Learning From The Bear, Part I

Many lessons are in the making as we wade through this Bear market. I am
going to take two of the lessons that I have learned from over the 12 years of
investing I have been around for, and share my thoughts with investors, as well
as allow myself to remember my benefits from these two lessons. I have decided
to do this in addition to market insight in order to bring a little more
excitement to this column and the current environment. So, for my next two
columns (today and next Tuesday) I will be producing a two-part “miniseries,” expanding on
my personal trading experiences.

I have always said that although poor markets can be boring and even try
investors’ patience, they are the necessary element that provides stocks the
opportunity to set up and create the launch pad they need to move higher. I
don’t think many people disagree with me on that (please let me know if you
do), but I do think some people may not understand how that works.

First of all, take a look at the major indices, just so we all agree times
are tight right now and the Bear is not in hibernation.

First, the Dow Jones Industrial Average:

The S&P 500, just like the other indices, is waiting for the first day of
a rally. The Nasdaq is trying to stay viable as a going concern as the tech
wreck continues.

Now the point I was originally making is that stocks are setting up their
bases, even though things seem to keep dropping. I was only able to find 199
stocks that met my initial screen this weekend. In good markets, I usually come
across hundreds. Even though I found a smaller quantity of stocks, many of them
are working through bases, and could finish the right sides and get ready to
break higher at any time the market begins to stabilize.

US Physical Therapy
(
USPH |
Quote |
Chart |
News |
PowerRating)
and Bradley Pharmaceuticals
(
BPRX |
Quote |
Chart |
News |
PowerRating)
are two simple
examples of stocks building bases.

Neither stock has established a pivot point yet, but as the market eventually
begins to stabilize, charts like these begin to look a lot better and buy points
become evident. Obviously, I cannot assure investors that these two stocks will
not fall apart completely, but I do know that there are stocks out there that
are forming the eventual pattern that will lead to a successful breakout and
significant profits for investors who have been patiently waiting.

Waiting…this idea brings me to my second point on what to think about and do
during the downtime. I will continue this two-part series on Tuesday, after
everyone has had a chance to digest Part 1!

Feel free to load me up with your thoughts and comments about not only this
format, but also the content that I am providing. If anyone has any “issues”
in regards to their trading, now is a great time to bring them up!

Have a great weekend,

Tim

My Complete Methodology For Beating The Market Through Intermediate-Term
Trading

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