on that note, today’s selling sure did bring out a lot of people that are worried about further selling. To that, all I have to say is if you have some profits and do feel afraid you will lose some. Why don’t you sell 20%, lock in some gains, sit back and relax, and then let the stock TELL YOU what to do next. For now, I don’t see a reason for all the worrying that I saw today. How I judge how bad selling is is to see what it does to my current holdings and to see what the short scans bring up.

When it comes to the 70 plus stocks I am long (14 are of good size the rest are nothing that will change the fate of my world) there were ABSOLUTELY ZERO that gave me a FULL sell signal. Everything that pulled back did so either on low volume, barely pulled back on higher volume and had a bullish reversal before the close, and/or if it did pullback heavy it did not close below either significant support or the 50 DMA. Now I hate to be a party pooper for the HUGE short interest that is out there but facts remain that when a market is ready to top I will not only have a few partial sells I WILL HAVE A FEW FULL SELLS. Tonight, I had NO full sells.

On top of that, when I go over my short scans, another thing became clear. There is nothing I want to short and there is nothing that I can short (in size) that is either a safe short or a smart short. The truth of the matter is that this market may not be the healthiest market AT ALL but it is still alive and the uptrends that are within the current market are still alive.

If we would have sold off today on heavier volume and volume was heavier than the 50 day volume average, then obviously I would be a little more concerned. Another area of concern would have come if I had a handful of full sells which is very much possible when you have a real top. The final straw that broke the bearish camel’s back was finding NOTHING in my scans that could even be considered a safe short. Well, I guess there was one stock, that did show negative divergence but the lack of red BOP or HUGE distribution pulled me away from that one.

For now, the market still is just going nowhere on low volume. I am kind of shocked by how many “bulls” and how many “bears” I see out there. There should not be so many polarized opinions on the market out there, when the market is in the middle of a bunch of trends. The primary is down, the intermediate is up, the short is sideways. This is not a market to be a hardcore bull or bear. Especially when we don’t have any shorts working and we continue to wait for more than one “hot and perfect” chart to setup in a good stock. We have had a couple start but they have all stopped. There is nothing out there right now that is flooring me except one stock that starts with the letter X. That is the ONLY one. There are many other really really really nice ones but I am still waiting for my perfect charts. Until I see these, being a hardcore bullish is just wrong.

What else is wrong is being a bull when the NYSE has had 43 straight days below average volume. How anyone can be a raging-bull here with volume as pathetic as it has been is just silly to me. Also silly is being a bear when shorts are clearly not working here and stocks like MXC and PDO are up 1,000% and 600% the past quarter. I don’t know about you but being short stocks when you have a chance to take part in a 1,000% and 600% gain tells me that odds and reward/risk analysis is not your “forte.”

The bottom line is that some people are simply too focused on a market that intelligent and experienced traders are not “completely” focused on. That is why you don’t see any volume. THE SMART MONEY is NOT investing right now. If they are, they are doing it very slowly and are ONLY accumulating the Nasdaq stocks as the Nassy is the only index that has traded with volume above average. The good news about that is that the days when volume moves up the index moves up or has a bullish intraday reversal. if this pattern keeps up the low volume rally will continue.

Now, while that is not really good for a lot of stocks as few stocks are making big gains, there is one group that does have stocks making very big gains. That group, of course, is the oil&gas stocks. This group is simply incredible and is about the only group that anyone should be focusing on, besides the few select technology stocks that are starting to come alive. However, the few that are setting up are starting to show sings of slowing down. So it is best to continue to focus on the ONLY group (besides the metals) that is moving in exponential ways.

8 of the top 20 industry groups based on six-month price performance are in the oil&gas/energy sectors. Today 8 of the top 10 groups that had stocks hitting new 52-weeks highs today were in the oil&gas groups. Canadien Int, US Expl Pro, Int Int, Drilling, US Royalty, Canadien Expl Prod, Int Expl Prod, and Field Services all had 14% to 67% of the stocks in their groups hit new highs. That is amazingly impressive.

The final mind-boggling stat of the night comes with the new highs and new lows. That is where the dominance of the oil&gas/energy stocks become extremely apparent. Out of 153 new highs (which beat new lows today 153-107–this is bullish divergence), 87 were from the energy sector. That means that 60% of the new highs are coming from just one group and this is the last but most firm confirmation that we have one group leading and one group only. As long as we have leadership, the market should hold up.

Another bullish divergence came with leading stocks, as the IBD 85-85 was up .7% and the IBD 100 was up 1.1%. This shows that leading stocks, via the oil&gas/energy arena, are still leading this market, even when we pullback. I don’t know about you, but all of this bullish action UNDERNEATH today’s losses, combined with the NYSE short-interest hitting another all-time high at 13.68 and the put/call jumping from .82 to .96, makes me want to remain “A LITTLE” bullish on the market right now. And that means I will continue to hold my longs that rally until they are no longer rallying. When they show weakness, I will take profits as low volume shows no conviction in the rally. If this was a heavy volume rally, I would not look to sell 10% or 20% on a 25-50% gain. Normally, I would hold for even bigger gains. But this market is too unpredictable.

I want to thank Regulation FD, Sarbanes Oxley, all those lazy ETF’s (that take in SO MUCH money that could have been invested in real stocks), a low VIX, and a psychotically biased extreme-left leaning liberal media for making this a very difficult period since the April 2006 top. I have been able to still beat the market but the more I see these perfect charts just turn into mush, like a great pumping swell being destroyed by wind, the more I get disappointed with this market. Sometimes, I just wish it would break wide open by 50% and then reset all the bases to give us a brand new fresh start with solid steady accumulators of stocks. Then maybe I could get another DGLY to setup. DGLY today is not the same DGLY it was just two days ago. What a difference max green BOP can make in some of my longs.

The fundamentals will always drive 80% of all my buys. But the chart is always where the FINAL decision is made. I WOULD NEVER go long a stock without knowing what the stock was doing on a daily, weekly, and possibly longer time frame. Along with that I always want to know if the market is moving up or down. I am sorry, those who do not go with the trend are forever to have mediocre results compared to my methodology.

I hope everyone had a decent Tuesday and hopefully Wednesday will be a better day for everyone. PWRD and GA sure did stink but did you see the action today? By not cutting our losses and admitting we were wrong we might have suffered an extra 5.6% and 6.4% loss. I am sure those losses will expand. One lesson to take away from this, those who loaded up on either of these (I had a large position in PWRD but my winners have cleared, by a wide margin, the 11% loss taken overall) is to make sure a stock is under heavy accumulation before you go long.

PWRD showed mutual fund ownership falling 26 to 17 to 16 the past three quarters, despite some VERY impressive growth in the EPS and sales. That is your first red flag! Why is this stock’s fundamentals so strong yet mutual funds do not want this stock? This is very odd. When you see big EPS and sales growth, yet fund ownership falls AND THE STOCK HAS EARNINGS THE NEXT DAY, you might NOT want to get long. The same thing was up with GA. Not only did it have earnings the next day but mutual fund ownership fell from 14 funds to 10 funds the past two quarters. So two great stocks with huge growth but funds were fleeing. Instead of going long, based on the extremely solid and beautiful chart and the strong fundamentals, next time make sure EVERY SINGLE acronym of the CANSLIM system is followed. Not just the ones you like. By doing this you increase your chance of success by 100%.

That is all I can think of that I need to go over with you. Remember, stay agnostic when it comes to this market. Don’t be a bull. Don’t be a bear. Be a trend follower. That trend is mixed which means it is a stock pickers market and there is only one group leading. This makes this easy. Now the hard part is having a great setup with a perfect buy point to go long. That will not be easy with so many of these leading stocks trying to go into a parabolic exponential rocket ship mode.

Aloha and I will see you in the chat room where everyday we live green because our portfolios always are chock-full of winning stocks.

Thankfully, even though volume ticked slightly higher on the Nasdaq, the NYSE had volume come in 1% lower on the reversal. To go along with that the volume was below average on the NYSE for the 38th straight session, volume was barely above the 50 DMA on the Nasdaq. With the volume being higher and prices being higher that would still be bullish despite the reversal. The volume simply was not full of conviction in the form of huge clear distribution. I guess you could count 4/1 as average daily volume on the NYSE, by the way, but still it wasn’t above average so I guess the point still stands.

Overall, the market is in the same situation as it was last week. We are rallying on lower volume with this clearly being a stock picker’s market. The good news, for me is that is what I specialize at.

However, since there is not much changing in the market and I have talked about all the different scenarios ad naseum in my chat room, I am getting straight to the data points.

The investors intelligence survey has the bulls at 46% while bears are at 29.9% which shows a decent shift amongst newsletter writers but still nowhere near extremely bullish (which would be bearish) levels of 55% bull and 20% bear. There is still room to run in this thirdary indicator. The most interesting of all stats I follow is the NYSE short interest which is yet hitting ANOTHER all-time high of 13.38 which means it now takes almost 13 1/2 days to cover all the shorts out on the NYSE. I am not sure what % of the NYSE is short but it has to be near 5% and I don’t care if no volume ever enters the market, that numbers is simply too high and a clear indication to me I need to focus on the bull side and keep an eye out for leading stocks EVEN DURING THE UPCOMING PULLBACKS. The crowd may say they are bullish but heck they sure are betting like they are not.

The only place it has changed is the put/call ratio which is still at .69 today which is the second day in a row below .7 which has been a tough line to crack for a long time. This also indicates that the crowd is getting a bit bullish on the current uptrend. However, with all the bases being built, new breakouts, and stocks building bottoms they have plenty of reasons to want to be bullish. I am not sure how many are as good at TA as me but if they can see what I see I find it hard that they could be too bearish. I mean when I say there are a lot of round bases, bottoms, and strong stocks, I mean it. The odd part about all of this underlying strength is that there still remains ONLY ONE perfect stock chart. Hopefully, if this rally continues many more will show up which could happen if volume shows up to the bull side eventually. It has been 38 days. Eventually the NYSE will have the average so low an above average day will have to occur. The Nasdaq is starting to see a lot of days of above average volume gains. The only problem is that none are EXTREMELY convincing. They are all good but not great.

Another hint of rotation was clearly on display today as 7 of the top 20 industry groups based on six-month price performance in IBD were part of the top 10 worst performing sectors today. On top of that, on the other end, 5 of the top 10 stocks today were in the bottom 20 industry groups. When you take that along with all the retial, tech, internet, and telecom stocks that have moved from the 100-197 area to the 20-50 area, you can CLEARLY see something is going on underneath this market while the public is distracted with commodities and inflation speak.

There were SO MANY donkeys from weakmoney.com that were bottom guessers and FA-only morons that sent me emails telling me how stupid I was for not buying the same 30 stocks we have heard the past 10 years in January as the market was bottoming. Those idiots are now stuck holding crap going nowhere to up 3%, while we have stocks like GEOI, VISN, CSIQ, SOL, and DGLY in our coffers. So much for having to buy the exact bottom. These idiots will never learn and I hope they have learned their lesson to keep their retarded mouth’s shut. I have proven for the twelfth year in a row that buying stocks hitting new highs blasting out of extremely green and perfect chart patterns can equal huge profits if you learn how to hold a stock for the big gains. These people think landing a 25% gain in six months with a 2% dividend is a huge win. I am disappointed with our best stock being up 49% in a little under a month. I was expecting at least 75% by now. And if the VIX would have been at 40 instead of 17, I am sure DGLY would have been up 100% in under a month. Please go back and study all my BIG WINNERS from 1999 and 2003 to see how POWERFUL my methodology is and then take a look at the rest of the years and enjoy the BIG GAINS that still came from pretty dull markets to bear markets.

Some of you value guys might not like looking at the new 52-week highs and instead love to look at the 52-week low list for buy candidates (I saw NYC desk zombies do this all day–scanning the new lows for big buys). You are never going to find the gems in that list like you will the new highs. IBD research has proven the first time a stock makes a new high it goes on much higher and to greater gains than stocks making fresh new lows. The performance is NOT EVEN CLOSE. It is a wide margin of victory for new highs. So why you would want to focus on stocks near lows is a freaking stunner to me.

Let’s look at today’s stats where there were 218 new 52-week highs to only 87 new 52-week lows. Those who religiously follow this indicator know that clearly the past month this ratio of new highs to new lows has completely turned around with down days now seeing an equal amount of both to sometimes the new highs winning and up days now having these stocks trump.

So what are these leaders? The same leaders since 2003 almost!!! Energy had 74 new highs in its group today so obviously you need to be long some of these-SOL, PDO, GU, SM , XEC, CVX, NE, TTES, BTE, OXY, NBL, SFY, WFT, NL, BRY, DNR, PDE, ARD, STR, E, or WES. If NONE of these stocks are in any of your portfolios, all I have to ask you is why???? I only listed two stocks that I own in this group but I still have plenty of energy in my port. Why? Because they are flying! The point is to make a lot of money and that is what they are doing.

Other industries include Metals/Steel, Machinery, Transportation, Medical, Retail, Utilities, Mining, Chemical, and Business Services stocks. Leaders in these groups include GTI, SCHN, VMI, GHM, ABB, SNHY, FLS, PH , JST, GDI, ENS, AME, RBN, EGN, SBS, NFG, LL, ARO, COST, RTP, LIFC, MLNM, KSU, CSX, BNI, IBM, NCIT, DGLY, VISN, CE, ARG, and FMC. I swear to God if you can not find a way to make money in any of these (TRY BUYING A HEAVY VOLUME BOUNCE OFF THE 50 DMA IF THE STOCK PULLED BACK TO THAT LINE ON LOW VOLUME–THAT IS ALWAYS!! THE LEAST RISKIEST LONG AS THE 50 DMA IS THE CUT LOSS AREA), you have a long way to go son.

OK, I am tired, I waited way too long to get this done, but heck, like always, I got it knocked out, even when I am too tired to do it. I work my ass off for you guys. If I was doing it my way, I would scan my charts for 2 hours, do order entry for an hour, and go over my portfolio for an hour. What is that? 4 hours of work. Do that at 3pm to 7pm at night and have the whole day and night off. Sounds good to me. But how does that fulfill my life? It doesn’t helping people VOLUNTARILY is the way to go. But to get my picks, you got to be crazy if you think a guy that can pull 500% winners and 2,000% winners in raging bull markets is going to give that away for free. I might be kind hearted person trying to do the Christian thing as a VERY WICKED disgusting human being but I am not stupid. I know that my win ratio, the % gains, and the ability to possibly hold long enough for long-term capital gains taxes is something NOBODY else offers on the internet. I am STILL trying to find anyone that can find stocks like me, every time, all the time, no matter what the market is like.

It may take years sometimes to get a perfect, easy-to-make a TON of money long setup but there is always something running exponentially waiting for me to come along and snatch it just as it breaks out on very strong volume. Heck, there were two new candidates tonight and a CANSLIM gem I am adding back to a large position. There is always something to make us money out there. Every day, something sets up and moves. Maybe 10 days out of the year I will not be able to find a great setup on the long or short side. But every other day, we will have a chance to make a LOT of money together.

Aloha from a very Vog-filled Maui where the sun is being blocked by a thick blanket of volcanic ash coming from the Big Island. Hopefully, the sun will come out and the swell that is supposed to hit tomorrow actually wraps to the upper west side. I think it has been over 7 days now since the last time I surfed and I am starting to get antsy. If no surf, at least we have the beautiful waves of the Billabong Pro for me to watch. Watching that is 10000x more exciting than watching this market intraday. You daytraders keep doing that, I will be watching surfing, basketball, hockey, and baseball (thank you God for MLB.tv)!!!! ALOOOOHA!!!

I’ll let the schmucks like Sandy/Wendy (or whoever this crazy is) believe that this is “THE BOTTOM.” I will continue to wait for proof and then get long the next bull market leaders, while the IDIOTS buy their BSC, LEH, URS, and BYI speculative-junk!!!

Cramer constantly produces 50% losses and I have NEVER!!!! in 12 years EVER owned a stock down 50%. Anyone hear of SGP? The stock I was short for a 43% gain that he was long for a 55% loss?????????????? Did you hear about that smart Cramer going long that? Or how about AUY, NYX, IMA, C, or any other blowup he has recommended?

I doubt the real leaders that I am looking at are being looked at by DONKEYS like Sandy/Wendy Wright and Jim Cramer. The truth hurts don’t it. The truth shall set us free even though it will NEVER set the fucking morons on Wall Street free. However, I have NO loyalty to wall street. My loyalty lives on Main Street.

AT THE TOP IN MAY 2006, HERE WERE MY LONGS:

Longs Outperforming Market(number is % gain since purchase): ERS-562 GIGM-254 MFLX-203 PETS-102 CBG-133 SIRF-129 NVDA-107 ATHR-112 AKAM-117 WIRE-188 LCC-133 EMKR-182 SMDI-116 CVO-104 TSCM-136 TGB-128 PEIX-108 IED-120 SPNC-92 NGPS LRCX-53 TTES-51 CYMI HEIA-45 CAMP FSTR STRL-43 KNXA-81 GEMS-41 IFO RSAS CTXS-59 ICTG-74 SPIL IHS-44 MTU WF EAGL-76 SMSI-61 IVAC-25 FRGB PNRG-52 ARS-56 RUSHA DECK ROK-27 STMP-26 NTAP KCS TYL TOMO-41 BWLD UIC-73 NCTY WST ZEUS-63 VLG KEX-51 SHFL BAS KDN-25 SPWR-44 POR TFSM-55 OMCL MERX-42 AIXD DIL SWW-41 ACTG-81 CCUR-30 SVNT MEL RNWK ILA CRUS ABI BDK SMF RAIL-73 SBAC-60 NKTR IT-40 CTCI CTEC

I know a few traders that for some ungodly reason were bullish after today’s close. This was because they said the Fed has a new way of making sure the market has bottomed. Once again, the same market call but this time from different players with a different excuse. No matter how many people try this argument with me and no matter for what reason it is, I simply will not believe it until it is true. When I see the market making strong gains on strong volume with top stocks breaking out and moving higher (heck there doesn’t even have to be heavy volume on the indexes; I just need some HOT freaking charts, for God’s sake), then I will wrap my arms around this market just like the perma-bulls have been the entire way down.

The right thing to keep on doing is raising cash with stocks that we are cutting our losses on or taking profits on and to keep the new buys or shorts small until a trend is clear. Right now, the market has no clear trend as a low volume trading environment has now entered the stock market which could help build some nice bases. However, nothing is hinting at that what-so-ever as few NEW and FRESH stocks are forming bases after a previous uptrend in innovative companies with great fundamentals.

Instead, it is the same bear-market crap showing up in my scans that always show up when the market is in trouble. Medical, finance, and energy stocks always lead the way in bearish markets and here we are with our three usual bear market leaders. For those that still think we are going to bottom, you need to get your head examined, wake up, and take a look around at all the past-leading stocks. It is not good.

If you are a value player and you take a look at the DJIA’s p/e at 61, how can you buy stocks that are this expensive? You can’t unless you are insane. If you are a growth stock investor and you take a look at the GDP growth of our country combined with wages and inflation, how can you invest? You can’t unless you hate holding on to your money. This is simply a horrible environment for bulls and bears.

That might make you think that things are bad enough but a VIX at 25.61 and a put/call at .87 IS NOT bullish. Everyone might think the market is volatile now. But you are comparing it to what? 2004, 2005, and 2006 which were had the two least volatile years of my trading life. Only 188 stocks made 100% gains in 2005!! Worse, that trend stayed the same in 2006 and 2007 with only 219 and 212 making those kind of gains the next two years. 2004 produced 269 but even that is pathetic to what bull markets produce.

Some of you are crazy. You think you are somehow missing something by being in cash. You foolish investors have no freaking clue how to handle a bear market and receiving questions like this is pathetic. To not understand that there are less stocks making big gains in down market compared to up markets is freaking foolish. If you are that stupid and do not understand that, PLEASE stop reading me and never come back. I do not have not time for that crap (I received an email today from someone wondering why I can’t find the good stocks now). You simply can not find HUGE stock market winners in bear markets. The fact that I can find any that make huge gains is a miracle in a market like that.

Some of you newbies have no clue but I have been writing on the internet since 2005!!! at my blog. If you just go back to 2005 and 2006 (April 2006 to May 2006 to see the bulk of the gains as that is where the market topped), you can clearly see some of my huge past big winners in this SHITTY low volume market since 2003. GIGM, CVO, BOOM, KNOL, AAPL, ERS, AUY, TGC, SLW, BTUI, WIRE, MFLX, ASF, CBG, RATE, MNG, MRB, NXG, VGZ, TSCM, NVDA, and ZEUS and many others all produced 100% gains. Who else did that that you know during 2005-2007? Even at the end of 2007, we had a great chart in APPY. That was a 125% to 150% gain from September 2007 to late October 2007. So the reason “I am missing them” is because THEY DO NOT! EXIST. DUH!

The fact is they do exist, they just do not exist right now. When this stupid sideways chop/bear market is over, there will be another bull market and it will unleash a ton of big winners. But instead of just getting 100% to 300% with a few 500% major winners, we can finally get our 1000% to 2500% gems that I WILL FIND BECAUSE I FOUND THEM IN 1999 and 2003. Back in 2001 there were only 357 stocks to rally 100% or more (most of that was due to the vicious oversold rally after that horrific day) but the next year in 2002 when the bear market put in the final touch to its downtrend, there were ONLY 127 and the funny thing is that about 80% of those made those gains from November to January.

What is important to remember is what happened the next year, in 2003, as the new bull market got underway. A whopping 931 stocks made at least a 100% gain. So as you can see trying to find a great stock when only 127 move that much compared to 931 is a much more difficult task. So far, in 2008, we have a whopping 13. At this rate we will only have 52 stocks up 100% this year. This is out of a universe of 7,000 to 8,000 stocks in between 2001 and 2008.

That little exercise there should help prove that it is much easier to hit the home runs in bull markets than it is during any other market. Since most of you NEVER know when we are in a bull, bear, or nothing market, it sure does help to know what you are in so you know when to go ALL-IN with your margin. I will know. Will you?

I also know that the IBD 100 has a D- for an Acc/Dis rating and that is PATHETIC with a capital P! These are our leading stocks and they are clearly being distributed. There is no reason to ever buy stocks until this index can at least hit a C. So all of you buying stocks now are making very foolish decision. The same can be said for those shorting stocks willy-nilly with no regard for a chart.

The good news about this market is that I know when it is best to take vacations. When the market is ripping higher like it was in late 1998, late 1999, and in 2003 you want to be very involved, awake, and long stocks in the bull market. But in a market where stocks are clearly out of favor and are being sold, it makes no sense to stick around and watch the damage. Instead take some time off to have fun, making sure you keep on top of your watchlist and index charts so that when the market does turn you can wake up and get back to work.

Eventually, this market will turn. However, until it actually does, trying to predict is is FOOLISH! Waiting, watching, and building your watchlist in this poor market environment is the smartest thing to do until we get a bunch of charts that look like my ‘past big winners’ showing up.

This is NOT to say that we will not see any longs if we go nowhere the next 10 years. What it does mean is that there will be very few. Only two CANSLIM quality perfect setups worked in 2007: AFSI and TESO. There was also one speculative that worked extremely well with a perfect chart: APPY. However, there were another 5 perfect to near-perfect charts that failed and those failures did not even come close to hurting the gains made by the winners. This is the power of this CANSLIM strategy. Good money is constantly poured into the best performing stocks while losses are dealt with immediately.

No matter what happens in this stock market, I am ready. If we rollover and breakdown (with or without volume) in the stock market, I will start to find stocks failing at key moving averages or breaking down below key areas on very heavy volume. If I can get these within a safe buy point (usually 5% within the pivot), then I will be more than happy to increase my short positions.

If the market bounces higher and volume starts to come-in in the form of accumulation days that then help create beautiful chart patterns in strong stocks with great fundamentals, I will have no problem going long stocks breaking out of or bouncing off of my favorite chart setups.

It was nice to see oil fall $4.04 to $101.58 today which is a LOT better than the $110 it hit not to long ago. That along with the other commodity charts looking like they are putting in significant tops is, I think, a longer-term bullish development as it helps move “safe” money into more “speculative” investments. it will not start immediately but getting money out of this sector into a more high-growth (like solar stocks) area is what will start to get me excited.

And the last thing I would like to mention before I go is SGP. I have been short SGP since 1/14, I wrote a column to RM.com readers on 2/1 telling them to avoid SGP as another possible Cramer blowup, and today I watched it collapse as a near 50% gain has been realized in less than three months. All the while, Cramer was telling you to buy. I told you to run from C, I told you to run from IMA (after I made a 100% gain), I told you to run from SGP, and I am telling you to run from NYX.

The CANSLIM strategy helped give me gains in IMA on the way up and helped keep me out of C, NYX, and IMA on the way down. My own study of past shorts from the “How To Make Money Selling Stocks Short” by O’Neil helped get me into SGP for a near 50% profit. The IBD 100 has returned 195% to the S&P 500’s 42.5% since May 2, 2003. The IBD 85-85 index has returned 133.7% to the S&P 500’s 2% since Jan. 1, 2001. How is Cramer’s Action Alert portfolio doing? I think I know.

Aloha from Maui where the surf is flat again and the whales are starting to say bye-bye to another great winter season of surf and whale watching. ALOHA!!

Despite the losses, there was one bit of good news that can be taken away from this session and that is that volume was lower across the board. In fact, Friday’s volume was the lowest turnover of 2008 and shows that institutional investors who make up over 75% of the volume in the stock market were not active at all. Still, you can’t get too excited about low volume pullbacks when they come after low volume rallies.

We did have one heavy volume rally on 3/20 when the DJIA had its follow-through day. However, since then we have been left with nothing but low volume volatile-intraday sessions that have left us at the same point we were at right before the two bullish days on 1/22 and 1/23. This is not good as it is not normal to see a market have a FTD and then not put out any big winners that are working right away or have any follow-through days to the follow-through day.

And at this point, that is what I must have before I can believe it is safe to get very long again. I must have a lot more HOT and very green charts setting up in proper bases in CANSLIM quality longs and I must see more volume to the upside in the leading indexes. Without the very big price gains on much heavier volume, there is simply not enough support in the market to justify buying stocks up here.

Especially when the DJIA has a P/E ratio of 62.2. Can you imagine what the P/E ratio might be if the bank stocks that are in the DJIA come out with HUGE misses thus sending the DJIA P/E ratio up to 80. Considering I know investors that have told me they only buy a market with a P/E ratio of 5-10 on the DJIA and I see SO MANY top rated mutual funds in cash I must say I am very worried about what might happen with this market. Things are not setting up right for a rally.

The worst part of it is that we have already seen a distribution day, though it was with volume below average, we have to remember that almost every day the past two months has come with volume below average. The key is that volume was clearly higher than the day before on the Nassy and the index almost lost 2% on that day. This is not good and brings the chances of this rally succeeding to less than 50% as any distribution day within 4 to 5 days of a follow-through day is normally a rally killer (this information was gathered from Ken Shreeve of IBD in today’s ‘Market Wrap’ video).

Besides this poor day on Thursday, it was clear, this week, that the market is more-than-likely going to fail this rally. I would LOVE to be wrong and get long more stocks that look like N**, L**, B**, B***, and F*** but I can’t do that when nothing out there looks like that and when the strong CANSLIM stocks do setup they sure have not been acting right. Just the past two days, we have seen HLF, WFR, WMS, ANF, APOL, DV, STRA, TITN, INFA, CPLA, and RBN breakdown and reverse a breakout. This is NOT how leading stocks act during bull markets. There is not ONE bull market that you can find leading stocks reversing solid setups and then see the market take off making massive gains. Not one; leading stocks always lead real bull markets. The market is going nowhere and will not go anywhere without leading stocks. That is just the way it always is.

I have been posting the current leading sectors and areas of the market recently that have been leading us recently. It is obvious by the quality of the sectors that this rally was suspect from the very beginning. However, as long as these sectors stay near the top of the list, I believe the market will be in a bit of trouble. Since most of the sectors that are now leading have come from such laggard bottom 20% spots, it could be a while before we cycle into a new true leader.

When we do, those leaders are inevitably from an innovative technology related sector. Recently I have noticed a couple of Semiconductor stocks making new highs (RMBS and RBCN) and that has gotten me a little excited that we could be getting ever closer to a tradeable rally sometime in the near future. Along with those two Semi stocks, a few Software stocks have shown up and even though two of the three are low quality the fact they are showing up is a good sign for those that think we may never see a bull again. LOL, eventually, with time and price and regular cycles, you HAVE to have a bull. We just have to be patient and wait for better quality than what showed up today. It should also be noted 2 of the 3 hitting new highs have been bought out. Only ERES is of any real quality and that stock is in such a lagging industry group that an investment in it would probably be a mistake.

Still though, the typical bear market stocks are leading now. Medical, auto manufacturers, oil&gas, chemical, food-meat, beverage, housewares, and the other usual suspects we have talked about are where it is at and if you are focusing on going long anywhere else in the market you are only decreasing your chances of succeeding which are already significantly reduced in this “I refuse to rally” market. I still believe it is smarter to completely stay away from longs and for newbies to stay out of shorts here. Professionals are more than welcome to short your favorite candidates on low volume rallies and heavy volume failures.

I believe it is going to be about time to start looking for shorts again, if this market stops moving sideways and starts falling. The IBD 100 and IBD 85-85 index both still have an Acc/Dis rating of D which shows that since the January rally NOTHING has shown up that has led this index higher. Even the few beauties that this index has produced has returned nothing and a lot of the stocks in here moving higher have a look of stocks that are not going to be able to produce to much more to the upside without volume coming into the indexes.

Without that volume we can expect to add to the losses already suffered this year. The best index is the NYSE which is down only 10% since January. What is funny is that I am running a small account for a friend where I am very aggressive and even with a 2 out of 12 record so far I have only sustained an 11% loss putting me on par with the NYSE. However, I started trading this account in November so the NYSE is down 15% during that time. So I am really beating the market in every account on all time-frames still and I would consider this my worst trading ever, not due to my ability, but due simply to the market.

Since November the Nasdaq is down 20% and is down 15% from January 1st. I am doing much better than this index. But the one I always focus on is the IBD indexes. There they are down 30% from the November top and 20% from January 1st. Clearly my 4% gain during that time from November to now and 0% return so far YTD is KILLING the IBD indexes. If I am up 4% on my biggest account and only down 11% in my friends small account, while the IBD indexes are down 30% from November, how do you think I am going to do in the next bull market when the IBD 100 is up 75% while the Nasdaq is up 45%? If I am outperforming the IBD 100 by nearly 35% in a bear, then I am going to crush the 75% return in the next bull. AND SO WILL YOU!!!

The only way to make sure that you will be able to do that however is if you get off your butt right now and start to take the necessary steps that will make sure you are ready for the next bull and will know what to look for. The first thing I would like you to do is study EVERY SINGLE ONE of my ‘past big winners’ in my silver longs section. Go to the very first post and work your way one by one through them all. By the time you get to the end you should basically be able to see the EXACT same similar thing in EVERY single one on the buy and on the uptrend. After that, reading ‘Monster Stocks’ and ‘How Legendary Traders Made Millions’ by John Boik is a REQUIRED REQUEST of mine to you. Both of those books will show you the best stocks from 1997 to 2007 (in detail) in the first book and the best stocks and active-investors from 1897!!!!!! to 2007 in the second book. You will see the same thing EVERY decade during every bullish uptrend and even sometimes during the flat and bearish market phases, just like you will with my own records with my ‘past big winners’ from 2000-2002 like CRUS and GNSS.

Some key measures I am watching is the put/call ratio which is still over the 1.00 level at 1.02 which says that the crowd is still a bit bearish as they continue to buy puts with no abandonment. However, it appears that it is possible that the crowd is actually right this time as the charts confirm that lower prices should come about. But we probably just will go nowhere, since the market almost never rewards the options players as 80% of all contracts expire worthless. NOT my kind of odds. I prefer the CANSLIM system where I am 25% to 33% in most bear markets which still produces gains for me since my winners do much better than my losers and 75 to 85% in most bull markets where some HUGE gains can be found in early bull markets along with some decent gains later on.

On Monday there sure were a lot of cocky bulls that swore we are going nothing but higher for the rest of the year. At least that is exactly what they made it sound like. Instead the DJIA fell four straight days after the impressive gains and the Nassy and SP 500 fell the last three in-a-row, killing the fantasy and dreams of the perma-bottom callers. By the end of the week, it was clear who is still basically in control, even though the short-term trend is up, because the DJIA fell 1.2%, the SP 500 fell 1.1%, the NYSE fell .5%, but the Nassy did manage to buck the trend did finish the week with a .1% gain. That obviously is nothing to get excited about. Especially when Friday produced an extremely low amount of new highs to a lot of new lows. There were 17 new 52-week highs to 118 new 52-week lows. That, with the overbought condition, in this market might not be very good at all.

Before I wrap this up, I want to remind everyone that you need to just forget about playing this stupid bottom-calling game. Leave that for Cramer. While he calls everything a bottom and then gets it right one time while breaking all his readers with the other 100 calls, I will just wait for the right time to get very long.

Don’t forget that back in 2003, Cramer only produced six legitimate 100% winners: NT, Q, ATT WIRELESS, GLW, CNXT, SKYW. He also hit it big with three option plays producing some HUGE gains on small positions. So while you got six winners over 100% with the best one up 500% and the rest only up 150% or less, I produced over 50 stocks that produced 100% gains from 02-03. With that, there were four stocks that I LOADED UP on that each produced 300% plus gains. I was also long SINA, SOHU, NTES, and TASR which all produced over 1,000% gains. Not only am I outperforming Cramer now but so is the SP 500.

When the next bull market comes, hopefully we will have a VIX over 40 and a BUNCH of stocks that looked just like what you saw from my ‘past big winners’ from 1999-2003. I tell you what I can’t wait till I can get that thing updated to RICK and APPY of late 2007. It should be the end of the year before that happens. That way I can stop being asked by all the newbies about stocks after 2003. I have gone over my past big winners from 2003-2007 many times in random post. If you missed it, you are just going to have to wait till I post them on the site. Just be patient.

The very last thing I want to end this one and make clear is that IF YOU GO LONG A STOCK IN THIS MARKET, AND IT DOES NOT IMMEDIATELY SHOW YOU GAINS, YOU NEED TO CONSIDER SELLING 25%, 33%, OR EVEN 50%. IN THIS MARKET, IF A STOCK DOES NOT FOLLOW-THROUGH RIGHT AWAY FROM YOUR DAILY BREAKOUT, YOU JUST CAN NOT WAIT FOR IT TO WORK OUT LIKE YOU CAN IN A BULL MARKET. Exercising intelligent common-sense judgment goes a long way in the stock market and it is obvious that in a bull market you can be patient and give your stock a few days after the breakout to get going. But in a bear, you need to see results IMMEDIATELY, especially you newbies!!, or else it is best to cut back on it so that if and when it does fail you don’t end up suffering a major loss if something unexpected happens.

Be careful out there, keep your longs small, pros keep your shorts manageable, and remember everyone CASH IS KING! Enjoy your weekend of spring training baseball, NCAA college basketball March Madness, a little NHL hockey, and A LOT OF TIME WITH LOVED ONES! They are WAY MORE IMPORTANT than this stock market. ALOHA and I will see you in the chat room where I am always online.

current longs/(shorts) up today and their total return since purchase: EBIX 124% CMP 45% PTEC 98% (BA 23% FTEK 22% GOOG 33% SIGM 44% ATI 28% CMS 20% EEFT 26% ASF 33% SHOO 34% LVS 35% BEN 23% EEFT 26% SGMS 40% MI 32% GRMN 40%)

But it is important to pay attention to the market right now as things are lining up for at least a powerful short-term rally. When we look at the put/call ratio we can see that on a huge up day that it jumped to 1.12 which is a very high level of fear on such a bullish day. That tells me that market players expect this market to move lower on the short-term. Too bad these guys are almost always wrong. Therefore, the extremely bearish bets on such a strong day is a bullish item short-term.

The investors intelligence survey shows more bears than bulls for the second straight week, with bears beating bulls 45% to 31%. This is a very wide margin and considering we have a high put/call and a follow-through I think it is very important to make sure you are not overextended to the bear side. Just on Thursday it appeared it was all over for the market. How amazing that on the VERY NEXT day all looks well. But such is the nature of this market.

And even though I have been pounding the table telling you that cash is king, it is time to start looking for potential setups in CANSLIM quality longs that are in well formed bases. Right now, there are not a lot out there but there are a few stocks out there that are starting to show up that I would like to get long if they could quiet down, move sideways on lower volume, and breakout on strong volume with BOP green to max green the past few months. Some are starting to show up but the few that are are NOT in your usual powerful bull market leading groups. They are in the small banks, savings & loan, medical, manufacturing, business services, auto/truck-parts, tobacco, and transportation-railroad stocks. These are not the exciting innovative groups that lead most long-term bull markets. These are the groups that normally show up in bear markets. However, during the bear market rallies, these stocks always do very well.

But how well these will do with a VIX at 26 is the question. I have a bad feeling I know how well they will do. During the last bear market we had in stocks, I still had no problem finding a few stocks here and there that produce good gains. But besides COIN which rallied 58% in three weeks, I have not had any big winners in this bear. This is unheard of. And it isn’t me that is the problem. The problem is the market. I finally have a few really green charts that are looking good. But usually, even in bear markets, I will have a couple of stocks that have produced 75% or more by now. This market is simply THE WORST market in twelve years that I have been a part of.

Now, like I said, there finally are a couple of chart that have shown up that are full of accumulation and max green BOP. But the way the market is still acting it is very hard to “load-up” on these. So I am going to continue to keep it cautious but my first long position over $60,000 has finally been taken for the first time since September. That means that I am finally beginning to think that maybe we could sustain a rally here. The good news about my methodology is that if this trend reverses, I can be out with less than an 8% loss on both stocks. If they don’t blast-off and make immediate big gains, there is no reason to be long and they will be cut.

I love being a bull and if this market can continue to build on these gains WITH HEAVY accumulation then I will embrace this rally with arms wide open. But for now, I am as skeptical as you can be. This is due to the constant flooding of emails from bottom callers (which oddly enough don’t happen anymore) since the November top till about two weeks ago that we were bottoming. Now that the donkey losers that make up this group of emailers have stopped with their FACTLESS crap, I am ready for a bounce. But the fact that everyone is still looking for a bottom makes me believe that there is almost NO WAY that this is the bottom.

I have never seen a prolonged selloff where everyone is bottom calling actually bottom during the time all of these amateurs are calling for a bottom. After a very long bull market, where every single leader of that uptrend gets broken, it usually take a long time to form a bottom. If everyone I talked to was telling me that they were scared to death of a financial collapse and that they believe they should be selling stocks left and right, then I would be looking for a bottom. But everyone I know wants us to bottom now so we can go back to getting long GOOG and AAPL for the next attack on the old highs.

It would be nice to bottom here and then in about a month (it would take that long) start going long a bunch of stocks that look like all the patterns in ‘my past big winners’ but I just don’t think I am going to get that opportunity yet. Before that could happen in 2003, we had to have a horrible 2 1/2 year bear market. And before those perfect beauties of 1999 setup, we had a Y2K fear that sent companies investing in technology at a breakneck speed. This along with the bear market of 1998 (LTCM fiasco) helped create a ton of near-perfect to perfect charts. Since I doubt we will see another 1999 setup until I am, maybe, 100 years old, then we probably need a very long bear market to create the charts we saw in 2003.

I know a lot of people do not want to wait that long, but if that is how long we must take before we can get the next TASR, EPIC, EVOL, FMDAY, SSYS, TRAD, USNA, SINA, SOHU, NTES, FARO, and SIGM setups, then dang it, I will wait as long as I have to. A lot of people want to make money right now. But as those impatient and historically ignorant traders do damage to their account (like yours truly) by forcing trades that should never be forced (I am not forcing them, the market is just that hard!!), the smartest traders are in 100% cash loading it up for the moment when the stocks above are waiting to be taken.

Like I keep saying, you do not have to bottom tick the lows or bottom tick the day the market hits the lows to make a ton of money. EGHT and FMDAY both produced 300% gains in one and four months respectively. Both of these stocks STARTED their move in late October/early November; ONE FULL YEAR AFTER THE OCTOBER 2002 BOTTOM!!!!!! So the FOOLS, MORONS, IDIOTS, and SCUMBAGS on wall street that tell you that you have to buy the bottom can go F themselves. These idiots can buy THE BOTTOM TICK and they will not come close to TOUCHING my returns by the EOY. The scumbags like to brag when they get the bottom right. Too bad they never remind you about the other six times they got it REAL WRONG.

Calling a bottom here makes more sense than any of the other attempts, as we had the VIX hit 35 intraday (still below 40 and the last indicator to get extreme enough to have a great low), the investors intelligence bears take the bulls, and we have a put/call that has been pervasively around the 1 area for months now. So it makes sense for the donkeys to bottom call here now. However, do they not see that there are problems all over the index charts, besides the bad leadership and destruction in past leaders underneath the indexes.

My first problem with becoming a bottom caller is that it only works 10% of the time and those are odds I will NEVER take. Therefore, I never will bottom call. But I believe in my multiple years of trading FULL TIME I have seen many tops and bottoms during that time. I have learned that calling a bottom before prices can at least get over the most recent resistance is a recipe for disaster. Sadly, the constant bottom callers never have to eat the egg on their face. They just conveniently forget and move on.

On the NYSE, I love the volume I see on the January and Friday’s lows. The huge volume surge along with the accumulation leading up to Friday’s move is very bullish. But that volume is still leaving much to the imagination as the selloff in January came on heavier volume than the uptrend from January to February. That was followed by heavier volume selling that received some sneaky accumulation during that time. At best, this index is very mixed with the extremely short term looking bullish compared to the overall downtrend from November which is still VERY much in tact. Especially with price below the 50 DMA.

This almost exact same kind of action is happening on the Nasdaq also. The volume near these lows have been incredible but the overall downtrend is still very much alive with the price below the 50 DMA. The bottom line is calling a bottom UNTIL YOU ACTUALLY KNOW it is a bottom is foolish and if you are one of the fools that think you must buy the bottom to make the big money you really are ignorant and need to study the past big stock market leaders like CSCO’s 80,000% gain, SCHW’s 10,000% gain, or MSFT’s 10,000% gain. Do you think you needed to bottom tick to score big gains from those winners? Of course not. So don’t believe the MORONS that tell you you need to be buying here. You can wait. In fact, I hope we go on to crash just to show these fools how dangerous the verbal shit that flows from their mouth really is. If we bottom, I can hold off for months!!! and still CRUSH ALL OF YOU who think we need to buy “the exact bottom.” You all have SEVERE historical mental problems.

All I am going to do is continue to look for my hot charts, as I know when they show up, and if the market is in an uptrend, the coast will be clear for me to go all-in with my 2 to 1 and 4 to 1 margin accounts. There is no need to buy here with all the carnage out there. The greatest traders of ALL-TIME waited for trends to be confirmed up or down before making any big bets.

That can proven by those who made big recent bets in gold and oil. My God it looked like gold was about ready to explode to the upside and become the next bubble. But it in fact was already in a mini-bubble and now we can only cut our losses and wonder about what could have been. The most important point that came out of the gold selloff is that even leadership is NOT safe in this market. If you can’t find comfort in your leaders, even in a bear market, you know that you have some very serious issues to deal with. So calling this a bottom, IMO, is the most ignorant thing you can do after getting the last six to nine calls wrong.

Some interesting items of interest from Thursday’s session includes oil falling to $101.84 and gold falling to $920. Gold just touched $1020 intraday on Wednesday (I believe) and since then has spent its time selling off hard. This is a clear sign of a sector that is putting in its top. This comes with oil stocks recently reversing hard and EVERY chemical-fertilizer stock FINALLY rolling over on strong distribution and starting its selloff on heavier volume with low volume rallies. They are not ready to be shorted in bulk yet, but if the market does not breakout above the 50 DMA on heavier volume soon, confirming the FTD, then it will only be a matter of time before the ugly charts in the chemical, oil, and gold group really get nasty. Breakout fakeout reversals are NEVER good for the market, when they happen in leading industry groups.

However, like I said, if the market can build on these short-term gains, I would love to start finding some more stocks that are as green as NEU. If a bunch of charts start showing up in industry groups that are FLYING up the list of top industry groups in IBD’s 197 group list, then I would love to jump back into the market long and strong. But for now, we are lacking any leaders. Every time a new leader gets rotated into the top spot they WHACK it. In my recent RM columns I have posted the charts and stocks that I am finding very attractive and that are also the current leaders. However, the small-regional banks and savings & loans are not going to produce any 300-500% winners in 12 months or less. So we better hope for higher quality or else we are going to be sitting on our hands a lot long than expected. Well, expected by readers. I am ready for a two year bear market or for the bear market to end today.

All I need to know it is over are more charts setting up like the stocks you see in my ‘past big winners’ or like TESO, AFSI, HRZ, PTT, APPY, CVO, MT (IST), BOOM, ZEUS, IHS, MA, CCC, TNH, MOS, OMTR, or ERS from 2004-2007 that I have not posted yet. I KNOW HOW TO FIND AND BUY THE BEST STOCKS THAT PRODUCE THE BIGGEST GAINS IN A SHORT AMOUNT OF TIME IN ANY BULLISH MARKET (YOU DON’T NEED TO PICK AND GUESS AT THE BOTTOMS). I HAVE NEVER SEEN A MARKET LIKE THIS OVER THE PAST SIX MONTHS IN OVER 12 YEARS OF INVESTING EXPERIENCE. THERE STILL IS NOTHING OUT THERE to get insanely excited about besides one stock that I have recently started going long and adding to. If you are not a subscriber, there is no way I am telling you what this near perfect stock is. But it needs a bit more time moving sideways, another pop, and it would be PERFECT! If I see more setup like that I will be more than happy to rejoin the bulls. For now, that is not happening.

We have not had a market like this since 1938 as there have been 28 days this year where the market has moved at least 1% by the close. Nothing is going to make sense in that kind of volatility, unless every day was up or down. Right now, the market is just trying to wash the weak blood out so that when the fresh faces and cash heavy traders return they can come over and pick up the easy cash in the corner and profit handsomely via the smart money that is trying to pick the bottoms like the professional-amateurs they will always be. That is why they have to keep their job at the trading desk; they would NEVER last on their own.

But for now, until I see more technology and innovative groups make their way to the top of the IBD industry group list with some very green chart setups, there is no way I am joining the bottom callers with small regional-banks, tobacco, medical, savings & loans, and beaten up junk sectors leading this rally. WMT and NKE are not my ideas of “fresh, new” leadership. V is my idea of new leadership. Hopefully, this could be my next MA 340%-plus winner. But unless the market continues to trend higher, V will more than likely suffer the same fate the market does. Still it is nice to see an IPO price and run after the public offering.

Until I get more confirmation on the upside, I am simply not going to fall in love with this FTD. I recognize it and realize we have one and that it is time to start looking for stocks that are green like NEU that are setting up or breaking out of well-formed bases like the cup, cup with handle, double bottom, flat base, high-tight-flag, saucer, saucer with handle, or three-week tight pattern. This market is not a market to be overleveraged. Keep the longs small, keep the shorts small (newbies avoid going short the rallies until you have a track record of making money going long), and keep the cash VERY VERY HIGH.

This is the most cash I have had since 2002-2003. When the 2003 follow-through happened I was long 35 stocks. By the end of 2003, I was long over 90. You don’t have to be all-in long AT the bottom. You have plenty of time to get very long. GO STUDY 2003 in TCNet and learn for yourself that you don’t have to bottom call to get FILTHY RICH. My ‘past big winners’ should PROVE this! If you still are not convinced, please, NEVER come back to my site. Mahalo and aloha! I will see you in the chat room where everyone is in control, thanks to the CANSLIM methodology. God bless you IBD, O’Neil and the CANSLIM system!!!

Pray for surf!

Today quite a unique event happened today in the market that I have not seen the entire downtrend. And, imo, this is not good. The last time I saw this was in late 2000. That is when the bear market gained steamed and sent stocks much lower. Well, today, the chemical-fertilizer, metal ore-gold/silver, steel-producers, and oil&gas – US expl prod all fell between 5.9% and 6.9% which is just shocking. To see leading stocks in this really rough market get treated like this is the last thing from bullish as it can be. Only a politician could spin this as bullish.

5 out of the top 9 worst performers were in the top 10 industry groups. This is not how a market should act. Not only should the leaders be from more innovative areas of the economy, they shouldn’t be selling off when they are up there. If the weak stocks are getting CRUSHED (BSC TMA C etc..) and the strong stocks are getting crushed (GTU AUY BVN XEC EOG etc…) where is there to hide? The answer is no where. Only is cash or bonds the safe place to be. It is simply not a market any of the greatest traders today or of all-time would mess with.

This market is strictly for the foolish and gamblers. These people can go about and try to flip and trade stocks all they want. That has no interest in my camp, I would rather go driving looking for surf all day or read surfline and have a better time–and probably be more productive!

But for those that want to mess with this market, good on ya and great luck! You will need it. I am going to, instead, focus on the leaders until more technically sound charts set up in stocks with great fundamentals. Something tells me this is far away, via the fact that there is nothing setting up out there that looks ripe. Everything has just been destroyed. This market is jacked up and the red charts all over the place in massive downtrends prove this.

For those that enjoy buying stocks in downtrends (and losing money), this market is for you. But I must continue to preach to you all that raising cash is STILL the smartest thing to do. Even if your stocks are done going down, the chances are that you are now in a laggard. This will prevent your stock from accumulating any significant gains when the bull market starts. While I am out there grabbing the next TASR, TZOO, and AAPL’s, you will be trapped in your horrible HNSN long or BSC bargain.

The worst part is that if this bear market last a long time, your bargains now are only going to get cheaper which means you will have even less money to put to work when the market turns around. Basically, you screw yourself coming and going. I don’t like getting screwed or losing money, unlike my accountant who bought BSC and C all the way down. Instead I like making a lot of money when I am right and losing a little bit of money when I am wrong.

This market is killing me right now as the opposite is happening. However, I want to remind everyone, that just because you are not making money this year does not mean you suck. If you have lost more than 22% this year, then yes, you do suck. Because honestly, I have warned you over-and-over to go to cash and to get short this market after the November top. It has been extremely hard to make money in this market but it has not been hard keeping your money as there have been a ton of warnings to get out of the market. If you have done this, there is no way you should be under by anything more than 20% at most.

Now, I know how bad some people are doing. I get the emails. I have two emailers that have lost at least 80% with one losing it in one month, I know 3 that have lost 50%, and I know someone who has not told me how much he has lost this year but said it is $25,000 every month. So that must be over 20%. So keeping that in perspective and knowing that I always want to be doing as good as the top 5% of the top growth mutual funds, I am extremely happy that my worst performing account is only down 9%. The best performing account is only up 3.6% since November 1st. But if you compare that to the 22% loss in the Nasdaq, that is a 25% outperformance. And when this market bottoms and produces us our next perfect charts, that will be 25% more capital I will have to work with. For those that don’t see the important of this (my accountant who bottoms fishes when he sees my records with his own eyes!!!!!!!!!!!!!), there is nothing I can do to save you. LOL.

OH MY GOD, some of you might say, I am down?! Duh! Of course. This isn’t the first time and it definitely will not be the last. What is unique about this time to the others is for how long it has been since I have made a killing. Ever since APPY in September, there has not been one single perfect chart that has setup and broken out. Since AFSI in April, there has not been a single CANSLIM quality long setup, breakout, and then succeed. They few that have have all failed. In 2003, they all worked, in 2004, most worked, in 2005 most were still working, by 2006 1/2 worked, and come 2007 there were only 3 left. This was due to the length of this bull market.

The bull market went on a full 5 years from October 2002 to November 2007. This caused many stocks to get very parabolic and long in the tooth making it very impossible to make a lot of money. That being said, how anyone thinks a five year bull market can be fixed by only five months of a bear market, is beyond me. This is going to take at least a few more months to flatten out and create the round bases I need for stocks to breakout of. Right now my max green and green BOP scans don’t show anything working on a base. This is where these stocks show up first. They are not there and that tells me we are not “there” yet.

So without new leaders and with the current leaders cracking how do you think we are going to bottom? Especially when EVERY SINGLE talking head on CNBC and RealMoney.com was telling me this is the bottom! If everyone is looking for the same thing, the opposite will happen. That was JUST PROVEN in commodities.

As soon as everyone falls in love with commodities and as soon as everyone thinks that inflation is about to run away out of control (which is what I personally fear), we have a possible top. Now, the hard part about this for most is that they just saw me fall in love with AUY. Well guess what? AUY was a whore!!! AUY was sleeping with the market and now it has caught the market’s disease. So now it is time to breakup with her. In fact, it is time to breakup with the whole sector. I mean there was one stock out there that was “near-perfect” (well, it wasn’t really a stock) and even it got screwed. GTU broke down through the 50 day moving average, destroying its beautiful chart in one single day! This market is crazy and dangerous. This is the most obvious tell: GTU.

Gold fell a whopping 59 points to $945 and oil fell to $101.69 overnight in the Asia trading session. Not only do gold and oil have a topping look but other commodities do to. Look at arithmetic daily charts on a year long time frame (for the experienced this should show the climax move clearly). Corn, soybeans, coffee, sugar, gold, silver, copper, crude, heating oil, and nat gas all look to be putting in, if not “the” climax top, at least a short-term to intermediate term top.

But not only do the commodities look toppy, but the Yen, Euro, Swiss Franc, and Peso all look to be putting in some kind of possible topping pattern. This does not come as a total surprise to those that are at least on the ‘GOLD LEVEL.’ Those subscribers know that on 2/22 I posted DBA as a ‘parabolic chart.’ This was a warning to subscribers that if you are long DBA you need to be looking for a possible top soon as the stock is showing historical signs of being in a climax run. This was reiterated one more time on 2/26. And just like history has proven over and over, learning from it will make you a more powerful investor. DBA topped that day and has since rolled over with a 2.31% drop today. This is a very ugly double top on an arithmetic chart.

Now, not only have I warned paid subscribers to this, I have also warned of parabolic moves in DBS DBP FXA FXF SLV IAU DJP GLD and FXE on 2/28 and subsequently warned about them on other days in the forums and chat room. These were the ETF’s of the futures contracts and thus NO ONE who is a subscriber should have been shocked. The only thing that shocks me is that gold did NOT go into a completely psychotic parabolic climax run. But the fact I loved the GTU chart so much, in a bear market, and thought in my head that gold was going to 2000, I probably should have known better.

With the leaders being taken out, there not being any new leaders shaping up in my scans or in the IBD industry group list, and the put/call actually dropping to .94 from .97 yesterday when the market almost gave back all of its gains, there is no way I can join the jokesters, amateurs, pathetic liars, and fools in calling for a bottom here. I simply couldn’t lie to you if I wanted to. I might not be the most perfect person but my ethics are very high and people like Eliot Spitzer disgust me. Trust me, the last thing I WILL EVER do is give you money losing advice like Cramer is so good at doing.

His recent comments the past few months would have sent me to the poor house. I don’t think that is very good, no matter what the management at thestreet.com tells me. In fact, I think it is HORRIBLE that a man who has been around this long with access to IBD and the CANSLIM methodology preaches the way he does KNOWING that this system exist. There will never be too many people following this methodology for it not to work. There are simply too many stocks. So to watch CNBC or read thestreet.com so many times and never hear or read about the CANSLIM system is STUNNING!!!!!!!!!!!!!!!!!!!!!!!!

With there being 43 new 52-week highs to 238 new 52-week lows, I simply don’t know how anyone can say that new highs look stronger than new lows and that is why Cramer believes we are at a bottom. That statement combined with a subscriber making a similar incorrect statement that there are never more new highs than lows at a bottom show that people simply are COMPLETELY IGNORANT of their history. Sharp market corrections like a 20% drop in one month like in 1998 definitely is not going to have more highs than lows at the bottom. But long protracted bear markets will in fact have more highs than lows when they finally bottom.

I do not have the data but back in 2002 I know they were pretty much getting close to even and by that March 17, 2003 follow-through day, that sent many stocks on to breakouts from HOT HOT HOT max green chart patterns, there definitely were more new highs than lows. So this is just one more negative note to close this commentary out on. There sure is not a lot of positives to talk about in this market. And I do not know about you but when I am 55% cash, 30% short, and 15% long, you can be sure we are in a very UGLY market, since I only go long stocks that move higher and higher. I do not buy stocks that are falling. So being only 15% long is a huge clear warning to newbies that if you want to go long stocks right now you are nuts!

Now is definitely not the time to be going long! CASH IS KING!! Aloha and I will see you in the chat room where the bull market is still alive and well!!

However, to the magnitude that the rally hit us, I had NO clue that was going to happen! Obviously, if I would have thought that was coming I would have partially covered a lot of my shorts that had huge gains. Instead, I had to do that today. And the beauty of that was that very few gave back more than 3% on the day. Considering where the majority have been shorted, that is darn good.

Too bad, the big-cap tech stocks are the ones that are not cooperating (FSLR, RIMM, BIDU) and it seems to me that many newbies are taking pot shots at these shorts. First off, I have warned you over and over and over to NOT short stocks UNTIL you MASTER the long side. Anyone who is shorting stocks that has no history of having consistent winners in their portfolio is being dangerously foolish. I thought I have made this clear but obviously I have NOT! Second, I don’t know how freaking clear I have to make it that my shorts ARE SMALLER HERE THAN THEY EVER HAVE BEEN. I was shorting in bigger size early on but when all of my big-caps either failed or got away from me, I have scaled back. And as the crowd grew more hostile and I saw the market get more volatile (relative to the recent market), I began raising cash.

EVERYONE WHO IS A MEMBER OF MY CHAT ROOM KNOWS THAT DURING THE PAST TWO WEEKS I HAVE BEEN STRESSING THAT GOING SHORT AND GOING LONG IS JUST TOO DIFFICULT RIGHT NOW IN THIS MARKET. THE STOCKS THAT ARE BREAKING WIDE OPEN ARE NOT THE STOCKS THAT LOOK LIKE THEY ARE ABOUT TO IMPLODE. THE CHART PATTERNS THAT SHOULD BE PRODUCING TSRA SGMS GOOG and AAPL TYPE OF RETURNS ARE SIMPLY NOT PRODUCING EASY RETURNS. THOSE NEAR-PERFECT PATTERNS FAIL AND THE HALF-ASS PATTERNS SUCCEED BEYOND ALL EXPECTATION WITHIN A SHORT AMOUNT OF TIME.

THIS IS EXACTLY HOW THE STOCK MARKET STARTED TO ACT IN 2006 WHEN WE STARTED TO RALLY ON PATHETIC VOLUME. EVER SINCE THEN MAKING A LOT OF MONEY HAS BEEN EXTREMELY HARD AS THE VIX WENT TO EXTREMELY LOW LEVELS. SOME MAY BELIEVE THAT THE VIX IS HIGH UP HERE BUT UNTIL MID-2004 THIS WOULD BE MID-RANGE WHERE WE ARE AT RIGHT NOW.

THE LACK OF VOLATILITY IN THE MARKET AND THE LONG UPTREND HAS MADE IT VERY HARD TO MAKE MONEY IN LONGS THE PAST YEAR AND NOW IT IS VERY HARD TO MAKE “EASY” MONEY ON THE SHORT SIDE. THUS CASH IS KING. I HAVE BEEN SAYING THAT FOR A LONG TIME AND TODAY’S MARKET ACTION PROVES WHY CASH IS KING.

Even though I understand how important it is to be in cash right now, it seems like most investors think that they must overtrade and be more aggressive and risky now that it is harder to make money. Instead, these people should be doing the exact opposite and the fact that some of them can not get their heads around this idea is something that will need to be fixed quit or else you can kiss your butt goodbye. If this market acts like this for a year or two, can you handle it? I can. You know why? Because I know the exact same stocks that have shown up decade after decade as the best stocks of all time will show up again. They always do. Even in our next uptrend, in case one would start now, there will be plenty of stocks to be going long. However, for newbies, you CAN NOT DO THAT JUST YET!!!!!!

You guys need to wait for a real follow-through day on volume that is MUCH bigger than the 50 day volume average on BOTH indexes (not just the NYSE, like today). Even if we get one of those, you still need to make sure that there are stocks setting up in proper bases, ready to breakout to new highs on strong volume that also have fantastic fundamental characteristics. Basically you want a bunch of CANSLIM quality stocks showing up in a wide wrath of leading industry groups.

If some of you think that we have had our “real” bottom today, I would like to ask you which of our new leading industry groups are going to produce us our next STLD, MT, TASR, TZOO, TNH, or POT. Is it the gold/silver stocks, the oil&gas-US Royalty stocks, or is it the fastest moving Tobacco stocks. These industry groups have climbed up the industry group rankings based on six-month price performance the fastest with each group moving from the bottom 40 to the top 20 out of 197 industry groups. These are the leading sectors right now if this market would become a bull and if that would happen you can guarantee that this is in fact a bear market bounce and nothing else. Tobacco and Gold/Silver stocks are clearly not a sign that this economy is warp speed ahead.

But instead of focusing on leaders, some very (I am sorry but what I am about to say is true ) unintelligent active-investors want to bottom dip and buy BSC. Listen, if that is your M.O., fine! I don’t care. But listen, buying “bottoms” is the MOST DANGEROUS play you can do in a bear market and if you are not sure why that is, damn you, you have serious problems. It is clear as day via looking at ANY ONE OF CRAMERS HORRIBLE RECOMMENDATIONS (SGY NYX GS C IMA NLY and many others) the past four months that buying stocks that are falling is a quick way to lose all of your money.

I can guarantee one thing. Those going long stocks at the start of the bull market, who are now in cash, that maybe play a little bit on the short side, are not sending me emails asking me how come they are losing so much money. First off, STOP TRADING until we get a real follow-through day with real technology and innovative leadership. Next, go to IBD’s website and go to their learning center and get going!!! Just start reading. Go over the Investors Corner archives, go over everything. The problem with the majority of people is that they have absolutely NO CLUE about history. They have not studied the past. They ask me for examples of great stocks and then they ask for more recent ones. HELLO DONKEYS!!!!!!!! WAKE UP!!!!! YOU ARE NOT GOING TO FIND A F-ING TASR OR TZOO IN THIS MARKET. YOU ONLY FIND THAT AT THE START OF BULLS. NOBODY CAN FIND THE STOCKS I CAN AND NOBODY CAN MATCH MY RETURNS BASED ON A SIMPLE BUY AND SELL ACTIVE INVESTING METHOD. THERE IS NOTHING DIFFICULT ABOUT THIS. HOWEVER, YOU GUYS LOOKING FOR TASR IN THIS MARKET HAVE LOST YOUR MINDS. IT DOESN’T EXIST!!!!!

The only thing that exist right now is pain. And many investors are suffering a lot of it unnecessarily. Most of this pain is caused by either shorting to heavily and not understanding that you must never risk more than a little in each short. The only time you should EVER load up is when we are going long at the beginning of a bull market. I might start out with just 10 to 20 longs, make some huge money, and then start moving them around and possibly get 200 longs by the time it is all said and done. And if any of you can pick 200 stocks that move higher and keep moving higher, besides me, join me and in ten years when I open up my firm we can make a heck of a team. But since I am still the only person I know that can pick so many damn stocks that work really well in bull markets, for now, that can stay a dream.

But in this market, if you expect my stock picks to work out all the time, you are crazy. That is simply impossible and I will be happy if 30-50% workout. Now, in a bull market, I average 75-80%. JUST ASK ANYONE WHO HAS BEEN A MEMBER WITH ME FOR MORE THAN TWO YEARS. The great part of having such a huge winning percentage is that my high holdings of stocks workout well for me since I am always rolling (well not always…but most of the time) them over into something new that is working. In a bear market, though, you will never get those kind of odds and thus will not be able to roll them over constantly into new potential big winners. You have to keep trading small and cash high because 33-50% is lame.

If you don’t know how I can be right only 1 out of 3 times and still make money……UGH….I don’t even know why you are here. Cutting a loss at 7%, and another at 7%, and then hitting a big winner like CBEY for a 60% pop takes care of itself. Even losing 10%, another 10%, and another 10% can be offset by the next one moves up 50%, will take care of you. And in this bear market, if you have been following my weekend post, you can see that we are finding ourselves plenty of shorts moving 20-50%.

Now if you are one of those “dip-buyers” that are telling me to buy BSC here, I can say this much: at least it has the capitulatory volume and intraday reversal to confirm that. But those jerks! were telling me to buy BSC when it was 150. Then when it fell to 100 it was a can’t miss, then at 80 I was a F-ing idiot for not realizing it was “too cheap,” and now I am supposed to buy it? And do what with it? Watch it go nowhere. Watch the stock take years to get back through all that resistance. Check out 1998 to 2000 for BSC. That was a pathetic selloff too. However, the darn stock went nowhere. But do you know how many stocks rallied 500% or more during that time??? 261!!!! There were 261 stocks that rallied at LEAST 500%, while BSC rallied 150%.

Why would I want to bottom fish, collect the STUPID dividend, and waste my life in this stock, while I miss out on JDSU and QCOM? Because had I been listening to some FOOLS back then, I might have bought BSC in 1998. That would have been a WEAK 150% return while the VERY FAMILIAR (to CANSLIM investors) stocks of PMCS NEWP, and PWER which rallied 3260%, 3579%, and 3688% respectively. CANSLIM investors new these names. So why do I need to bottom fish? All of these were breaking out to new highs BEFORE they started their huge runs! The same thing will happen during the next bull market. People will buy BSC now, make 20% and brag, and brag, and brag. Then come the next bull, their BSC will leave them with a 50% gain as they sell a rising stock too early. All the while PMCS, PWER, and NEWP come along for all of us CANSLIM investors to see.

And if you don’t think my charts were picking up AMCC which led the way, during that time, with a 5,355% return, guess again. It was in the scan almost daily. The problem was the setup was just never right to give a big run. My purchase was 5/1/97 with a premature final sell on 8/29/97 for a 58% gain. Not bad, but not good considering where it went. Notice how AMCC was only a 58% gainer yet the chart was extremely pretty? You know why it only gave a 58% gain during that time? The VIX. Guess where it was at? If you said 27, you are correct. Where are we today, oh yeah, 26.

So this is clearly the problem with dip buying. If you happen to go after the ABK and TMA, you end up broke and humiliated. If you happen to buy the UGLY stock, and it does move higher, not only are you probably in a new bull market but you are standing to the side watching hundreds of stocks produce massive returns.

With this being said, if you still think it is smart to go out and bottom fish the next BSC, do me a favor and do NOT send me an email. I do not care what you are buying. I don’t care about the reason. I don’t care about anything if it is below the 50 and 200 DMA. If your stock is this, you can keep it to yourself. I have studied my history. I know that every single one of the best winning stocks have come from the same similar background. Those characteristics make up the CANSLIM methodology. Using this CANSLIM methodology, you would have found EVERY SINGLE ONE OF THE STOCK MARKETS PAST MONSTER STOCKS GOING BACK TO 1950 WHEN O’NEIL DID HIS STUDY AND 1880 BASED ON THE TECHNICAL ANALYSIS STUDY BY JOHN BOIK OF THE GREATEST STOCK MARKET INVESTORS AND THEIR STOCKS.(EPS and sales were not provided before the 1930s).

So while you nibble away at your boring MSFT, IMA, GS, and BSC, I will go ahead and chill and wait for either the perfect setups to come around or for this low volume rally to run into resistance so I can start my heavy operation of shorting the past bull market leaders. If this market has topped, the best shorts are going to be in these LOVED stocks. Like I keep telling you, I have already been long most of these past leaders. The few that I missed due to the patterns not setting up were also perfect CANSLIM longs then. So to us CANSLIM investors, FSLR RIMM BIDU GRMN GOOG AAPL are not new to us. We have heard, seen, and smelled these stocks for over three years (less on FSLR BIDU).

Now, with everyone noticing them and people talking about them like they are the savior of this market, it is obvious to me which side to be on. That is the short side. However, as Jesse Livermore first illustrated for us back in the early 1900’s, it can take two or three tries before you get it right. However, when the ex-leaders are cracking and the market is selling off you want to make sure you are short these stocks (I am ONLY talking to the experienced at this point). But you don’t just short everywhere and anywhere. RIMM was a great short, where it was at on the chart, right there at the moving averages. IT JUST DID NOT WORK THIS TIME. Look at the volume on today’s rally. Where the heck is it? I can’t find it. This is just short covering and that coming from a very heavy volume selloff in November to January is not good. The accumulation/distribution is very poor in this stock, just like it is in almost every single stock priced above $100. I have a scan that consist of stocks over 100 per share. There are currently 124 stocks in that list and out of those 124 all but 25 are in downtrends. What is worse, they don’t look like normal downtrends. They look like the same patterns from all my other shorts that have been either good shorts for me or turned out to be good shorts without me. This is yet another bearish sign for the market.

The other one is new highs to new lows. Not only is everything about this rally very weird on the sentiment side but people that think we have a real bottom forget that after the 2000 selloff started it wasn’t until 2002 around November that new highs started to catch up to new lows. It is no coincidence that come March 2003 when the market had its HUGE follow-through day, new highs were beating new lows. If we had 22 new 52-week highs yesterday and they only increased to 29 new 52-week highs today, you can be sure that this is just a bounce and nothing more than a bounce, for now (obviously ANYTHING CAN HAPPEN; but this is ridiculous). The other problem is new lows were at 746 yesterday and the new 52-week lows today was still up at 391 today. Not good.

But this bounce can keep bouncing. Especially with the put/call still up at 1.17. The put/call is still high which means the crowd is making too many bearish bets. The crowd has to become FULLY bullish again, before the low volume short-covering rally will turn back into our bear market decline that we are 80% chance still in. Even if we get a follow-through day, do not get too excited until those charts return.

If you happen to think that today’s gains, since they were so large, “JUST MUST MEAN THAT WE HIT A BOTTOM!”….think again! If you go to my new shorts section you can read there the same stats I am about to post here just without the dates (dates in the shorts area).

The best nine days for the Nasdaq, since it started in 1971, have all come between the dates of 5/30/00 and 5/8/02. Yes, for those that do not know these FACTS, you see that correctly. The best six days of the Nasdaq occurred during the bear market of 2000-2002. And it doesn’t get any better for the DJIA. The DJIA has rallied over 400 points only four times before today; they all occurred from 3/16/00 to 7/29/02. Yep that is right, the best four days (now fifth) for the DJIA came during the horrible bear market of 2000-2002. What is even better is that the best day for the DJIA is a 499 point gain on 3/16/00. If you wet your pants and got psychotically bullish after that incredible move and went all-in long, you were rewarded with an incredible (sarcasm) 6% gain to the 9/6/00 top. Almost six months of work and you got a 1% gain in each month. NICE (sarcasm)!

Hopefully you happened to sell right at the top, because after the six month joke of a rally in the DJIA, the market rolled over on huge volume and began a nasty selloff in September that eventually led to an almost 400 point decline (379 points) on 10/12/00. If it took a 400 point gain to get long and it took an almost 400 point gain to scare you out, you were one lucky fella!! You managed to only lose 8%, while the best active-investors were going long the LEADERS during the March to August period and going short shortly after the market broke apart in September.

The best traders hit it coming and going. They don’t just try to hit it once, pray that it works, and then walk away a defeated fool. NO! They learn their history and they know what they are going to do before they even get into the market. They have a plan for any outcome, no matter what the market does, because we are always prepared.

CANSLIM investors are the U.S.A. military under General Petraeus. We have an enemy and that enemy is Wall Street and all of its lies. No matter how many times the market straps on a vest and tries to blow us up, we simply can not be beaten because we have the best methodology that guarantees us safety in bear markets and riches in bull markets. It is not easy to learn and that is why we do so well. Take the time to learn this and you can change your life. Or else you are going to be buying WLP and shorting ATAI all the way to the poor house.

Please, for the love of God almighty, stop going short, stop going long, and just sit on your hands, park yourself in cash, and sit back and enjoy. Keep your watchlist updated and constantly ready to be put to work when we do have that REAL powerful follow-through day. We will have another one and I WILL BE THERE BUYING THE BEST STOCKS, WITH THE BEST FUNDAMENTALS, BREAKING OUT OF THE BEST WELL-FORMED BEAUTIFUL BASES. Aloha, pray for surf so I can have some waves to shred while I wait for this market to get more exciting, and remember, CASH IS KING, CASH IS KING, CASH IS KING. Aloha!

The first thing I look for, any time the market puts in a huge rally, in a bearish market environment or in a pullback from bull market highs, is if the volume was heavy. Higher volume than the day before is always important as it is the first sign of accumulation from large institutions. However, just having higher volume than the previous day’s volume is not the end all of all.

The second thing to look for to see how strong the volume is is the relationship of the volume to the 50 day volume average. When the market is up a lot, like it was today, for me to get bullish and not believe it is just a massive short-squeeze I have to see a major jump in volume. If you look at the NYSE and the Nasdaq, you will see that the volume was over the 50 dva but it was barely higher. Compare the volume today to the volume in late July to mid August. The volume that we saw on the downside was much heavier than what we are seeing right now. If that was not the case, the Acc/Dis ratings in the Nasdaq would not still be a C. Now on the SP 500 and the NYSE the Acc/Dis rating has turned into a B but the leading stocks IBD 100 is still very weak with a D.

The most important thing to take away here is to make sure that you can clearly see that the volume today and yesterday was very weak compared to the distribution that the indexes suffered on the way down. If you see that, then you are doing yourself a huge justice by taking the time to see the facts instead of just rallying around the hype the talking faces on CNBC produce. What is most amazing is that many professional stock market investors/traders do not use charts and pretty much think they are nothing but a bunch of squiggly lines that mean nothing. Sad, but true. And it definitely helps us.

So when I take a look at the volume on this rally I see almost nothing that tells me that large funds were stepping all over each other in an effort to buy the bargains. When stocks bottom, there are not only big price gains but there is huge volume that comes along day after day of the rally. Today was day two of the rally attempt, with day one starting yesterday.

The problem with day one was that volume was very small also. Combining the lack of huge volume yesterday with today’s weak volume and you really have a rally that so far has the feeling of being only an oversold short-squeezing rally. The fact that we are on day two of a rally attempt does mean that we need to keep our eyes out for a follow-through day soon.

After a rally attempt starts (yesterday), the stock market will put in a large rally (usually between 1% and 2%; I prefer 1.5% at least) on heavier volume than the day before, in between day four and day ten. This move is called a follow-through day and is very important. Why is it important? Because no major stock market rally has EVER started without a follow-through day. However, you must remember that not every follow-through day launches a long bull market.

I remember many times after the 2000 top to the 2002 lows where the market rallied for a short while after a follow-through day to just rollover to new lows. So while we are leaning to the short side still, you must remember to not lose your whole short position if you are in a very weak stock as the markets go through these short-squeeze rallies. Some of the ones I remember off the top of my head that you should review are the April 2000-August 2000 “FOR SURE BOTTOM RALLY.” I will never forget that when that happened EVERYONE said we bottomed and stocks were going higher. When the market started to rally in April everyone was for sure we saw the worst of the selling; just like now. However, possibly just like now, we were just starting.

Other times that we had fakeout rallies were in Jan 01-Feb 01, late Sept 01-Jan 02, and in August 2002 right before the rollover to the real bottom in October 2002. By that time, nobody liked the market, everyone was for sure the US financial system was going to forever to be destroyed, and the sentiment was so bad that nobody wanted to buy stocks. Right now, it looks like everyone and their mom is calling for a bottom here and that everyone is telling me what I should buy in preparation for attacks on the old highs. Folks, we don’t bottom when everyone is telling you to buy stocks.

Another problem was just mentioned and has been talked about constantly here for a while is sentiment. Just today I heard a guest on CNBC make one of the most absurd statements I have heard in a long time. He had the gull to say that a couple of weeks ago we saw sentiment get the most negative it has been in years warning of a bottom soon. When I heard this, I was stunned and immediately stopped doing what I was doing to hear what he was going to refer to to confirm this statement. Of course, nothing was mentioned. He did not point to a single indicator, survey, chart, or study to confirm “this most negative sentiment in years” comment.

The truth is we haven’t come close to seeing any fear at all. On August 16th intraday Chris (mahket) and me almost called the lows to the exact hour. Since then we were bullish all the way up to the November highs and as the market rallied there were plenty of stocks that produced solid gains for our portfolios. There was nothing amazing or incredible but there were still some solid gains to be made.

That reversal call was not anything special it was made based on the fact that the VIX hit a level we have not seen in over four years and not only did it hit that level it hit it and put in a huge intraday reversal and on an arithmetic chart looked clearly toppy. At the same time, the put/call hit over 1.3 (clearly a level showing fear) and the bulls hit 40% and the bears hit 39% almost crossing pretty much confirming a bottom. This along with all the hot charts moving higher made it clear the rally was good.

Right now, not a whole lot of that exist. Not only are there very few to none charts that are hot hot hot in high quality CANSLIM growth names, there is no fear down here at these lows. If this is a normal pullback from the August lows, then this makes sense. But if the SP 600 and Russell 2000 indexes are the leading indexes and are leading the market lower then we have a problem. Both are below the August lows by a good amount, yet the put/call, VIX, or investors intelligence survey are not even close to the August lows. If the NYSE is the leading index, then I am incorrect for using the leading indexes on the way up as the leaders now on the way down, and the market is just in a normal pullback in a bullish trend set back in August. Something tells me that isn’t the case, though.

So, going back to the guy, I find it insulting to intelligent investors that this hedge fund manager of two funds was saying such crap. It is these kind of lies that hurt the investing public and is part of the reason why people like me and RevShark exist. We can’t stand to hear and see this crap and, I am not sure about him but, it really bothers me that this stuff can be said and nobody says anything to counter it. It isn’t the anchors fault; there is no way whoever interviewed him knew any better.

Now, moving away from the sentiment that is not negative out there-or else people would not be saying to buy this dip-there is one other area of the market that can tell us how strong the market is underneath. That area is all of my charts. The first thing that struck me when I went over my longs and shorts scans that I have created I noticed that a lot of shorts did fail key resistance which is quite shocking because the setups were so close to perfect. The second thing was that in the CANSLIM watchlist there were a ton of top stocks breaking out to new highs or bouncing off key moving averages. And the third thing was that there was almost no volume on any of these moves.

All of these breakouts/bounces from strong support or through key resistance all happened in stocks that have “jacked up” charts. There are very few charts out there that are loaded with green BOP much less max green BOP. The stocks that do exist in these BOP scans are either under $10 a share showing that the stock is of low quality or it trades under 10,000 shares a day showing that the company is so small that there is no float much less interest from big investors. Take these very weak HOT charts with green to max green BOP and then take all the yellow to red BOP filled CANSLIM charts that are breaking out or bouncing on low to very low volume and compare them to all the stocks over $50 that are high quality that are selling off and it becomes clear the stocks that are moving lower are of very high quality and the stocks moving higher are of very low quality.

In raging bull markets when you are supposed to be maxed out on margin on the long side, you will have BIDU AAPL GRMN GOOG leading you higher while there are few to no stocks selling off. That is what we had from the October 2002 lows to the November highs. And actually we might have BIDU AAPL GRMN GOOG and the other horseman make new highs again. However, this time, if they do that, they will have extremely poor negative divergences in a TON of technical indicators and they will also have very wedging price patterns setting them up for lower prices down the road. There is no other way to put it, when I look at my charts, things have changed. There is no way I can see a bottom here so soon after the real selling started.

Am I enough of an ass to deny the rally? Of course not!! I need to make one thing clear: though I might have an overall bearish bent to me since the November highs, I am still more than willing to play ANY hot chart that comes up. That is why I went long EGN quite large yesterday. Today’s gains made up for ALL of my losses in the shorts, because the long was so well setup that the risk/reward was darn near perfect. ELMG is now looking great too. But one thing is similar here also: neither chart is perfect. I have no perfect charts STILL. However, they are definitely nice enough to cause me to take them.

Also there are six new longs tonight. If I was a true perma-bear without any brains like some people I know, I wouldn’t be going long six stocks. Are any of them worth loading up on? Not to me. I don’t see anything here. ANSR’s chart is what I would love most stocks to look like during their month of November. However, a sub $5 price is not what I like to see. I like my gems to trade $20 or higher. Thanks to the low price, by default, the best chart tonight becomes EGN again.

OK, I believe I have given you enough info to digest on tonight. Remember, it is not wise to be a hardcore bear or bull here. Stay flexible. Play the short side, play the long side, but do not marry anything. There are no perfect charts and if you short late in a bear market these rallies like you saw today will kill.

Also, don’t forget the biggest rallies happen in bear markets. Our biggest day this year was earlier this month. Did we hold those gains? Exactly. Did you know that the best nine days for the Nasdaq ALL happened during the bear market of 2000-2002? You didn’t? I did.

Aloha and I will see you in the chat room!! ALOHA!!!