The U.S. stock market is standing on the cliff -- again. It's
peeking down over the edge...
But is it ready to jump?
The difference between a major buying opportunity within a bull market and a major selling opportunity early in the trend is the major sell SIGNAL. I haven't seen that yet.
However, I might get the major sell signal before I'm able to reach out to you next Tuesday when I write again. When I do get that signal, I'll be making bearish adjustments in my own stock accounts, my 401k, my kid's college account, my family's accounts and so forth. This is what I did weeks before the 2008 crash.
This is what I believe should be done with everyone's accounts out there. Why?
The strategy I'm talking about makes enormous money in the stock market but, more importantly, it allows for peace of mind in a low stress environment. I have time to enjoy my family without thinking too hard about money, or risk of loss.
It's a lot to explain today, here, in this one article. But I will explain some of it to you, of course...
Today's Market
The sell signal I'm talking about is very different from the "sell signal" most people are currently seeing, which is the "external market" sell signal.
The external market consists of the major indices like the S&P 500, Dow Jones Industrial Average and NASDAQ. The only problem is, those major indices often don't reflect what most stocks are doing. The disparity can be so large that a major index like the S&P 500 can technically be in decline while 4 out of 5 stocks are moving up in a major way.
The idea is that the external market is mostly influenced by a handful of the largest companies in the index, while the vast majority have very little influence.
When we look at what most stocks are doing, we are looking at the "internal market". We are looking at what's REALLY happening in the stock market.
That's a small part, but probably the most important part, of what I teach in "TAM". And so far, the internal market still looks pretty strong. I'll get back to this in a second, but the point is that watching the internal market keeps me focused on what the reality is. More importantly, the internal market leads the external market.
That means that the internal market almost always tells us what is going to happen next in the major averages like the S&P and the Dow.
For example, on July 24th I wrote an article titled "Bearish Reversal or Bullish Godsend?". I discussed the reasons why the market was setting you up for a GREAT bullish trade.
The market was tanking and most people out there were panicking, selling and giving up on the bullish stock market. The arrow below shows where the S&P 500 was when I wrote the article.
There are many reasons people were giving for their panic, like: The up trend line was broken... there had been a "head and shoulders top" formation... and the stock market sold off violently from April to June. The bearish sentiment was fresh in their minds, so it was easy to believe the bearish case after a few harsh sell-offs.
Is This Time Different?
What's very interesting to me is I'd estimate that, 90-95% of the time, small stocks lead big stocks in a major reversal. Said differently, the internal market almost always leads the external market. That means that we typically see the internal market weaken first while big stocks maintain their uptrend (or vice versa before a bullish reversal).
If we are truly in the middle of a bearish reversal, then yes, "this time is different".
Here's why...
Right now, the internal market looks pretty strong. Average and small stocks have held up. All of that, of course, can change overnight. But the fact that the internals remain strong means that the majority of stocks trading on the U.S. exchanges continue to stay on buy signals, not breaking key support levels.
This implies that the market remains strong!
This is surprising to me because we've really seen the big stocks getting hammered. Is it because the big stocks pay the big dividends which are going to see 33% more taxes taken out of them (20% instead of 15%)? I'm not in the business of asking or answering "why?". I'm in the business of quickly seeing "what" is going on and acting on it.
Below is a chart of the S&P 500. With such a nasty move below the major up trend line (lower line of the channel below), it can be easy to throw our hands up and say: "WELP! This is it!! Good bye bulls and hello bears!"
But something similar happened on July 24th and I wrote you a similar article. Odds of the bull market continuing without a much bigger correction may be much lower than they were a week ago. But odds still favor a continued bull market.
Here's the rub...
I can't write to you until next Tuesday (with the exception of my TAM Mastery Program, where TAM students get weekly live webinars). But, once and for all, you should consider taking your trading and investment life into your own hands and using one solid methodology that has worked well enough to build fortunes over the past century. You don't want to hop around from one thing to the next or let the market whip you around any longer.
I've built my own wealth with this methodology, and people who I have taught have done the same. People thank me virtually every single day for showing them my method -- they say it has changed their life. If you want to see a detailed track record, you can always check out The Tycoon Report website.
But is it ready to jump?
The difference between a major buying opportunity within a bull market and a major selling opportunity early in the trend is the major sell SIGNAL. I haven't seen that yet.
However, I might get the major sell signal before I'm able to reach out to you next Tuesday when I write again. When I do get that signal, I'll be making bearish adjustments in my own stock accounts, my 401k, my kid's college account, my family's accounts and so forth. This is what I did weeks before the 2008 crash.
This is what I believe should be done with everyone's accounts out there. Why?
The strategy I'm talking about makes enormous money in the stock market but, more importantly, it allows for peace of mind in a low stress environment. I have time to enjoy my family without thinking too hard about money, or risk of loss.
It's a lot to explain today, here, in this one article. But I will explain some of it to you, of course...
Today's Market
The sell signal I'm talking about is very different from the "sell signal" most people are currently seeing, which is the "external market" sell signal.
The external market consists of the major indices like the S&P 500, Dow Jones Industrial Average and NASDAQ. The only problem is, those major indices often don't reflect what most stocks are doing. The disparity can be so large that a major index like the S&P 500 can technically be in decline while 4 out of 5 stocks are moving up in a major way.
The idea is that the external market is mostly influenced by a handful of the largest companies in the index, while the vast majority have very little influence.
When we look at what most stocks are doing, we are looking at the "internal market". We are looking at what's REALLY happening in the stock market.
That's a small part, but probably the most important part, of what I teach in "TAM". And so far, the internal market still looks pretty strong. I'll get back to this in a second, but the point is that watching the internal market keeps me focused on what the reality is. More importantly, the internal market leads the external market.
That means that the internal market almost always tells us what is going to happen next in the major averages like the S&P and the Dow.
For example, on July 24th I wrote an article titled "Bearish Reversal or Bullish Godsend?". I discussed the reasons why the market was setting you up for a GREAT bullish trade.
The market was tanking and most people out there were panicking, selling and giving up on the bullish stock market. The arrow below shows where the S&P 500 was when I wrote the article.
There are many reasons people were giving for their panic, like: The up trend line was broken... there had been a "head and shoulders top" formation... and the stock market sold off violently from April to June. The bearish sentiment was fresh in their minds, so it was easy to believe the bearish case after a few harsh sell-offs.
Is This Time Different?
What's very interesting to me is I'd estimate that, 90-95% of the time, small stocks lead big stocks in a major reversal. Said differently, the internal market almost always leads the external market. That means that we typically see the internal market weaken first while big stocks maintain their uptrend (or vice versa before a bullish reversal).
If we are truly in the middle of a bearish reversal, then yes, "this time is different".
Here's why...
Right now, the internal market looks pretty strong. Average and small stocks have held up. All of that, of course, can change overnight. But the fact that the internals remain strong means that the majority of stocks trading on the U.S. exchanges continue to stay on buy signals, not breaking key support levels.
This implies that the market remains strong!
This is surprising to me because we've really seen the big stocks getting hammered. Is it because the big stocks pay the big dividends which are going to see 33% more taxes taken out of them (20% instead of 15%)? I'm not in the business of asking or answering "why?". I'm in the business of quickly seeing "what" is going on and acting on it.
Below is a chart of the S&P 500. With such a nasty move below the major up trend line (lower line of the channel below), it can be easy to throw our hands up and say: "WELP! This is it!! Good bye bulls and hello bears!"
But something similar happened on July 24th and I wrote you a similar article. Odds of the bull market continuing without a much bigger correction may be much lower than they were a week ago. But odds still favor a continued bull market.
Here's the rub...
I can't write to you until next Tuesday (with the exception of my TAM Mastery Program, where TAM students get weekly live webinars). But, once and for all, you should consider taking your trading and investment life into your own hands and using one solid methodology that has worked well enough to build fortunes over the past century. You don't want to hop around from one thing to the next or let the market whip you around any longer.
I've built my own wealth with this methodology, and people who I have taught have done the same. People thank me virtually every single day for showing them my method -- they say it has changed their life. If you want to see a detailed track record, you can always check out The Tycoon Report website.
19 votes
Thank you for voting!
Comments:
Eric
10/23/2012 10:16 PM
You are right; TNA, the small cap 3X ETF, was very strong after hours yesterday and on the rebound today.mario ibarra
10/24/2012 2:26 AM
Chris have you ever thought about following up w/ all the ISS students like myself since your release of TAM. If i knew when i bought ISS we was going to be left out in the cold i would of held off on purchasing the ISS program and spent my money on the TMark J. Walker
10/24/2012 11:23 PM
Your analysis is interesting, but there is still more to the story. Longtime followers of the DJIA already know that the index is heavily influence by high-priced stocks. When these high-price stocks report less than stellar earnings and unflatteriLuc Cousineau
10/28/2012 10:29 PM
I dunno why Chris doesn't name his indicator, he has done so time and time again in this pages, he's waiting for the bullsih percint index of the NYSE to turn to O's on the point and figure chart. He has described this many times, so why hush hush now