FACTS: we are currently experiencing...
The worst June for the Dow since the Great Depression; The first time the Dow has been down three quarters in a row since 1977/1978; A 1300 point decline since my "Dow 12k or Bust" article on June 2; An 1100 point decline since my "Hindenburg" article on June 20, and 5 additional Hindenburg Omen signals since then, creating a cluster of warning signs of the markets poor health; U of M's consumer confidence index hit a 28 year low as reported Friday, June 26th; The rally that took 4 months from the Jan'08 low was just wiped out in 1 month, and both the Dow and S&P are below their January lows as of June 26; Wall Street is in the midst of the biggest "crisis of confidence" since the 911 Attacks; The Dow and S&P sit -20% and -18% from their Oct'07 all time highs, while the Nasdaq sits -19% from its Oct'07 high, which is still 54% off it's all time high in January 2000.
So, how do you like the "buy and hold" strategy your broker has been experimenting with on your money? Brokers, financial planners, or whatever else you call them, are mostly salesmen...not that there is anything wrong with salesmen. But, if you are believing that they are saints that are looking out for your best interests above their own, wake up and at least sniff some coffee. Only a true money manager with demonstrated skill in surviving both up and down markets should be relied upon to take care of your funds.
A Lunar Effect (http://tradewithwaves.com/lunareffect.php ) is likely holding court over the markets from June 30 to July 2 +/- a couple days. As this link explains, New and Full moons (we’re at a new moon currently) have been shown to “inflect” the trend of the markets. So, if the trend is down into a Lunar Effect, it should reverse higher out of a Lunar Effect, and vice versa. This is another reason that I suggested taking short trades off yesterday morning with nice profits.
The Euro has moved back up to the 1.58 level, nearing its 1.60 high. There is a chance it'll make new highs prior to another multi month decline, next time toward 1.40. My suggestion to short near 1.58, then to cover on June 10, near 1.53 worked out well. Conserative traders should stand aside now, awaiting a short on a new high in the 1.61-1.66 area, or on a break of 1.54 for the slide toward 1.44-1.48 initially, with lower levels possible toward 1.38-1.40. Aggressive traders would short here again at 1.58, adding into the range just mentioned. If your business can benefit from currency exchange, begin making your dealings in dollars, at the expense of the Euro for the next year or so.
Books: Day Trading books came out near the market top in 2000, as the market was topping…Flipping Houses and Foreclosure Investing for DUMMIES have recently been published, almost certainly guaranteeing that the housing debacle is far from over. It’s rare that books and magazines that teach you the correct thing to do come out at the perfect time. In fact, history shows that they tend to mark reversal or acceleration points. Therefore, despite what realtors are telling you, this IS NOT the time to pick up and hold onto houses for investment. Ask to see how many ‘great deals’ they have bought in the last year that are cash flow positive, or they have sold for profits.
Check my last post for actionable buys and sells, if you can take the heat. Otherwise, stay out of the kitchen, seriously! THIS DECLINE HAS THE POTENTIAL TO CREATE SHOCK AND AWE, AND CONTINUE FOR MANY MONTHS. DON'T BE SURPRISED TO SEE SINGLE DAYS WITH 500-1000 POINT DOW MOVES.
For what it's worth,
Ken
