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Day Trading Grandma Makes A Small Fortune

daily chart Sept 23 20149/23/2014 – A down day with the Dow Jones down 116 points (-0.68%) and the Nasdaq down 19 points (-0.42%). 

A great market summary in today’s MarketWatch Article Everyone is a genius in a Fed-induced stock rally

A few important points if you don’t feel like reading. 

  • Everyone and their day trading grandmother believe that they are geniuses. Mostly because the market hasn’t had a real correction in over 5 years.
  • Most investors are high-fiving each other because they are making so much paper money.
  • Amateur investors and financial commentators are openly insulting well researched bears.Including market pros like Marc Faber and Bill Freckenstein.
  • Most bears have given up.
  • Everyone is predicting the Dow 18K, 20K, 25K, etc…..

Understandably, it is incredibly difficult to remain bearish in such an environment. Yet, despite the uptrend and all the bullish hoopla, it is important to remember that no one expects a bear market to start when it actually starts. And you don’t have to go further than October 11th of 2007 in order to see this principal in action. Jesse Livermore was right on the money when he said, “To make big money you have to sit alone and wait.”

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2014-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2014-2017 will start (to the day) and its internal composition, please CLICK HERE

(***Please Note: Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. September 23rd, 2014 InvestWithAlex.com

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Day Trading Grandma Makes A Small Fortune Google

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Cyclical Composition Of The Stock Market

Long Term Dow Structure3 Continuation from yesterday……(Buy Low, Sell High, Go Short & Cover Case Study)

  • 17 Year BEAR Market (1932 bottom to 1949 bottom): The cycle originated at the bottom in July of 1932 and lasted until June of 1949. During this period of time we had a post great depression bounce, 1937 crash and the World War 2. Yet, despite the overall upward trajectory, this clearly defined 1949 bottom remained 60% below its 1929 top and well below both its 1937 and 1942 tops.
  • 16.5 Year BULL Market (1949 bottom to 1966 top): The market surged higher between 1949 bottom and 1966 top. This was the so called “Golden Age” of post war reconstruction and the American industrial boom. During this time the Dow appreciated over 500% in a clearly defined bull market cycle.
  • 5 Year BEAR Market (1966 top to 1982 bottom): The market stayed relatively flat during this period of time with a few notable declines of 30-50%. With the 1972-1974 mid cycle decline of 54% being the largest one.  This clearly defined bear market completed in August of 1982. Approximately 25% below its 1966 top.
  • 17.5 Year BULL Market (1982 bottom to 2000 top): A very well known period and a clearly defined bull market. The market surged higher from its August of 1982 bottom to reach its historic top in January of 2000. During this time the Dow appreciated over 1,400% in one of the strongest bull markets in history.
  • 17 Year BEAR Market (2000 top to 2017 bottom): Even though the market is sitting at an all time high (as of this writing in September of 2014) and even though most people have assumed that the new bull market has started, in relative terms the market hasn’t appreciated very much since its top in 2000. The Nasdaq is still down. Plus, with the final down leg of this bear market being ahead of us (based on my mathematical and timing work), a BEAR market of 2000-2017 should complete itself in a negative territory or below its 2000 top.

It is important to note that the small variation (of +/- 1 year) in duration of these cycles is caused by smaller or larger cycles arriving at the same time.  Please note, the stock market is an incredibly complex entity that requires much further explanation. If you would be interested in learning how the stock market works behind the scenes I would highly recommend my other book Timed Value for your consideration.

To Be Continued Tomorrow…….

Z31

Cyclical Composition Of The Stock Market Google

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When Will The Market Correct?

daily chart Sept 22 2014

A down day with the Dow Jones down 107 points (-0.62%) and the Nasdaq down 52 points (-1.14%). 

While most markets continue to trade within a tight trading range, most investors continue to ask the same questions. When will the correction come and what sort of a catalyst will set it off? G20 finance ministers add to fears of a stock-market bubble

The big assumption or the error that I must bring to your attention here is that we will get some sort of a correction, not a multi year  bear market. As I have suggested so many times before, a bear market of 2014-2017 is just around the corner. Second, there won’t be a catalyst. The market will simply turn around one day and start heading lower. Accelerating pace as it goes along. Just as it did in October of 2007. And while some sort of a catalyst will be assigned to the market post-mortem (ex…. Alibaba going public), it won’t have anything to do with the actual turning point. Again, the market will simply top out, turn around and head lower.

If you would be interested in learning when the bear market of 2014-2017 will start (to the day) and its internal composition, please CLICK HERE

(***Please Note: Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. September 22nd, 2014 InvestWithAlex.com

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When Will The Market Correct?  Google

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Buy Low, Sell High, Go Short & Cover Case Study

nasdaq

Continuation from Friday…….(Buy Low, Sell High, Go Short & Cover Summary)

The premise is very simple. We will study the Nasdaq between 1994 bottom and today in order to determine how various investment strategies would have performed during the time. In order to initiate the process we must first have a clear understanding of exactly where we were in the cyclical composition of the stock market back in 1994, where we are today and what had transpired in between.

In my previously published book Timed Value a considerable amount of time was spent on discussing two powerful cycles that tend to rule the overall stock market since it began trading in May of 1790. These cycles are the 17-18 Year alternating Bull/Bear cycle and one completed growth unit within the stock market, most commonly represented by a 5 Year Cycle.  Let’s now take a closer look at both, starting with a bull market cycle of 1914-1932.

THE 17-18 YEAR CYCLE IN THE STOCK MARKET:

  • 17.5 Year Bull Market (1914 bottom to 1932 bottom): The previous bear market terminated in July of 1914. At that time the US stock market shut down for World War 1. The stock market remained closed between August of 1914 and December of 1914 (a very rare occurrence). When the market finally reopened in December of 1914 it immediately began a rally that would not terminate until October of 1929. Followed by a now famous 1929 stock market crash and a massive 90% 3 year decline. The cycle terminated at the bottom in 1932, completing the 17.5 year bull market cycle at that time.

*Note: It is important to address the 1929-1932 bear market and its impact on the overall 1914-1932 Bull Market cycle. It is a complex matter to discuss without sufficient background or understanding, but the final (short-term) structural composition of this Bull Cycle inverted over the last 3 years (1929-1932). Mostly due to a massive rally between 1924-1929 and a number of down cycles converging on this time period at the same time.  Regardless, the overall cycle lasted 17.5 years.

To Be Continued Tomorrow…….

Z30

Buy Low, Sell High, Go Short & Cover Case Study Google

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Alibaba Stupidity

daily chart Sept 19 2014

9/19/2014 – A mixed day with the Dow Jones up 14 points (+0.08%) and the Nasdaq down 14 points (-0.30%).

I have two things for you to ponder over the weekend.

Alibaba worth more than $200B… just what is it?

I think when the history books are written this massive Alibaba (BABA) IPO might be viewed as the “Ringing of the Proverbial Bell” for this bull market cycle. And do I really need to talk about its valuation? As I write this, the company is selling at 24 times revenue. For god’s sake……Tesla (TSLA) which is another highly speculative stock is selling at just 13 times revenue. Amazon, who most closely resembles Alibaba, is selling at just 1.9 Revenue. In other words, the valuation of Alibaba is 12 higher than Amazon and twice as high as Tesla. If this doesn’t scream out “MASSIVE STOCK MARKET BUBBLE/TOP” to you, well, you deserve to lose a lot of money.

‘Bubble in everything, everywhere’: Marc Faber

We live in the world where a 25 year old financial commentator with a nice haircut and a bachelors degree in marketing can make fun of well researched investors like Bill Fleckenstein for, get this, missing the latest rally of 2%. Over the last few months Marc Faber received the same treatment on at least two financial network. The question you have to ask yourself is this. Who would you rather listen to

  1. Openly bearish money managers like Marc Faber, Bill Fleckenstein, Carl Icahn, George Soros -OR-.
  2. Financial commentators who have no idea what they are talking about and/or who most likely have most of their money “well diversified” though at least 5 “well balanced” mutual funds.

The choice, as always, is yours.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2014-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2014-2017 will start (to the day) and its internal composition, please CLICK HERE

(***Please Note: Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. September 19th, 2014 InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

 Alibaba Stupidity Google

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Should Janet Yellen Declare Victory?

daily chart Sept 18 2014

9/18/2014 – An up day with the Dow Jones up 109 points (+0.64%) and the Nasdaq up 31 points (+0.68%). 

The consensus is in. Everyone and their day trading grandmother now believe that the markets can only go up. The FED has done the impossible by printing money and stabilizing the economy. Even Mr. Obama was so excited about the news that he committed the biggest sin of all. He took full credit for this ” incredibly strong economic recovery.”  I wonder if he will take credit when this economic miracle blows sky high.

Unfortunately, most investors are committing a massive mistake by believing that the FED  A. Had anything to do with stabilizing the markets back in 2009 and B. They will now be able to anticipate and prevent future declines. They are once again confusing cause and effect. The FED is always behind the ball. And you don’t have to look further than every single financial crisis over the last 30 years.

It is the stock market that drives FED policy and not the other way around. Just remember the following. One of these days the market will stop going up, reverse and initiate a massive bear leg. Regardless of whether or not Janet Yellen likes it. You have been warned.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2014-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2014-2017 will start (to the day) and its internal composition, please CLICK HERE

(***Please Note: Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. September 18th, 2014 InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

Should Janet Yellen Declare Victory?  Google

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Buy Low, Sell High, Go Short & Cover Summary

Continuation from yesterday……(The Reason Most People Buy High and Sell Low)

With that in mind, it is now time to bring all of the points above together in order to formulate a clearly defined investment strategy.

Buy Low, Sell High, Go Short & Cover Investment Strategy Summary

stock market cycle

Know Exactly Where You Are At All Times.

Whether you are investing in individual stocks or the overall stock market, you must have a clear understanding of exactly where you are in the cyclical composition of the underlying financial instrument.   Luckily, you only have a few options.

  • Market Bottom:

Cover your short positions and prepare to go long. Identify substantially undervalued securities.

  • Bull Market:

Buy and hold substantially undervalued securities. Continue to add to your positions and/or buy newly discovered undervalued securities throughout the duration of a bull market.

  • Market Top:

Liquidate all of your long positions and prepare to go short. Identify good shorting opportunities. They can either be stocks you were long or stocks that are expected to decline at X multiple to the market.

  • Bear Market:

Take short positions in the overall stock market or individual stocks once a bear move is confirmed.  Continue to add to your short positions for the duration of the move. Cover once the bottom is reached.

Then simply rinse and repeat.  The rules above, of course, can be applied to all time frames and to all financial instruments. For as long as you know exactly where in the cycle you are.  The primary benefits are as follows.

Risk Reduction:

  • Through the purchase of undervalued securities.
  • Through knowing where in the cycle you are.
  • Though having the ability to be on both sides of the trade at appropriate times.

Maximizing Profits:

  • Through having the ability to profit from both sides of the move. Long and short.
  • Through purchasing undervalued securities with significant upside potential or shorting overvalued securities with a lot downside.
  • Through compressing anticipated gains into the shortest time frame possible.

Let me now show you exactly how this works with a real life example and why this particular approach outperforms most others by a significant margin.

To Be Continued Tomorrow…..

Z30

Buy Low, Sell High, Go Short & Cover Summary Google

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What You Ought To Know About Your Stock Market Gains Vanishing Into Thin Air

daily chart Sept 17 2014

9/17/2014 – An up day with the Dow Jones up 20 points (+0.12%) and the Nasdaq up 9 points (+0.21%)

Most markets continues to trade within the confines of their 3 week trading range. And despite Janet Yellen’s dovish stance, one primary question remains. Now what? With today’s backdrop of less liquidity, proposed higher interest rates and a massive speculative bubble in the stock market (well, most asset classes), what happens next?

Perhaps Bill Fleckenstein has the answer. Fleckenstein on missing the rally: ‘So what?’

“I think the stock market is more crash-prone than ever,” Fleckenstein said Tuesday on CNBC’s “Futures Now.” “So will we get through September and October without some sort of an accident? I don’t think we will, but I don’t know-we’ll just have to see. If you want to pursue idiots like the Fed doing crazy policies, and if you think you can get out in time, go for it. I don’t want to try to do that. Fleckenstein may have missed out on gains, but “so what?,” he asked rhetorically. “When markets decline, how fast it will be taken away from you.”

He is right on the money and that’s what most people or investors don’t get. Despite the bulls hyperventilating about how great this bull market is, once a bear market gets going or god forbid crashes, most of the gains accumulated over the last few years will vanish into thin air. In a matter of weeks, if not days. In fact, repeat after me…. “POOF”. Yep, just like that.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2014-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2014-2017 will start (to the day) and its internal composition, please CLICK HERE

(***Please Note: Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. September 17th, 2014 InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

What You Ought To Know About All Of Your Stock Market Gains Vanishing Into Thin Air Google

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The Reason Most People Buy High and Sell Low

Continuation from yesterday……(Buy Low, Sell High, Go Short & Cover)

Warning Signs:

  • Most long-term bull market cycles do not last longer than 5 years. Today’s bull market has been in existence since about March of 2009 or 5.5 years. Suggesting that the market might be topping.
  • Monthly charts show a possible period of distribution that started in January of 2014. In other words, the market has shifted from a fast moving bull market into a flat market. Suggesting a possible near term roll over.
  • Short-term charts suggest that the market is unable to go much higher. Let alone continue on with its bull market. Therefore, a real downtrend shift becomes likely here.
  • A massive fundamental overvaluation bubble reminiscent of 2000 and 2007 tops.
  • A secular bear market of 2000-2017 is scheduled to complete in 2017.
  • A mass psychological delusion suggesting the impossibility of a bear market at this juncture.

Determination:  Even thought all technical indicators (short-term and long-term) are still positive at the moment, the market is at a very dangerous juncture. In fact, given the warning signs above, any analyst worth his salt should conclude that the market is likely to be at the top here.  That the market is distributing prior to its eventual roll over into a full out bear market.  Not a simple correction.

As you can see, this simple analysis yields exactly where in the cycle we are and what we should do next.

Recommendation:  Any investor here should go on the highest level of alert in anticipation of a possible roll over.  All investors should be ready to liquidate their long positions at a moment’s notice and go short if their trading/investing profiles allow for it.

The following recommendations would apply to specific risk tolerance levels.

  • Low Risk: Get out of the market by liquidating all of your long positions. Remain in cash.
  • High Risk: Get out of the market by liquidating all of your long positions. Remain in cash in anticipation of a market roll over.

Upcoming investment recommendation:

  • Low Risk: Stay in cash while the market corrects. Preserve your capital and buy stocks at 30-50% discounts at the next market bottom. Profit from the next bull cycle.
  • High Risk: Be ready to go short as soon as the stock market confirms the start of a bear market leg.

The great thing about the approach above is it works in all market conditions. For instance, investors who are “long only” today or those who are unaware of our current cyclical location would simply hold their positions throughout the duration of the upcoming bear market. Just as they did between 2007 and 2009. Most likely selling at the bottom of the range as the amount of psychological distress associated with losing 30-50% will reach its pinnacle right around the market bottom.

That is why most investors do the opposite of what they should be doing. Instead of selling out and going short at today’s market top, most investors will go long due to their general unawareness, long only bias, faulty technical indicators and to be honest, stupidity.  Holding it for the duration of the decline and getting out at the bottom.  Even worst, many will go short right before the market bottoms. In other words, they will buy high and sell low.

To Be Continued Tomorrow……

Z30

The Reason Most People Buy High and Sell Low Google

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Are You Ready To Buy Some BABA?

daily chart Sept 16 2014

9/16/2014 – A strong up day with the Dow Jones up 101 points (+0.59%) and the Nasdaq up 34 points (+0.75%). 

The market continues to trade in a tight trading range. Accumulating energy for either a significant breakdown or a breakout. In the meantime, some money managers believe today’s range bound market is due to Alibaba’s IPO this Friday.

“People are pruning their portfolio ahead of Alibaba to get rid of over weights in competitors to raise money for Alibaba,” said Art Cashin, director of floor operations at UBS. “The usual cat and mouse game is bigger than normal.”

Fair enough, but what about the fact that Alibaba’s anticipated valuation being out of sync with any sort of fundamental reality?   

“There is some room for some volatility in the market over the next week when they realize that this period of zero rates is going to end,” he said. “But if you take a look at the big picture, rates are still so extraordinarily low that money will continue to flow into equities.” Standing by his prediction of 18,000 on the Dow Jones Industrial Average (Dow Jones Global Indexes: .DJI) by year end, Siegel again made his case for why the bull market still has legs.

In other words, buy everything in sight. Buy BABA and buy every stock under the sun. And the more speculative it is the better. Yet, maybe…..call me crazy…..just MAYBE this Alibaba IPO will mark the market top. Hmm, definitely something to think about.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2014-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2014-2017 will start (to the day) and its internal composition, please CLICK HERE

(***Please Note: Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. September 16th, 2014 InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

Are You Ready To Buy Some BABA? Google