Tag: dow

Have All The Experts Forgotten This One Major Trading Rule?

Posted on by The INO.com Team

Today we looking at trends and how important they are in trading.

In particular, we're going to be looking at the DOW (DJI) and how it has continued to trend since June of '08.

I have watched with amusement, as several "GURUs" have been trying to pick a bottom in this index. As I have stated many time before, it's not over till it's over and trying to pick bottoms is not a smart thing to do.

The negative trend for the DOW is intact and remains in place. In this new video, I will share with you a simple trick that will help you to avoid the temptation of trying to pick a bottom. In fact, I will show you step-by-step why the DOW is still in a negative trend.

The video is free of charge and there is no need to register to watch this short educational trading video.

All the best,

Adam Hewison
President, INO.com
Co-creator, MarketClub

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Major Shift in Markets Affects All Traders

Posted on by The INO.com Team

I'm not sure if you've had a chance to check out any of the material from Bill Poulos from Profits Run, but he's normally right on with his techniques and analysis...almost as good as Adam!! He's a big fan of the video education, as we are, and today I've asked him for a favor. That favor is to come and teach us a little about how we ride these markets more effectively...and allow us to watch his 6 part video series on how to become a more independent trader. The videos can be watched HERE.

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Today I wanted to bring to light a major shift that has occurred in the markets. One that isn't getting enough attention, but has the capacity to continue wrecking people's portfolios.

That shift is a movement away from traditional buy and hold investing and toward technical trading.

If you've watched the markets in recent weeks you already know that both the Dow and the S&P500 have traded in a very consistent but narrow range.

And, if you've been watching since late last fall when the markets suffered their worst fall since the Depression era, you would know that the people who are in control of their trading actions are the people less likely suffering from significant drawdowns. Conversely, those who adhered to long term investment strategies are looking at extreme timelines just to recover to a break even level.

Today I'd like to share with you where the shift is happening, and what you can do about it:

In the longer term investing model, money in the market would typically stay 'put' for several years (usually in the range of three to five years). That same money RIGHT NOW is moving in mere DAYS.

That suggests more traders using technical indicators to drive their actions in the market and fewer relying upon fundamental indicators. As well, the speed at which the market prices are moving dictates the need for AGILITY -- traders need to be doubly aware of their risk management practices and completely UNEMOTIONAL about executing them.

What you MUST do:

Get control right now of your portfolio by learning to become an INDEPENDENT trader.

I've found some individuals aren't prepared for this, because they're what I call "DEPENDENT" traders.

DEPENDENT traders rely entirely on the media to "spoon feed" them "market info" and "hot tips"... they still think holding on to a stock and praying for it to go up is the way to go... and they don't have a plan they can follow regardless of what the market does.

To help more traders get on the INDEPENDENT express, I recently re-released my 6-part COMPLIMENTARY video series which will help people to adapt and use a new approach to give them the flexibility required to prosper in today's markets.

I believe that right now is the time to attack the market, not run away from it. Even though the economy is in recession, you can prosper -- and in the complimentary video series, you'll learn 5 'recession-proof' trading attack plans you can execute RIGHT NOW to enhance ANY trading method at ANY time, in ANY market.

Watch the videos HERE

The bottom line, however, is simple: the markets have changed and those who adapt and change with the markets have the greater opportunity to prosper. Those who fail to adapt will likely be left behind.

Bill Poulos

One of the other shoes fell today.

Posted on by The INO.com Team

On December 3rd of 2008, I wrote a blog post entitled, "Waiting for the other shoe to drop." Well today another shoe fell in the form of retail sales. This pushed the DOW below the low made three weeks ago. This in turn signaled a sell signal based on our "Trade Triangle" technology.

Many experts have been predicting that we have made a low in the market. I happen to be on the opposing side of that trade. I think that we have yet to see the bottom. The fact is, we are in a bear market and bear markets tend to be very different from bull markets. Bear markets just claw you under and sink under their weight.

So are there any other shoes to drop? Could credit cards defaults be the next shoe that no one is talking about that right now? Or, could it be county and state governments who are reeling with their loss of property tax revenue. Ultimately, it could be something as simple as this: nobody believes in anything anymore.

I keep hearing people say that there is money on the sidelines. Does that mean that this money is going to come back into the game anytime soon? I seriously doubt it; the money could stay on the sidelines for years. Given the uncertainty of our times, I'm not sure it's going to come back into the market anytime soon regardless of how people define a "cheap stock" or how they hype the possibilities of capitalizing on this economic downward spiral.

So what is a bargain stock? These "bargain" stocks are trading lower today then where they were two years ago. Under those conditions, the stock is often times labeled as a bargain or as "cheap." The reality is, in a bear market the market sets the price, not the buyer. We continue to see the markets on the defensive as the troubles we see both domestically and globally are a long way from being solved.

With President-elect Obama waiting in the wings to rescue the world, I am not holding my breath or expecting any miracles on this front. When President-elect Obama is sworn in, we'll see just how deep the social and economic problems are in this country. I do not expect him to perform some magic trick that makes all of the economic issues disappear overnight.

Last month we also blogged about the silly season. This is the time between December 15th and January 15th when the markets tend to go nowhere and everywhere based on thin volume. Now that we are getting close to January 15th, I expect to see more volume, more serious trading, and price action taking place. This action could well be on the downside as the realization sinks in that we are not going to get out of this easily or quickly.

Many investors have learned a hard lesson that holding onto stocks is not necessarily the best investment. Many 401(k) plans have been destroyed by lack of a game plan and positive action. I strongly believe that you must be proactive in the next 5-10 years. It is not good enough to sit back and say, "Oh, my stocks will come back" ... because many of them won't.

Here are the three keys to unlock and save your financial future:

* Number 1: You must have a game plan for any investment you make, and you must follow the game plan.

* Number 2: You must be disciplined in your investments. You cannot expect or rely on your financial advisor to do this for you.

* Number 3: Your portfolio must be diversified. Learning how to drive a variety of investment vehicles and also learning how to trade on the short side of the market as this gives you the protection you need in troubled times.

If you follow these three simple rules you will best avoid the pain and agony that many investors have suffered in the last year and a half.

It's up to you.

Every success in the future.,

Adam Hewison
President, INO.com
Co-creator, MarketClub

Waiting for the other shoe to drop.

Posted on by The INO.com Team

Waiting for the other shoe to drop.

What is the other shoe, or is it other shoes? The other shoes are the states which have enormous financial problems. Some problems which may have not been exposed yet. In Maryland, the state in which INO.com calls home, we have a $20 billion shortfall in the state's entitlement program. We also have property values dropping and more and more people becoming unemployed. Revenues to the state in property and sales taxes are diminishing rapidly, making it harder and harder for the state to stay in the black.

In California, the problem is even greater and we are not talking about entitlements, we're talking about just running the state. Governor Schwarzenegger was on TV today saying that the shortfall in California is going to be somewhere between 11 and 38 billion dollars in the coming year. This is a huge shortfall for California to make up given the economy and it illustrates just how fast things are going south.

We have to remember that the states are run by politicians, most of whom have never had to make a payroll. For them cutting back and laying off state employees is almost unheard of. But that's what's going to happen to a fair number of states. That situation will only exacerbate the problem we are now facing. Clearly the states cannot continue to raise property tax, or even sales tax as it will push the economy even further down the drain.

So what's going to happen?

For the past 20 years, the majority of U.S. tax payers have been gorging on easy money. As long as everybody could keep borrowing, it did not seem to be a problem.  But then... the bubble burst.

Since the early '80s, the savings rate in the US has continued slipped every year. Fewer and fewer Americans are willing (or able) to save money making the American Dream only possible through credit cards which created a housing market gone wild.

With no savings and a national debt of over $170,000 for every man, woman and child living in the United States, it's now time to pay the piper, or in this case China. I am afraid that we're all going to be learning some very difficult and hard lessons about money in the future. When people say, "oh this is like the '87 crash," don't believe it. This is very serious, you've got a collapsing housing market, you've got unemployment rising you have the Government clueless in what to do or who to point the blame at.

The states who spent themselves silly in the last few years are seeing their revenue and paycheck from the people getting cut dramatically. All in all, I see rough seas ahead. It doesn't quite matter if the big three get funding or not, because the die has been cast for a very slow economy in 2009. I do not see the world economy jumping out and starting up again anytime soon.

Now, I know all of this sounds very ominous, but we are waiting for the other shoe to drop. Once the states with budget shortfalls cry for help, I'm sure that the news will be saturated with this new problem.

There will be some fantastic opportunities in the future to trade these markets and some incredible opportunities both in foreign exchange and in the futures markets. Readers of this blog know that we cover all of these markets and we will be detailing some trades in the near future that we believe warrant your attention.

Now here's the question, do you trade on emotion, or do you trade with a solid game plan?

If you trade on emotion then you are probably exhausted as the market for the last several weeks has been like Vegomatic. It has cut a lot of traders and their portfolios to pieces. On the other hand if you are trading with a solid game plan, you must be relaxed and loving life right about now as the markets have provided some wonderful trading opportunities this past year.

I have had a steadfast negative view on the economy, and I see little reason for that viewpoint to change. I do not expect to see a "Santa Claus" rally, as I think there will be further erosion for the balance of December. The run up in the last five days of November was both short covering and fund managers pushing stocks up so that their portfolios wouldn't look so bad at the end of the month.

If you haven't watched my latest video on the DOW, I strongly recommend you take a few minutes to watch and see how this trend has developed and what we expect to see in the future.

Lastly, picking bottoms is just as foolish as trying to pick a top in a market, not to mention that it is almost impossible to do. I am amazed at all of the TV infomercial talking heads that are calling for a market bottom. Many of these same talking heads missed the downturn, so why listen to them now? Mark my words, there will be plenty of time to get long this market. The one thing you can count on is the market which will tell you what it wants to do. Right now it's telling you that it has not finished going down.

The light at the end of the tunnel is in fact a brighter future for all of us, but not in the manner we have been used to. The light may be faint for now... but it's there.

I am looking forward to 2009 and all the opportunities that I know will be coming in the New Year.

Stay tuned,

Adam Hewison
President, INO.com
Co-creator, MarketClub

How low can the DOW go?

Posted on by The INO.com Team

Make no mistake about it, the market action on Wednesday (November 19th) was extremely negative for all of the indices that we track. The close below 8,000 on the DOW can only be described as negative, indicating further weakness to the downside. I am looking for this index to trade down to around the 6600-6700 level.

Watch my new video right here.

Looking at the charts using our "Trade Triangle" technology, it is clear that the Dow has been under pressure since our first major sell signal at 11,290. I see no reason to alter this stand, as I believe the trend will continue to be on the downside. I expect to see further weakness in the weeks and months to come.
What's an investor to do? As a trader or investor there are three choices you have as an investor:

1. You can go long a market.
2. You can go short a market.
3. You can move into cash.

I'm often amused when I see people buying "defensive stocks." Why not get out of the market entirely when it's going down. Doesn't that make common sense to everyone?

However, most brokers want you to stay in the market at all times fearing that they will miss a bottom. Truth is, most investors (including brokers) missed the top, so what makes anyone so sure that they'll catch the bottom?
The key in trading is not to get out at the top, or in at the bottom. Anyone who tells you to do that isn't playing smart in the markets, and most likely claims that they are holding the "holy grail" of trading.

An investor's goal should be to capture 70% of a move. The middle is the sweet spot, and if you make enough in the middle then who cares about the tops and bottoms.  Forget picking up the 15% on the top and 15% on the bottom, it doesn't work consistently to use it as a trading strategy.

Check out my new video and see exactly where we got out of the indexes and were we see them headed right now...

Enjoy the video,

Adam Hewison
President, INO.com
Co-creator, MarketClub