TODAY'S BREAKOUTS & BREAKDOWNS (10-9)

What we saw today was a continuation from the indecision signal that was given yesterday – the market was simply taking a breather before resuming its trend. You can’t blame it on the shorts because they just got started today and they wouldn’t cover today. I know I didn’t. What seems to be going on is that funds of all types have having trouble meeting redemptions and withdraws, now bought on a large-scale by disgruntled investors. People have lost nearly $3 trillion in a matter of days, and there is no question that people are demanding to have their money pulled out en masse. Fear produces panic, which is the start irrational hysteria, in this case, selling.

This will go on for quite a bit. When we do get a reactionary rally once we hit a major capitulation point, it will be sharp and dramatic, but longs will still be selling during the duration, because panic doesn’t subside in a few days or overnight. In order take advantage of this situation, identify the day with capitulatory volume (I hope it comes tomorrow – after all, which longs are crazy to hold over the weekend) and go long and don’t look back. This rally will be sharpest rally that anyone of us will have seen so far in this bear market. Once the rally is underway, the market must make a decision on whether we will start a 4^th primary leg down (this one will be even scarier than this one). We shall see in due time, but I’m still looking for my overdue rally.

When I reference “oversold”, it is only a technical term. The market’s true value, right now, indicates that the levels we're at, right now, are correct. I find it interesting that people who are aware of the catastrophe (which is everyone), are still expecting or wishing that their portfolios to go back up. Sorry, the market is always right.

No breakouts today. You can expect any on days like today. We had 13 new highs today and 2,862 new lows. On the NYSE, 90% of stocks declined and only 8% advanced. Declining volume on all exchanges are around 90% of total volume. These are signs of panic-driven selling and forced liquidation and this trend has gone on for a long time.

As for breakdowns, we have too many. I estimate that my article would be over 4,000 pages long full of breakdowns, but we’ll only over 10 today. The important lesson here is the same as it was on my past three articles: don’t let your stock end up on my list. Comb through your stocks and see if you see any of same patterns forming. Those are very clear warnings, and have provided dozens and dozens of examples with comments so far. Every single day matters – one day can reverse the entire trajectory of a stock. You’ll notice that the majority of major losses in anyone’s portfolio can be avoided. Capital preservation starts with prevention!










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