A Bottom May Be In, For A Long, Long Time.

All we needed was a little confidence in the market. The government is doing everything they can for us, right? The Libor rate is falling, that must mean everything is getting better. But that all changes with the release of a handful of emails between employees at some of the major rating agencies.

I think must of us knew the credit rating agencies were on the take when it came to this mess. But to hear it, and have politicians grilling witnesses on it, is another story. In my opinion this will start a new run on the hedge funds and we may still have Mutual Funds that will liquidate large blocks of shares at prices that will drive us all down.

For that reason I will continue to stay out of individual stocks. All of the signals for the Indexes show we are in a downtrend. With big sell offs like we had today giving us an oversold market, we can probably count on a dead cat bounce rally. But don't be fooled, we are not only going to test the bottom but in my opinion we will set a new bottom. Luckily we have options as traders to make some money on the move, it just might be tough for some of you to sleep at night leaving double short index trades on the table at the end of the day. Remember, that a lot of traders will take the trade off and accept a lose if any trade is down 8% or so. You pick the number.

So let's keep emotion out of it, trade the trends and ignore the stockpickers!

Testing The Bottom Again!

Another 733 points down on the DOW today. Must have been some politicians on TV today! But in all seriousness, this should be enough for everyone to understand that any benefits that the government "interference" will have on the economy or our markets, will be slow in coming.

If we are back to trading on fundamentals it will be a sad fall trading season for traders of individual stocks. I hate to bore everyone, since everybody loves a great stock pick. But this is no time to own individual stocks. Or at least not for long. Very few professional traders are holding any stocks right now. Are you so much better then them that you can know where this thing is headed?

For now I am sticking with what I am now calling [remember, you heard it here first] the "Slingshot Trade". When we become so oversold it is pretty easy and you can almost throw a dart at a list of stocks and do pretty well. For now we are sticking with trading the Ultra Shorts and the Ultra Longs, [DXD, DDM, SDS, SSO, QID, QLD] including the DUG and DIG on crude.

If you are not familiar with these it is time to get on board. We bought the DUG last night and sold it at close today. I'll let you go do some research and the math. We are continuing to short crude for now but that doesn't mean that we won't go long [DIG] one day if we have a catalyst that will turn us around for a day. And with the movements [down] that we have had it doesn't take much.

With us down 733 on the DOW we may be testing the lows of last week. So if it falls apart again tomorrow look for this thing to rip again as buyers flood back in. We'll be right back in the DDM as we get under DOW 8,000.

Good luck tomorrow, you better strap in!

Blogging About Stocks A Lot Like Trading

We are going to spend quite some time trading in an environment where traders will basically be looking at each other and saying....."You Buy It"....."No You Buy It".

Being the first one to call a bear market always brings some grief from the Bulls. But here is the first few lines from one of my favorite investment bloggers......

Dow to Fall ANOTHER 2,200 Points
by Martin D. Weiss, Ph.D.

Dear Subscriber,

Today's 508-point plunge brings the Dow closer to our long-standing target of 7,200. But to get there, it still has a long way to fall — over 2,200 points......

It's a tough one to swallow but I am afraid we are going to have to. Forget the fundamentals, sell all of your stocks on every rally [we'll still have those] except the ones that have a safe dividend in the 10-15 percent and even then only the best large cap companies. You think their market value makes you sick now. Imagine losing another 2,200 points!

And don't expect any help from Washington anytime soon and that is about the best news I have heard all week. Can someone please figure out exactly how many DOW points we lose per word that Uncle Ben speaks!

The more Bernanke [and is boss] say, the worst the market feels. It's a confidence game now and it is obvious any real leadership out of Washington will have to wait for the next president. And of course the congress and senates much needed vacation.

No sense in talking about trades, I'll be putting on the same Swing Trade I have wrote about in my latest post. Today I got hung up with the DDM when I bought it at about DOW down 300 and it continued down. Looking for a rally to sell it off and buy the DXD or SDS.

That's all I got!

We Are Headed DOW Down DOW

All traders anxiously stared at television screens this morning expecting the fed announcement for a rate cut. When it didn't come the outcome was obvious, we are headed down. My call for DOW 10,000 which I got more then a couple of nasty emails about is starting to look like a conservative call.

It it is obvious that we are having a run on the hedge funds. They are being forced to sell at ridiculously low prices as investors demand cash.

So for today I will be sitting tight as I expect to go lower through tomorrow morning when I will take a position in the DDM [Ultra Long DOW 30] expecting a dead cat bounce Tuesday afternoon. I am not trusting any stocks for trades right now, while I will make small purchases in my long term positions. The second I sell off my DDM I will be purchasing the DXD [Ultra Short DOW 30] This trade has and will continue to work until we get some consolidation in the market trend.

There is money to be made so keep your head out of the sand.

Watch how to Swing Trade in a bear market Click Here

Forget The Fundamentals, Trade The Trend

I think I feel about the same as every other trader right now, hung over. It has been a tough week or two for everyone. But as I have said in previous post we can control our anxiety and stress by formulating a plan and sticking to it. Even if it means sitting on the sidelines for now. But I don't think you have to. There is money to be made.

We are at a point where we need to forget the fundamental technical analysis and trade the trends using catalyst for our buy and sell points. I am tempted to say don't buy any stocks right now, but that wouldn't be right. There is best of breed companies that are getting knocked down to levels that I personally have to add to my positions on. I am adding to FCX and NOV just to name a couple. But I am still sticking to my plan to sell them on every rally. Until we get some consolidation in this market I will sell every rally then turn around and short the market using the QID for the NASDAQ and the DXD for the DOW. Most likely this week it will be the DOW with the levels that the NASDAQ has reached.

Now that the "bail out" vote [yes I'll call it that] is done what is our next catalyst? I think it will be the Federal Reserve lowing the interest rates. The Street seems to be betting that if financial markets remain unsettled, the first rate cut could occur before the Federal Reserve's next meeting on Oct. 28-29. Some are saying as early as this week!

The trend is down no matter how the talking heads want to polish this thing. Stick to your plan, take your profits and don't trust this market.

Create FREE Portfolio Click Here

Must See Dollar Index Video

Rarely do I find something that I feel like my readers just have to see. This is one of those times. I know we all get bombarded everyday with the latest hot stock picks and trading methods, but Adam Hewison with INO.Com has a new video that will open your eyes to trading the Dollar Index, Ticker DX.

I am always a sceptic, but the returns I have made on Adam’s advice during these turbulent times have made me eager for every new video he puts out. Do your portfolio and your grandchildren a favor and take a few minutes to watch the video.

Click Here To Watch DX Index Video

The Ostrich Trade Still Won't Work

I am sympathetic. With a market like we have right now it is real easy to just pull the covers over your head and ignore everything. But there is just as much money to be made right now as there is at any other time.

On Wednesday I bought the QID, the QQQ ETF that shorts the NASDAQ 100. I sold that at the close of trading for a tidy 9 percent+ gain. That's almost 10 percent in two days. Now I don't know about you but that is as good a trade as I can get even in the best of times!

So my stock tip of the day....forget the stock trade and trade the trend. Right now I think every smart trader out there knows we are headed further down. I for one am holding to my goal of DOW 10,000 and we my continue down through that. But with the sucking sound of money coming out of Washington with the vote today we are likely to get a pop on all three indexes.

If we do I will either pick up the QID again or more likely the DXD, Ultra Short DOW 30 since the NASDAQ has been beat so hard.

So pull back the covers, stick to a plan, forget the stocks and trade the trend.