Stocks Rally On Low Volume But The Market Is Still Going Nowhere Fast

January 27, 2009

There is almost no point in wasting your time today with commentary so I guess I will cut to the heart of the matter and tell you what we need to do right now since the market is not doing anything (10/27/08 to 1/27/09: Nasdaq -0.07%).

I know that the market was up around 1% on all indexes today but that has just put it basically where it was last week and three months ago. The simple fact is that this market is going nowhere any time soon. If it does break up or down, I am pretty sure that all those daytraders that have shown up recently will pay the price. But until the price of the indexes can start moving higher or lower on higher volume, daytrading just might be the right play for right now.

Or perhaps the wiser and more sophisticated way of approaching this market right now would be to hold a high level of cash and wait for the perfect moment to put the money to work on the short or long side. I don’t understand why people feel that activity is the equivalent to making money. You know how I figure out if a trader is smart or not? By how little they trade.

Those that try to pick bottoms (stinky fingers) and guess tops (insanity) only end up, USUALLY, losing money as they miss-time their actions left and right. The wisest of you, ESPECIALLY IF YOU ARE NEW TO INVESTING, should have your money mostly in cash right now. Only the crazy people or REALLY GOOD DAYTRADERS are trying to mess with this market right now. And I guarantee the wisest are NOT using their whole bankroll.

At the same time putting all your money in gold is crazy to me also. I suggest to wait till we have those PERFECT setups for longs or shorts setup and then put our money to work when the market is ready to move in our direction. PLEASE GO BACK AND STUDY ALL OF MY PAST BIG WINNERS IN BULLISH MARKETS. If you do this you will quickly and clearly see the HUGE money that can be made by buying breakouts or bounces on heavy volume correctly. It doesn’t take a genius, it just takes someone who is hard working and is on top of his watchlist.

If this market breaks lower, we have a lot of potential short candidates and smart people know it is NEVER smart shorting stocks not moving lower. Why? Because short-squeezes can hurt more than you can imagine. If you have ever owned a short and had it reverse on you more than 20% in one day, you will quickly learn how dangerous the game can be. Those that have witnessed my shorting in 2008 (May-September) saw how shorting at the right time can make you GOOD (not HUGE) money in a short amount of time. Right now, shorts just are not working like they should be. Longs are not perfect either but at least the last three longs we have taken are doing well.

Basically, this is one mixed market and everyone should be holding a lot of cash. It isn’t going to zero yet and holding your money in cash is much better than buying the banks each tick down. I don’t care what those CRAZY “buy on the dips” guys say. Buying stocks moving down is WRONG! The only good stock is a stock making me money. The only good long is a stock that is moving up. The only good short is a stock that is moving down. How can you be down around 40%, like Cramer, and say that what you are doing is the right thing? YOU CAN’T! Anyone down more than 20% for 2008 DID SOMETHING WRONG! I don’t care if their name is Peter Schiff. Did he make money in 2008? NO! SO HE WAS WRONG!

There are some people that phone into Cramer’s show and the Dave Ramsey show that just make me question what in the heck most “regular” people are thinking out there. The individuals that read this and watch my videos, I thank you for being smart enough to not listen to the wall street BS. I am just FLOORED and SHOCKED by how many that still do. I would like to think there are more smart people out there than dumb but EVERY TIME I turn on CNBC and see Cramer going over “technical analysis” or happen to accidentally see “the lightning round” I am just stunned thinking about how many people are watching that CRAP like lemmings. Very scary and the main reason people like Don Worden publish Worden Notes on people down 28% for the year. How can you “Knight” someone down 28% for the year? Has the investment world gone crazy? Sadly, I think it has. Don Worden and Jim Cramer have both COMPLETELY lost their rational minds about investing in the stock market and yet more and more people suck it down like it was kool-aid for the soul. Sad.

If you are down more than 20% since October 2007 and are not a subscriber to this web site, what are you waiting for…a 50% loss? Cause if you listen to the advice coming from the notes of Don Worden or the rantings of Jim Cramer, you will surely be there soon.

Thirty minutes a day of Investors Business Daily could really change some of your lives forever! Stop watching CNBC, stop reading the Wall Street Journal and replace that time with Investors Business Daily and within a couple of years you will see a HUGE DIFFERENCE in your investment success.

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