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Monday, December 15, 2003
Good evening friends,
The capture of the Iraqi dictator was worth nothing to the markets today, if you can believe it. Both the Dow and NASDAQ gapped up this morning and almost immediately began to drift lower. Both indexes were on a steady downhill roll all day and picked up momentum into the close with both indexes closing at the lows of the day. The Dow had a 120 point swing and the NASDAQ had a 60 point swing from high to low on the day. This goes back to what I've said many times since the beginning of our service and I think it's worth repeating again tonight - “the market never does what the majority expect it to do”.
The futures were up big today and it looked as though it was going to be “the mother of all rallies” as described by one of our subscribers. Instead we got the “expected”, unexpected mother of all fizzles. I say “expected” because this failed rally was really expected by the smart money and unexpected by the dumbobarries. Guess who's going to win this every time? The smart money got what they expected. The sheep herded into the market in droves at the open and got slaughtered again as usual.
Here is a copy of my post on the boards this morning:
“That is why I suggested not chasing stocks today. I've seen this before many times. The crowd of retail investors (Sheep) rush in and the smart money (wolves) sell them the gap up and profit. When the market fails, the Sheep sell at a loss and the wolves take the shares back on the cheap. It's a vicious cycle and you must not follow the crowd or you'll get caught up in it. It's best to be patient and wait”.
I sent out an alert this morning to be cautious about this rally. I really thought we would test 2000 on the NASDAQ today but wasn't willing to chase stocks. I'm always hesitant of these massive gaps on news; they seem to fail more times then not. I didn't think we could break through 2000 but I will admit, I thought the gap and run would continue until at least into the afternoon where I expected some selling and then was planning to buy the pullback. Things changed when I saw the selling accelerate into the close. There were just no buyers to support the rally from the start. It turns out that we didn't even get close to 2000 today and the worst of the news tonight is that I saw many bearish engulfing candles on charts with many stocks closing at or near their lows. This of course is never good and I'm certainly glad we didn't fall for this fake out like many people did today.
We will stay on the sidelines for now, saving up our cash for better trading opportunities. One thing you need to always remember, if you trade just for the sake of trading, you are a compulsive trader and you need to get help. It's like a compulsive gambler or alcoholic. If you trade just to trade, then you will never win. The only winner will be your broker collecting commission on both ends of your trade. You must only trade when the odds are stacked in your favor. When you see a great chart and all the indicators you use are signaling a winner (when the stars are all lined up, if you will). Unless you have this situation, you should not trade. If you trade for a living and you are using the rent money to do it, you must not trade until the stars are lined up and fire works go off around you. When you get this signal, you make your move. This is your money we are talking about here; don't give it to your broker on break even or losing trades. Your account balance will dwindle away faster then your wife can say “You're a dumbobarry and you know it”. I'm not telling you this as a joke - I'm as serious as a heart attack. I want you to succeed and be around trading with us for a long time to come but if you run out of cash, you can't trade anymore. Think about it; don't let your broker drain your account. You don't have to trade, nobody is forcing you, you're in control; control your trades by using smart money management and limiting risks and unnecessary commissions since it all adds up. You are in a game where everyone is out to take your money.
I enter the game every day by myself and I face millions of competitors all wanting to take my money, all thinking they got the best of me when I bought their shares or when I sold them mine. Only time will tell who the winner of the trade is but I am confident enough to think I will win because I won't enter the trade unless the odds are in my favor, this gives me the best chance to win. Cash is king, don't dwindle it away, hold it tight and be ready to pounce on the next winning trade.
Because of today's market action, very few stocks are showing up on my scans tonight. The good news is, only 2 of the current 38 Bulletin stocks have enough chart damage to warrant removal tonight. This tells me that we are following many strong stocks that still have good charts, so we'll concentrate on these for the time being. Have a great night everyone; I'll see you all Tuesday evening.
Make the holiday's Special: There are many children who won't have a gift to open this year, a toy to play with or a coat to keep them warn while they walk to school. Please see it in your hearts to donate a gift to a child this Christmas. Give a toy to the Toys for Tots campaign this holiday season or you can also donate some warm cloths to the Coats for Kids campaign. Your generous gift will be most appreciated by those who receive them. Thank you and happy holidays from TWPD.
Reminder **Holiday schedule** The Bulletin will be produced on 21- 23 December. The market is open a half day on the 24th and 26th of December. I will not produce a bulletin on Christmas day for the 26th half day of trade. The next bulletin after the 23rd will be Sunday the 28th. I will produce a bulletin on New Year's day for the 2nd of January trading.
Flash back Aug 14th Bulletin
New Today PMU 8/14/03 Comments = Nice small cap in the mining group. B P .52
This stock recently reached a high of 1.85 for a 255% gain
Earnings Calendar.
http://biz.yahoo.com/research/earncal/20031023.htm...
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