Volatility and 600 point swings ... learn how to profit from them.

The results of our Traders Blog survey are in and 62 percent of our respondents got it exactly right when they said that they are bearish on the economy.

The other 38 percent of our respondents said that they were bullish or neutral on the economy. I hope they were able to avoid the recent collapse in the markets, otherwise it has been an expensive month for them.

The one great thing about markets, is that there are two sides to every trade. You can trade from the long side, or trade of the short side. Both sides offer you a way to make money. Why trade only half the time when you can easily trade both ways and make money.

The only thing you can count on in the markets is that they will fluctuate. Your job is to determine if the fluctuations are headed higher or lower.

Members of MarketClub can easily determine market fluctuations by using our "Trade Triangle" technology. Most member using this technology are either short stocks or out of the market. It's safe to say that they have done very well in this downturn.

Here's one of the realities of the marketplace. You cannot and should not follow the crowd. Unfortunately every talking head guru seems to talk about the same things at the same time as the other talking head gurus. Last summer it was global growth, remember that was going to send stocks into the stratosphere, now it's doom and gloom. They the gurus are always the most bullish at the top, and the most bearish at the bottom. The fact is, no one knows exactly where the market is headed, except the market itself.

Here's what I mean ...

Let's have a little reality check on some of the (former) darlings of the tech world.

Apple, After trading over the $200 a share, Apple's magic hit the skids as it fell from grace to trade below the $130 level in just 15 days. MarketClub members exited Apple (symbol appl) at 178.60 on January 7th. Now where would you rather be with Apple, on the sidelines, our hanging on and worrying if Apple is ever going to stop going down?

Now let's take a look at Google (symbol goog). Google was the mega star of the tech world trading close to the $750 level on November 7th. So what happened just few months later that had Google on the ropes at what seemed to be a bargain price of $519? What changed? What happened in Google to cause such a fall? What happened was that market and traders perception changed and Google was not going to take over the world, at least not just yet. MarketClub members exited Google at $652.50 on January 7th. There must be a lot of unhappy folks in the Googleplex tonight who are feeling a whole lot poorer than they did two months ago.

You cannot hold onto stocks like Apple or Google forever, these are trading stocks. We are in a new world paradigm, a new world of trading and investing that dictates that you must remain fluid at all times. The message here is you have got to time your trade entry points and more importantly you have to time your exit points on when to get out! These two fundamental position plays along with money management are the key to successful trading.

If you are not already a MarketClub member, and you are reading this blog, I strongly recommend that you check out MarketClub. You will find that MarketClub can alert you and offer unbiased opinions on practically any market that trades. It doesn't matter if you trade in stocks, futures, precious metals or foreign exchange, MarketClub has you covered.

Billions upon billions of dollars have been needlessly lost in this market in the past three months, much of it can be directly attributed to Chairman Benanke and the lack of action by the FED. But a lot has to be attributed to the individual investor who has yet to learn when to exit a market.

We have been saying on this blog for quite some time that Chairman Ben Bernanke is not the right man to lead the economy or the Federal Reserve. What we need is someone much stronger and someone who is in touch with reality.

The person who comes to mind is Paul Volker who was chairman of the FED in the early '80s. The markets knew where they stood with Volker and he was no namby pamby like Bernanke. He made decisions and the markets respected him and knew what to expect from him. They have no idea what to expect with Bernanke and that's why the markets are volatile.

Todays FED is clueless.

What strikes us as stunning is the fact that there was no coordinated cut in interest rates with any of the other central banks. It seems that the FED was just winging it on Monday night when it made the decision to cut the federal funds rate by .75 basis points.

This lack of a coordinated effort among the central banks tells me that the FED and Bernanke are in an ivory tower, isolated from the real world and the markets.

For future reference we expect to see the federal funds rate to evaporate down to the 2-2.5 level in the next twelve months.

Today's bounce in the stock market from the previous low was encouraging, but it is just a bounce. All our indicators remain negative on the stock market.

Remember one day does not make a new trend.

Once in the game of trading, you must have a game plan if you are going to be successful. If you are just trading on emotion, eventually you will lose, it's that simple.

At INO.com we supply traders around the world with tools they can use in the real market to become more successful. Our latest educational tool is INO TV, and our other global trading tool that used around the world and one we highly recommend is MarketClub.

Both of these products are affordable and will help you save and make money in the future.

I have included several videos in this blog that depending on which market you trade you can watch directly on your computer. No registration required.

The MarketClub approach performs extremely well in any market environment. Don't allow the FED to kill your retirement nest egg or trading capital. Listen to what the market action is telling you, that's the only way to make decisions based on facts and not fantasy promises.

This is Adam Hewison wishing you every success in the marketplace and in the future.

Adam Hewison
President, INO.com.

2 thoughts on “Volatility and 600 point swings ... learn how to profit from them.

  1. When discussing being bullish or bearish on the economy, keep in mind that the market and the economy are two separate things. The market works on 'future' time and leads the economy. Graphically, they look like two separate sine waves out of sync with each other. It is possible to be right on one and wrong on the other at the same time.

  2. Dear Adam Hewison,

    I read your blog entry of Jan 24th. I'd like to comment on your paragraph where you praised Market Club's "trade-the-triangles" system which got your Google investors out on 1/7 at $652.50. I'm not sure I'm convinced of the benefit of this system yet, since you're not giving the whole picture.

    I looked at the Market Club charts and found the following: subscribers would have bought GOOG on September 4th at $519.75. Then they got a sell signal on November 12th at $636.28 (profit of $116.53/share). Then they got a signal to get back into the market on December 6th at $711.06. Then they got stopped out (as you mentioned in your blog) on January 7th at $652.50 (a loss of $58.56/share). TOTAL RETURN: a gain of $57.97 per share.

    Ok let's compare to someone who didnt use market club, also in since Sep 4th at $519.75. Well, GOOG closed today (Jan 24th) at $574.49. (a profit of $54.74 per share). As of today, I made nearly as much money just staying in the market. GOOG is up another $13 in aftermarket trading....I really don't think the people in Googleplex are all that sad right now since they aren't getting whipsawed by marketclub's in's and outs.

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