This selling took the markets off around 5% to 6% and a lot of stocks were just walloped. Now while I have continued to talk about the nasty downtrend this market is in and how well my shorts have been doing: top short holdings and total returns: IPHS 44% POT 65% GGB 72% SBAC 66% CYT 69% MOS 74% CETV 89% CPRT 28% AZO 24% RDK 17% AMX 49% PLCE 38% CAJ 34% SPG 52% CEO 51% AAPL 50% ENB 24% K 18% ARB 67% AMSG 20% SPW 77% RIMM 58% LLL 37% CEDC 65% APD 55% OKE 46% SDA 80% TITN 59% PAA 28%). I don’t believe I have seen the market in such a bleak condition in a long time and think I need to tell you about the lack of bullish items out there.

To start it all off only 3% of stocks in the market are above the 200 day moving average and to make it worse only 4% of those stocks are above their 50 day moving averages. I personally have never seen numbers this low on both indexes. If I have, I can not remember it. To top that off, the amount of stocks hitting a new 52-week high compared to stocks hitting a new 52-week low really showed some extreme readings today. Now while we have had 4,700 new lows at one point just last month which signaled over half the market making new lows, there were still more than just one stock hitting new highs. Today, however, there was only one stock that hit a new high and there were 2,300+ stocks hitting new 52-week lows. This is just an incredible number.

What makes this selloff worse for bulls is also the fact that there is almost nothing setting up out there as possible future longs. Until yesterday and today, there was at least two handfuls left of stocks that looked like they could be longs in the future. After the past two days, it has become apparent that only COGT, a stock I am long, CWT, and HTX are the only stocks that still have that beautiful green to max green BOP, strong accumulation, and price above the 50 day moving average. This is such a low amount of possible future longs that I am just amazed that this can actually be happening.

The good news on the other side of this is my shorts and those great returns they are giving me. The only problem is that I did not have the time or the “near-perfect” setups to help me get more than 20%, on margin, short. Other subscribers with more guts than me have gains between 60% and 120%. Axman, Wutan, Author Ego, Mjjacobs, and myself all have strong gains of at least 30% and I have many other members with gains or small losses. Axman is by far the greatest of the great and that should be no surprise to those that know that he has been around since 1987. That kind of experience, as you can tell, has paid off. Now, if someone like Axman can get a 120% gain in a market that is down over 50% from the highs of last year, wouldn’t you want to make the commitment to be the same trader/investor that he is? I know I want to and I know that I will. When I have the years of experience that this great trader has, I know I will get the returns he does.

My problem right now is that I did not expect this market to turn down so fast so I thought I had time to wait for better setups and I did not think it would be this bad this fast. Thus I missed out on really exploiting my gains to the fullest (which would be a 150% gain with the individual returns in my shorts) and now am waiting for a new bull market to start for me to get maxed out to the long side with the new CANSLIM leading stocks.

I will probably be waiting a while as the markets have E ratings on the NYSE, DJIA, and SP 500, a D- rating on the Nasdaq, and C+ ratings on the IBD 100 and IBD 85-85. Until these accumulation/distribution ratings in IBD hit A or B, it is definitely smarter to stay on the short side or if you are new or have taken a lot of your short profits to be heavily in cash. Nothing is wrong with being long cash right now. Since the US Dollar took out the 50 and 200 DMA the future alone is up 18%. I do not play the Dollar index futures but I assume in the futures market you could have made a lot of money by playing the Dollar like that.

This market is getting harder to handle day by day but I know the more we selloff and the higher the volume gets, the closer we get to a bottom. With that kind of positive outlook and a history of getting some amazing returns in fresh bull markets, there is no way I can give up on the market right here. I might be a little down, but I am never out.

Today was an incredibly tough day for me as I had a lot of little “life problems” happen left and right today. At least my shorts are taking a little care of me, even if the market isn’t taking care of anyone. This is why the biggest gamble ever is buy and hold: F and GM. What a joke that whole story is.

This is a site designed to make you a TON of money in bull and bear markets. This is not a site to disect news and the automobile industry. All I can tell you is that I believe in extremely low taxes, free competition. little government regulation, and more incentives to have more IPOs come public. If that makes me a staunch Capitalist, then whatever and so be it. I know what it will take to turn this market around and I guarantee it isn’t bailouts. On that note, have a great day/afternoon/evening/night and I will see you after the next closing bell.

Aloha from the beautiful island of Maui where traffic gets more and more congested every day.

Part one and part two, full size version, of the Daily Market Wrap Videos are available to Gold and Platinum subscribers on the Gold Forums. Free version will be posted in a few hours.

This distribution day adds to the pressure the market is facing as each and every day passes. The market in terms of the Nasdaq and Nasdaq 100 are now down over 51% from the October 2007 highs. These losses have been extremely damaging to the psychology of many market players and has done some major damage to individuals portfolios.

This sad news is made even more sad knowing that the market does not appear to be near a low–at least as far as the market is currently concerned. This is obvious to me via the volume that is coming across the board on the indexes.

The volume is below average to average during this selloff and while that appears good for those expecting the market to turn around quickly, the fact is that low volume selling can last a long time and do some major damage to individual’s portfolios. The low volume can go on for a long time and wear on people which can be much worse than a fast swooning market that hits bottom and turns on capitulatory volume. This turn is obvious to a lot of technicians and causes general excitement to enter the market. The lack of a turn like that prevents any excitement to enter the market and you are left with nothing but pain as the slow drop burns in.

I have produced two videos tonight that go into detail about how the current market looks, how the longs and shorts look, and how the capitulation in one of my wonderful short positions (ARB 65% gain in a little under two full months) is what we need the market to look like before we can call any drop capitulation. Even if we get a selloff around 10% across the board, if volume is just slightly above average, average, or below average, you can be sure that that action will not be called a capitulation day.

The most ignorant of market operators might call it capitulation but those of you wise enough to read this blog and protect yourself from the lies of CNBC know that we will need a massive volume surge like in 1987, or in ARB today for example, before we can even consider the market near a capitulation bottom.

Something tells me that simply is not going to happen because we have a very bad market environment out there. We have multiple banks racing toward zero, GM and F racing toward zero, and a failing airline industry that has every single one of the major airliners priced below $12 a share. This is not conditions that are good for a turnaround and instead, along with the horrible economic data coming out, is conditions good for a market that could easily lose another 20% to even 50%.

I know this is horrible to think but some of you are very smart and understand charts. I am not speaking to those that read this and do not understand what I am talking about. While I want to help them and would love to as they should see via my returns in shorts like GGB 68% ARB 65% CEDC 61% SBAC 61% SPG 51% SPW 73% CYT 63% POT 60% SDA 77% CETV 86% APD 50% RIMM 54% MOS 66% ATHR 53% TITN 54% CEO 47% AMX 47% CPRT 28% ENB 18% PLCE 35% IPHS 35% CAJ 37% LLL 30% RDK 16% OKE 38% PAA 18% AAPL 46%, I can not force them to listen to me if they are biased to buying bargains. My returns speak for themselves and if you review my best longs from 1999-early 2008 you can see using this methodology (at least learning this methodology; not necessarily listening to me) that you can make a TON of money on the long side and a LOT of money to the short side.

Now getting back to an important technical pattern I want you all to look at, I just want you to take a look at a quarterly chart of the Nasdaq. This chart will be very disturbing to look at for those that understand how important accumulation and distribution is. But we must look at it to prepare ourselves for the worst case scenario. All the while being prepared by watching stocks like COGT for a possible bull market. However, this chart paints a very ominous picture and it is clearly noticeable to good technicians after an immediate glance.

In case you are not good enough to see the disturbing situation let me try to describe it for you. While the market rallied all throughout the nineties you can see that as each quarter came and went the market would work its way higher on stronger and stronger volume. If it did have a down quarter it was on lower volume 5! of the 7 quarters the market actually pulled back from late 1990-2000.

Since the end of 1999, however, we have the almost opposite and an even more disturbing situation. Since the start of the new century the market started off down 10 of the first 13 quarters. Not only was it down but it was down on very heavy volume nine of the ten times. After five of six quarters of rallying, during a time the market was in an uptrend, the market managed to have four out of five down quarters yet the market still made slight progress. Three of the four down quarters had heavy volume and was much heavier than the one up week yet bulls overall held.

Right after that, there were six of eight quarters higher but the two quarters in the middle had very heavy distribution compared to the six quarters of the rally. After that, the Nasdaq had five quarters of flat to slightly down price action. During those five quarters, three of them showed very heavy distribution on slight down days. The heavy distribution was so heavy that it was the top three highest quarterly volume bars ever. All three were quarters where the price of the market finished lower than the quarter before.

All of this distribution is now very bearish but before the selloff you can see was a very bearish warning. Those that listened to the voice of the market (price AND VOLUME) could clearly see and hear that major distribution had taken over. Those big three down quarters of record volume has since been surpassed by one of the worst quarters ever in the history of the stock market since a 45% decline in the DJIA in 1932. That is this quarter’s 42% loss on the Nasdaq on volume that is the largest EVER for quarterly volume. That largest volume ever with all those distribution quarters makes the Nasdaq look extremely sick.

And if you think there is much safety in the NYSE you are wrong about that. The NYSE had its highest quarterly volume ever during a down quarter in 2007. So while the quarterly volume selloff is not nearly as high as on the Nasdaq, the Nasdaq is full of technology and innovative growth companies that usually go on to make bigger price gains. That excitement and powerful gains was a hallmark of the Nasdaq during the 80s and 90s and was from 2003-2007 (mainly 2003 and 2004). Though the last rally during that time was NOTHING like the eighties and nineties, it still produced stocks like TASR that returned 2,390%.

Those kind of gains in a bull market combined with 86% gains from stocks like CETV in a bear market eventually leads to substantial wealth. Just do not forget about those taxes! I hope everyone had a good day, survived all the BS from the media, and with your updated watchlist are ready for tomorrow. Have a great day/afternoon/evening/night!

Part two (17 minutes) is available for Gold and Platinum members in the Gold Forums. Full size Part One is also available there.

Right now, the market is in a very long term downtrend but on the short term, after the market reset its rally attempt on Thursday, things have been looking a little better each day. On Thursday the entire market staged a bullish reversal and ended up closing higher on stronger volume. After a lower volume session on Friday followed by an even lower volume session on Monday, today came with another bullish reversal and pick up in volume.

While this is good on the short-term it still is not an “all clear” sign that the market’s downtrend is over. Instead what we have is a market that is putting in its second up day on day four of the rally attempt. This now puts the market in a situation where we can look for a follow-through day.

To me, what I must see on a follow-through day is more than one index up over 2% on volume higher than the day before. I also want to see this happen before the 11th day of the rally attempt. Anything after day 10 is increasingly prone to failure. The other requirement for the rally attempt to last longer than a few weeks is that I must see leading stocks in leading industries setup.

That still is not the case as only 3 of the top 10 industry groups hailed from the top 25% of industry groups. That means that leading stocks did not lead today, just like they did not lead on Thursday. Instead stocks that have been beaten up or are not showing leadership are the stocks doing well. That is never a good sign for a market rally.

This can also be confirmed in my scans as my BOP scans that produce stocks before they show up in my price/volume scans have gone completely empty. Tonight was one of the worst readings from the four scans that I have seen in a long time. This shows me that there is not much out there setting up and ready to go long and therefore this rally attempt will probably not end well.

For it to end well it will probably have to lead to another lower volume pullback that is followed by another higher volume rally. What we have so far is still way too early to be of any use to those that follow the trend of the general market and look to make big money on the long side when things are good.

Right now there are only a tad over 4.25% of all stocks over the 200 day moving average and only 10% stocks above the 40 day moving average. The fact that only 4% of the market is over the 200 DMA means that not a lot of stocks are going to show up in my scans as all of my longs BEFORE I GO LONG AND BEFORE THEIR HUGE GAINS that I show you on my Past Big Winners section have the price above the 50 DMA with the 50 DMA over the 200 DMA. So only 4% of the market can even be considered by me to be worthy of a long. That is extremely low and is indicative of a market not ready to rally.

If those numbers did not convince you, then maybe the lack of new highs will. Yesterday there were only 2 new 52-week highs on the Nasdaq, NYSE, and Amex. Today there were only five. This lack of leadership is going to be costly to any rally attempt.

Now that I have completely depressed anyone who was getting excited about a possible rally I do want to say that I am rooting for a rally as I would ALWAYS prefer to be long over being short. I will never have a short up like my TASR’s 2,300% gain. Much less a nice 300% gain like HIL in 2003. As you can see the start of bull markets with a high VIX (we are still over 67) can produce some huge gains that can make you rich for years. However, when it is not time to go long it sure would be stupid to say “get long.” Wouldn’t that make me Cramer? And wouldn’t that mean you are now down 42% this year? Not good for mom and pop.

The other clue that makes me think it is not time to get long off this rally attempt is that I still have had ZERO shorts give me FULL cover signals. That makes it 14 sessions in a row where I have not had one short that was a full cover. To go along with not having any full covers here are some of the gains in my top shorts that produced gains for me today: GGB 63% APD 44% SBAC 55% MOS 63% CYT 59% ATHR 50% PLCE 23% TITN 50% ARB 53% CAJ 34% SDA 75% CEO 42% SPG 41% CEDC 57%.

When you have returns like this on your shorts, the new shorts you take keep working, you have no full covers hit your top shorts and new shorts, and the longs that are showing up are not working, you can be sure that the only right thing to do is to continue to be short. The time to stop shorting will come sometime in the future and I will know exactly what to do when that time comes.

Until max green BOP, huge accumulation, low volume pullbacks, RS and moneystream lines hit new highs, and excellent well rounded price patterns show up in stocks that are turning around their EPS and sales or are building beautiful perfect chart patterns, there is nothing to do but wait it out with high levels of cash. That is unless you are an experienced short seller. If that is the case, you definitely want to operate this market until it is time to go back to being a bull.

For now the bear claws are still out, even though the bull is trying to get out of the gate. Remember, cash is your best friend right now. The last thing you should be doing now is chasing shorts lower in an attempt to make up for major losses to your portfolio. If you are thinking of going short here, think twice. We have been down for way too long and after 13 months of a bear market and with so many stocks being so far extended from their 50 day moving average you really put yourself at a high risk to make a move here. The right play is cash. Great luck out there and I will see you in the chat room!! Have a great day/afternoon/evening/night.

Gold and Platinum Members can watch my Daily Market Wrap Videos Part One and Part Two full screen versions in the Gold Forums now. Free and Silver Members youtube version below:

This very weak close was very nasty to see but some consolation can be taken with the low volume that came with the selling. That lower volume was the second straight day of a lower volume pullback that has come since the reset of the rally attempt on Thursday.

On Thursday the market dipped to new lows on a few indexes that reset the previous rally attempt. However, by the close, the market reversed to a very bullish close on much higher volume. That put market players who have been watching this selling for thirteen months now in a better mood.

The pullback the past two days have made some pretty upset that the market can’t hold onto the gains. However, these people refuse to look close enough to even understand that it is on lower volume and that there is a chance that we could rally and move higher for God knows how long.

The only problem with moving higher here is that I am without ANY leadership. There has not been one pullback or bear market that I have been in where there isn’t at least one sector with more than 1 or 2 stocks moving up. Right now I have two medical stocks up over 30% since I went long but there should be more showing up with better chart patterns if this was a true bear market leader. The fact none of the brother or cousin stocks are showing up for possible breakouts is a bit worrisome.

I do have a new long tonight but there are two major problems with this long. First off it is below $5 a share. There is not one single stock out there that is a leader that is priced under $5. Now in a new and fresh bull market you can find a lot of stocks turning around their EPS, sales, and stock via a really bad bear market (like some of my best longs in 2002 and 2003). The only problem is that if this is not going to turn into an uptrending market, it might fall hard. The last problem is the fundamentals. I think all I need to tell you is that the EPS rating is a horrible 5. If that doesn’t tell you how bad the numbers are nothing will.

But I will play any near-perfect setup for some lunch money, in case this market turns. If it doesn’t, well then, I will make a good amount of money. I am still short 34 stocks and 33 out of 34 show a profit. The only one that does not was my most recent short and it still has not given a full cover signal. So there is still time for it to fail and work out in the long term. Even if it doesn’t work, shorts like CEO 40% OKE 39% SDA 73% AMX 44% LLL 27% POT 57% APD 44% SPW 69% MOS 63% AAPL 45% GGB 62% ARB 48% CPRT 25% SBAC 53% IPHS 30% SPG 40% and CETV 85% more than make up for it.

This market is still in a primary downtrend and it doesn’t look like anything wants to move up just yet so until it does keep that powder dry and your cash level very high.

By the way, I submitted a Worden Report on how to “survive a/this bear market” and I really hope he publishes it. I do make one reference to a few of my subscribers being up 60% to 80% and that might prevent it from publishing. But if he does publish it, look for it sometime this week or next week, as he did receive a lot he said. If he does not publish it, I will not be sad, instead I will publish it here.

Have a great day/afternoon/evening/night and I will see you tomorrow in the chat room. Like always and almost all day long like usual.

Gold and Platinum subscribers can watch full size versions of part one and part two in the Gold forums. Free part one youtube version below:

you keep it real. you have your own skin in the game.

hey bro don’t let the turkeys bring you down your track record speaks for itself. since i got my computer back and signed back up, i have locked in about 3500 in profits from lll,spg,enb and rgld. in 3 weeks. and i am a chicken, i only short < 10k in any one position.heck, my first short after coming back made 800 overnight and paid enough to subscribe for the rest of the year.
you rock dude,

tnx, rmh

Anyway, I love the site and the videos and I’m glad to be helping out (while learning a lot).