened. History always repeats itself. I only wish I had Telechart charts of the Chinese stock market in 2006 through 2007. I am sure there were many 1000% winners for the taking from that index.

Anyways, pray for surf, I am getting chubby and hate our gym, so I need some big waves. Anyways, I can barely keep my eyes open. Hopefully, you will have a great day tomorrow. I know I will! I have been right with this trend the whole year and let me tell you something, even though I have been mainly in cash, it still has felt great knowing that we sure are on the right side by not being long and losing all our money. I had many friends I tried to keep from buying GS, LEH, MS, FNM, FRE, AIG, and MER. They knew my track record, they have seen my HUGE PAST BIG WINNERS that just rock it!!!!!! But they still did their own thing. Don’t be like these guys. Let history teach you how to make a TON OF PROFITS when this downtrend is over. I will not miss the bottom. Will you?

FULL FREE PART ONE YOUTUBE VERSION VIDEO: