Tuesday, January 06, 2009

Newsletter Excerpt

Two equally compelling set-ups, one in a leveraged ETF, one in a stock, we will always choose the leveraged ETF (our favorites being DIG/DUG, UYM/SMN, FAS/FAZ, URE/SRS) over stocks as we feel they are much more "true" -- that is fewer headfakes, more telegraphed, sustained moves.

However, big caveat: without set-ups around support/resistance these leveraged ETF's can destroy your capital more quickly than you can say Bernie Madoff. Don't touch these vehicles unless you're trading around clear multi-day/month support/resistance zones (which we will always provide in the newsletter).

Sunday, January 04, 2009


The market went from SPY 155 to SPY 80 in two years (2000-2002). Then it took five years (2002-2007) for it to simply recoup the losses and go back to the highs. However, it took only one year for the market to go from the highs to the previous lows. If someone showed us this chart with the title of some unknown stock and asked us our opinion, we would say, "What a mess! Stay away!"

Looking at the following chart it's hard to imagine that we're not in for a difficult time in 2009, either in the ways of new lows or months and months of consolidation or grinding action. It's going to be tough slogging for the bulls in 2009 as the long-term trend is clearly still with the bears until proven otherwise.