This One Indicator Works Amazingly Well

 

Can the market just stop going down today, turn around and turn right back
into a bull market?

 

Absolutely! I conduct my thoughts based on one thing…anything can happen.
But…my job is to not predict such things. My job is to figure out what the
ODDS FAVOR. Odds favor, right now, NO WAY, the market can’t turn right back
into a bull market. But if things change, my job is to react quickly 
Normally, things set up first before changing. Bad markets give clues as well
as good markets. All I care about is THIS SECOND. As of THIS SECOND, I have
seen nothing that tells me that’s about to happen. I have not seen one higher
volume day that tell me the big money crowd is accumulating stock. In fact, it
has been the exact opposite. Rallies have been on light volume….drops have
been on heavy volume….and most support has been broke. I do believe and said
in my report Monday that we are due any day for an oversold bounce. That’s
what we got on Tuesday. Playing it by the book, I now wait for a high volume
follow-through day. Even if one occurs, there is not a lot of leadership and
not enough quality bases to buy off of. 

If this is a bottom, it will take time to repair.

 

What charting service do you use?

 

I use Dailygraphs.com as well as the Daily Graphs hard copy.

 

What sectors do you believe will lead the market out of this malaise?

 

I do not have a clue but when they show up, I will find them. You can’t hide
leadership.

 

If this is a bear market, how long does it last and how deep does it go?

 

Once again, I do not have a clue. But, if I was pinned down, normal bear
markets dump the DOW and S&P 25% and the NASDAQ 40% plus. Keep in mind, I
never try to predict these numbers. I just let the market be my guide.

 

If OIL dropped back to $30, do you think the markets would turn back up?

 

This is a great question. My biggest problem is that everyone says it would
help the market. I have never seen markets accommodate everyone. My best guess
is yes. I do believe one of the culprits has been high OIL prices. On the
other hand, I believe the biggest problem is earnings…and that matters most.

 

What sentiment indicators do you use to tell you the markets are oversold
here?

 

First off, just on price, the market is oversold. Whenever major indices get
far away from their moving averages either on the upside or downside, I
consider that overbought or oversold respectively. I also look at put/call
ratios…but only when it goes to extremes. I used to watch the VIX a lot
more…as well as how bullish or bearish newsletter writers are. I do not
watch them as much anymore because they did not work well last year. I want to
stay on top of indicators that have consistently been correct.

 

How many stocks do you scan on a daily basis?

 

You don’t even want to know…but the answer is thousands. Needless to say, I
am getting laser surgery on my eyes soon.

 

Who are other technicians I should follow?

 

I believe Stan Weinstein is the greatest technician of all time but you cannot
follow his thoughts any more…unless you are an institution and willing to
shell out serious bucks. I love Tom Dorsey because he just sticks to his
indicators and keeps emotion out of the game. He is also excellent at guiding
you on a day to day basis. Lastly, I am not writing this if it wasn’t for
William O’Neil. I gather there are many like me who could say those words.

 

 How do you keep emotion out of the equation when you are wrong and selling
at a loss?

 

It is simple. I have years of time-tested evidence that what I do…works. 
Believe me, this only came about by my own mistakes. The biggest problem with
investors is not the winners they pick but when to sell losers. People are
inherently optimistic and are always willing to believe things will turn out
right. They keep hearing that things will turn and not to worry. That is a
fatal error in the market as the market couldn’t care less about you, me or
the Pope. It will slam you regardless. The only failsafe you have is the
ability to sell before too much damage is done. “Sell” is not a 4-letter word.
Yes, some stocks will turn back up and drive you up the wall. It’s the ones
that keep on going down that will kill your account. Remember, on a 50% loss,
it takes a 100% gain to just get back to even. Bad odds. It’s like playing the
‘hard ways’ in Craps.

 

You always talk about following earning’s estimates. Where do you get these
numbers from?

 

Zack’s Earning’s forecast is far and away the best.

 

I have been asking myself that question for many years. 

 

 ON ANOTHER NOTE…this is what I wrote on July 20th: