Stocks Run Into Resistance Right At The 50 Day Moving Average As Stocks Selloff On Options Expiration-Skewed Higher Volume

March 21, 2009

I made a whopping six videos for my subscribers this weekend and had a very active weekend myself. Therefore this commentary is going to be sweet and to the point with more ‘notes’ than an actual column. If you really want to know what I am thinking, how we are positioning ourselves to keep making money in a market where almost EVERYONE I know is losing money, then you will need to watch the six videos. The good news about the videos is that they are not time sensitive to before the opening bell, besides the first two. So you don’t have to watch all of them before the open or miss the whole point. They will be good for days to come.

As for the market. About all I have to say, after Friday came to a close, is of course! This is what socialism does to stock markets. Stock markets do not react well to unfavorable business climates and that is exactly what this administration and Fed is doing by showing us how irresponsible they are. It is like they don’t want the bad things to happen now, because IT IS ON THEIR SHIFT. You know, if it happens later, instead of today, guess who I am going to blame? Not the next guy. THE WHOLE GROUP OF INCOMPETENT POLITICANS AND ELECTED FED HEADS THAT ARE DESTROYING THIS ONCE GREAT NATION. Ronald Reagan, John F. Kennedy, Abraham Lincoln, Thomas Jefferson, and George Washington have all not rolled over in their graves.

The mess that the Fed is creating and created keeps getting worse week by week. The bad news keeps getting worse and worse and it seems like it is never going to end at least on the economics front–God knows the media would never report any bad news while this President is in office. You would think all of this bad news would eventually lead to an oversold situation combined with an environment that is just too negative that would lead us into a nice big bear market rally. Too bad that it appears this really bad news is just the tip of the iceberg, because the put/call is nowhere near where it was in March 2008 at 1.41 and the VIX is nowhere near the highs it hit in October very close to 90. Folks, it STILL IS NOT too negative out there.

That means that everyone who is talking about the recent lows being a capitulation bottom must be either A: very biased to the bull side or B: very biased to the left side. Either way, they are wrong, and those that use technical analysis to stay in either uptrends on the way up or downtrends on the way down will be right. Right now, there are a lot of charts trying to put in what could be potential bottoming patterns. But sadly the best looking stocks of the bunch, at the start of the week, have all seemed to have lost their luster by the end. This is disappointing for a market that is supposed to have bottomed.

If you are looking for a real bottom I suggest you first know what past bottoms looked like. In my part one videos over the past two weeks I have taken the time to show you what the REAL bottoms of 2002 and 2003 looked like before CANSLIM, speculative, and other “hot” stocks took off for the year. These bottoms both had the same characteristics that are not showing up now on the potential bottoms everyone is calling “bottoms.” Those characteristics include a multiple of things that are not showing up now.

For instance, on the lows in 2002 and 2003 the volume on the last down legs leading to the bottom was lower than previous selloffs. Also on the subsequent bounce, volume was much higher and well above average on the 2002 and 2003 rally off the lows. Now, some will say that the volume wasn’t that low on the 2002 final leg down in the summer. Well that may be the case but the rally that followed was on much higher volume on either the NYSE or Nasdaq (I can’t quite remember which one). The 2003 selloff was on very low volume and even had CLEAR accumulation on the way down. Then the rally took off on volume that was MUCH higher than average and well above the volume levels seen on the way down.

Not only were the indexes looking a lot healthier then than they do now but an even more important factor that was showing up in 2002 and ESPECIALLY 2003 is not showing up at all right now. That factor is chart patterns. The “hot” and “beautiful” charts that I love that have max green BOP for at least 10 days, has a TON of accumulation, along with a very tight price pattern that has either a breakout or a bounce on very strong volume (the most recent example is ANCI [was XSI] in June and August) are simply not setting up at all. Not only is this a problem but leading stocks are also not setting up in sound and tight patterns. This means one thing; the market is not ready to rally yet and we need to all be patient.

Now, it is obvious that gold, silver, and platinum are getting some buying in the futures area. Not only that but the ETFs and stocks that have some relation to these metals are holding up well or are already rallying. This was evident, even on Friday, in the IBD CANSLIM quality stocks in my watchlist. Only four stocks were in my CANSLIM scans (628 stocks are in the ‘master’ scan) that could be future longs, that I did not already find in my volume, BOP, price scans. Of the four stocks, three were gold stocks. If that doesn’t give the ultimate confirmation, along with my recent longs being gold stocks and the metal itself, I don’t know what is. The fundamental news surrounding gold is very bullish and I am treating this investment much different than ANY INVESTMENT I HAVE EVER!!!!! HELD.

Subscribers, please make sure you take the time the first few days this week to watch all six videos that I made. The longs and shorts videos are good until the chart patterns end the chart pattern I was discussing and the IBD videos are good till the end of time as I am showing you how I use the paper every time I use it before the opening bell. If the market can get more bullish and shake off the two distribution days, I would LOVE LOVE LOVE to get more involved with the paper and show you, in the videos, how powerful the paper can be to alert you to big winners early on. However, if the market keeps doing what it has been doing every rally attempt since October 2007–that is start and look promising early on only to IMMEDIATELY reverse it and kill any and all nice charts ASAP–then I will continue to just add CANSLIM quality stocks to the ‘master’ list, until we can get that rally that I have been waiting for for a long time now. I have a feeling I will be waiting a while longer. Pray I am wrong.

Have a great week everyone, I hope you all can make some money to help you survive this horrible economic environment that Obama the Fed, and Congress is only making WAY WORSE with budget busting government expansion plans, printing and borrowing of assets that don’t exist, and taxing bonuses at 90% illegally after you wrote the rule to ALLOW THEM TO HAPPEN!! By the way, all of you that think the bonuses are just the worst thing ever…why don’t you look and see how much AIG has shelled out to foreign banks and other troubled banks in the USA. AIG is NOTHING but a US government money laundering operation.

Give me liberty…or give me DEATH! What has happened to the beautiful country I knew as a kid growing up under a Ronald Reagan Presidency and a 1994 Newt Gingrich-led contract with America that helped usher in many years of great prosperity while getting the budget into a surplus. Everyone says we need to move forward. FORGET THAT! We need to move BACKWARDS back to the days of George Washington and Thomas Jefferson. If this government keeps pulling the strings that they are pulling right now, you better make sure you at least have your hands on at least a little bit of gold and silver.

Yes buying GLD or SLV is good, as long as you can’t buy the metal in that account. However, if the “sh** hits the fan,” you can’t physically take your GLD and SLV and get the hell out of here with it. But with physical silver and gold bullioni you can take possession of it and leave the IOUSSA (I Owe You of the Socialist States of America). I am personally advocating young people place 10-33% of their assets that they save annually in gold bullion or some form of gold investment. I am going to do this until the day we go back to the Capitalist policies that made this country such a great nation. If that day never comes, I will continue to stalk and prey for my max green BOP, huge accumulation filled, tight price action stock charts. But I sure will not be doing that with all of my annual earnings. Nope, things have changed the past two years in ways I could HAVE NEVER PREDICTED!!!!!! That means, instead of being the aggressive growth investor that I have been my entire life on the long and short side, I will now have to mix in a little bit of SMART CONSERVATIVE investing that could turn out to make me VERY RICH if things turn bad. Trust me, if you want to see how much you could make in an economic crisis, go study what happened to WWI Germany. History always repeats itself, sadly.

Enjoy the SIX LONG VIDEOS!!!! subscribers. I am dead tired. There was no weekend this week for me.

Top Longs/(Shorts) W/ Total Return, Since First Purchase, That Were Making Me Money Today: AIPC 20% (CEDC 80% CYT 73% CETV 87% SDA 79% ARB 72% FSYS 55% SPG 59% IPHS 57% MOS 51% GTIV 45% POT 52% APD 40% OKE 49% AMSG 31% RDK 30% RIMM 58% PRGO 25% TITN 60% CEO 24% AMX 48% MCY 32% PG 28% K 27% AAPL 36% LLL 34%)

FULL SIZE VIDEO ONE, TWO, THREE, FOUR, FIVE, AND SIX (11 MIN, 20 MIN, 22 MIN, 13 MIN, 17 MIN and 20MIN) AVAILABLE ON THE GOLD FORUMS FOR SUBSCRIBERS.

FREE YOUTUBE VIDEO: