The Day that Was - September 25th 2007

No one likes to hear things are not good, it is human nature. Everybody loves good news because it makes us feel good also. The things Lisa and I have been saying have probably not made you feel too good because we have not had good news to give you. Just as you don't like hearing it we don't like saying it. What you will always get from us is an honest and objective view of the US markets. Plain and simple.

We won't be cheerleaders, we won't be 'pumpers', we won't be telling you to buy something only because an analyst says you should. We will never be a repeater of the talking heads and their messages. We do our own research and develop our own opinions of the markets based on charts, economic indicators, objective news, and so on. Some services will tell you to buy something because it will "go to the moon" (we hate those kinds of expressions, it suckers in unsuspecting people to put their money into something and they run a great risk of losing it). Back to what I was saying, we are different and we pride ourselves on this. It is part of our mission statement to remain objective, fair, and unbiased.

So why have we been so 'bearish'? Because it is what we see. There are too many signs of a market sell off. This is why we want you to remain patient and let this market make its next move. And the move we see shaping up is down.

We want to get in the markets and start making trades, but we are not going to jump in just for the sake of "wanting to trade". We trade when the risk/reward is in OUR favor, not the markets. Some would say "but look at Apple, Google, and Amazon", and our answer is we see it too but it does not impress us. You know why? Because they are being pushed, pumped, and hyped up while the rest of the foundation which makes up the market continues to crumble around them. If any of our readers have been holders of these names (add to that RIMM and NILE) you need to be sellers. Lock in your gains before they evaporate. Part of being a smart trader is to know when to back away from the table and take your chips. Of course someone will always say but what if it goes higher after I sell? The answer is 'so what'. The idea is to keep what you earned and not risk it from falling apart on you. If you think that you are going to always sell at the top then you are in the wrong game here. Those that wait for a top to take place will often find themselves trying to unload after it has rolled over hard. And then getting out is harder. Smart traders ALWAYS sell into the strength, not into weakness.

Lisa and I remain on the side of caution due to the indications that the market is going to roll over. Holding long term swing trades now is dangerous. Last night and this morning the markets got bad news. This was not just any kind of bad news, it was substantial. Retail continues to weaken and housing gets worse. The weight tugging at the market is getting heavier each day and it is only a matter of time before it pulls it down a cliff. Right now it would take some huge economic news of something positive to negate the path it appears to be heading. We watch the advance to decline ratios, the put to call ratios, yields, financial sectors, and on and on. All of these indicators are pointing to a market that will sell off. Can we be wrong? Of course we could be, so could anyone else who analyses the markets. But where we are different is that we don't play games with our money and we would not ask our subscribers to play games with their money either. Lisa and I take very seriously the fact that you are looking to us for guidance and ideas of how to make money. And your money is important to you and you don't want to lose it. Lisa and I will never be reckless towards our investment/trade ideas because we understand how important money is. Just like you we don't want to lose it. So at worst case if we are wrong in our view of the market then all we have done is kept you in cash, you lost nothing. If we are correct then you will be winners (in our view your already are a winner by waiting for the market to show us its hand instead of being in there risking your money). While others feel they "must be in there" playing the market during these uncertain times we will watch them come out with their pockets turned inside out as they lost it all by trying to ride what they thought was a 'sure thing'. There is no such thing in the markets, only odds. We play the market when the odds are in OUR favor, until then we wait.

Let me give you an example of what I mean by the foundation of the market still weakening. Today on the NYSE the decliners outpaced the advances, the same on the Nasdaq (the Nasdaq is heavy with tech stocks, so with everybody saying tech is so good then why are the declines higher than the advances?). And one more thing today, new 52wk lows today outpaced the highs.

Lisa and I will always try to keep you out of trouble. When the market gives us the real direction it will go then we will go with it. Right now the risk is higher than the reward. For those of you that have been with us since the start you already know this about us. And that is why you are here. You want someone to be honest with you for once, that is what we do and will always do.

See you in the morning...