The Weekly Trader

Last weekend I interviewed Mark Cook about the bear market he saw looming a year ago. As many of you know, I also saw signs of a dangerous market, and in January, the market got rather violent. Here is a link to my MarketWatch interview with Cook. I hope you enjoy it!

http://goo.gl/Pyn4s9

As for me, I’ve been busy trading this market. Although there are no guarantees it will work in the future, shorting the rallies using put options has been working (but even in a bear market, there are wild rallies). This strategy is for active traders who have the time to monitor their positions during the day. If you don’t have the time or ability to trade, moving all or some of your money to cash is the safest idea. As you may know, many disagree that you should sell stocks and move to cash. Only you can decide what is best. Meanwhile, be careful out there. Many stocks are going to be taking big haircuts.

Although I anticipate that the bears will have a strong showing this year, I have learned to wait for the market to confirm my view. If the market starts to plunge, I will add to my inverse ETF positions, and also buy puts for the short term. Don’t forget Jesse Livermore’s astute observation: Only the market is right. Put another way, don’t think you are smarter than the market. Many billions of dollars have been lost over the years because investors and traders refuse to admit that the market has the final word.

As a long-term trader, I strive to be patient enough to wait for the right opportunity, and agile enough to pounce at the right time. If I’m late, I will not play catch-up but will be patient enough to wait for the next opportunity. Got that? Don’t chase if you missed an opportunity to make money. You will get another chance a day, week, or month later depending on market conditions.

My favorite book in 2015: Jesse Livermore — Boy Plunger by Tom Rubython. Highly Recommended.

I also recommend Prepare Now and Survive the Coming Bear Market by Mark Cook and myself. It appears as if a bear market has arrived, and our book will tell you what to expect.

Since my last post, the Dow plunged by 700 points before making a partial recovery. Lately, the market is giving many mixed signals, so be very cautious. I still believe that being on the sidelines in cash is the most prudent strategy right now.

The stock market has reached extreme overbought levels, similar to 2000 and 2007. Nevertheless, in the short-term it’s possible the market can get even more overbought. In my opinion, the smartest move right now is to be almost all in cash and wait for the signal to buy puts or inverse ETFs (only the most experienced should short stocks, and stay away from leveraged ETFs). What are the signals? Examples: An intraday reversal, a sudden plunge in the indexes, or intense selling on strong volume. This market is extremely vulnerable so caution is strongly advised. Cash is your friend right now.

 

MY BOOKS: The best selling Understanding Options 2E (McGraw-Hill), Understanding Stocks 2E (McGraw-Hill), Start Day Trading Now (Adams Media), and Predict the Next Bull or Bear Market and Win (Adams Media): http://bit.ly/1bl0ZNk

MY BOOKS: The best selling Understanding Options 2E (McGraw-Hill), Understanding Stocks 2E (McGraw-Hill), Start Day Trading Now (Adams Media), and Predict the Next Bull or Bear Market and Win (Adams Media): http://bit.ly/1bl0ZNk

My latest book (eBook) has been released: Prepare Now and Survive the Coming Bear Market. Amazon: http://goo.gl/2wWC8X Nook: http://goo.gl/VQstmr  Smashwords: http://goo.gl/eBpYBT

 

Until further notice, I have stopped writing my blog. Over the last few months, the market has provided many trading opportunities. As I warned for months, the market trend has changed. Therefore, I am concentrating all my energy on trading this very tricky market. (If you’re an investor, however, consider selling stocks and increasing cash positions.) 

I want to thank you for reading my blog. Thanks also for buying my books, which is the best way to show your appreciation for my efforts. I also hope I was able to help you understand the market better, as well as warn you in advance of a volatile market. 

I also urge you to read “Reminiscences of a Stock Operator” by Edwin LeFevre, a thinly disguised autobiography of the greatest trader in history, Jesse Livermore. My success in the stock and options market is because I followed Livermore’s strategies. His trend-following ideas work in bull and bear markets. 

Good luck and feel free to email me if you have questions about my books, 

Michael Sincere