One of the other shoes fell today.

On December 3rd of 2008, I wrote a blog post entitled, "Waiting for the other shoe to drop." Well today another shoe fell in the form of retail sales. This pushed the DOW below the low made three weeks ago. This in turn signaled a sell signal based on our "Trade Triangle" technology.

Many experts have been predicting that we have made a low in the market. I happen to be on the opposing side of that trade. I think that we have yet to see the bottom. The fact is, we are in a bear market and bear markets tend to be very different from bull markets. Bear markets just claw you under and sink under their weight.

So are there any other shoes to drop? Could credit cards defaults be the next shoe that no one is talking about that right now? Or, could it be county and state governments who are reeling with their loss of property tax revenue. Ultimately, it could be something as simple as this: nobody believes in anything anymore.

I keep hearing people say that there is money on the sidelines. Does that mean that this money is going to come back into the game anytime soon? I seriously doubt it; the money could stay on the sidelines for years. Given the uncertainty of our times, I'm not sure it's going to come back into the market anytime soon regardless of how people define a "cheap stock" or how they hype the possibilities of capitalizing on this economic downward spiral.

So what is a bargain stock? These "bargain" stocks are trading lower today then where they were two years ago. Under those conditions, the stock is often times labeled as a bargain or as "cheap." The reality is, in a bear market the market sets the price, not the buyer. We continue to see the markets on the defensive as the troubles we see both domestically and globally are a long way from being solved.

With President-elect Obama waiting in the wings to rescue the world, I am not holding my breath or expecting any miracles on this front. When President-elect Obama is sworn in, we'll see just how deep the social and economic problems are in this country. I do not expect him to perform some magic trick that makes all of the economic issues disappear overnight.

Last month we also blogged about the silly season. This is the time between December 15th and January 15th when the markets tend to go nowhere and everywhere based on thin volume. Now that we are getting close to January 15th, I expect to see more volume, more serious trading, and price action taking place. This action could well be on the downside as the realization sinks in that we are not going to get out of this easily or quickly.

Many investors have learned a hard lesson that holding onto stocks is not necessarily the best investment. Many 401(k) plans have been destroyed by lack of a game plan and positive action. I strongly believe that you must be proactive in the next 5-10 years. It is not good enough to sit back and say, "Oh, my stocks will come back" ... because many of them won't.

Here are the three keys to unlock and save your financial future:

* Number 1: You must have a game plan for any investment you make, and you must follow the game plan.

* Number 2: You must be disciplined in your investments. You cannot expect or rely on your financial advisor to do this for you.

* Number 3: Your portfolio must be diversified. Learning how to drive a variety of investment vehicles and also learning how to trade on the short side of the market as this gives you the protection you need in troubled times.

If you follow these three simple rules you will best avoid the pain and agony that many investors have suffered in the last year and a half.

It's up to you.

Every success in the future.,

Adam Hewison
Co-creator, MarketClub

Is now the time for a bear market rally?

I've been in contact and reading the blog for a few months now and from what I've read they seem to be on top of a number of issues. I asked them to answer one question for me...Is now the time for a bear market rally? Here's their answer:


The ongoing global financial crisis has made perma bears look like geniuses, yet the Psychology of the Call team (POTC) senses the imminent appearance of a bear market rally for four good reasons.

1) President elect Obama's first speech and chief of staff pick, Mr. Rom Emanuel, were very bearish for the market; we are confident both of those negativities will change soon. POTC believes Mr. Obama's goal in the coming days and weeks will be to do everything popular to be re-elected to a second term in just four short years. He understands that half of U.S. citizens are in some way affected by the mayhem of the recent sell off; Americans expect transparent leadership and policies now.

It's that second pivotal term where Presidents are more inclined to show their true colors, especially in terms of openly hell bent left or right policy. We remain confident and are prepared for a lag effect Thanksgiving Obama rally to begin this week, as his centrist appointments and policies begin leaking through hedge fund insiders. We are not waiting for New Year to enter long positions, as that seems to be the easiest and most ‘herdish’ trade today: we remain forward thinking contrarians and are going long the S&P emini contracts into Thursday's death spike.

We believe President elect Obama will appoint some Wall Street friendly names to his first administration, doing so to satisfy his political appetite to win that critical no holds barred second term in 2012.

Yet, if he chooses to select only hard line left wingers, the market will not rally. After witnessing the extremely well planned and hard fought victory, we would be shocked to see a concentrated (leftist) cabinet:. We are confident that will not occur.

2) The pressure from Warren Buffett on President elect Obama to call for a change in mark to market accounting from the SEC, or announce a huge infrastructure stimulus plan plays a factor in our short term bullish call as well.

Berkshire Hathaway just reported a horrible quarter, and even if Buffett is okay with paying higher taxes, we know he does not want to see his almost perfect legacy wither, wilt, and die in his waning years.
Other recent Buffett investments in Goldman Sachs (GS) and General Electric (GE) have underperformed as well, and both of those companies will survive this wickedly panicked market.

3) The financial sector could begin to stabilize as it shrinks. The S&P is heavily weighted with oversold financials.  Approximately 20% of the S&P value lies in financials, so be cautious. Regional banks could begin bouncing with 50%+ buy-out premiums. Rumors abound that Citigroup (C) is very close to bidding for a regional bank with government TARP money.
Story here

This would ignite a type of forest fire under financials, forcing many perma bears to cover their seemingly bullet proof short positions.

We will take advantage of what we view as monopoly money about to be used to boost stocks like Regions Financial (RF) and/or Suntrust Bank (STI).

4) Intel's (INTC) (see MarketClub's latest prediction here, ed note) report of lowering numbers after hours creates the perfect set-up for hedge funds to close or enter new positions before they step foot on Capital Hill, Thursday. Please remember these managers are either long, short, or in cash at this point, so we expect the INTC news to shake out the wounded, weak, and desperate long herd, and flush out the dynamic kings of cash, specifically Steven Cohen and Paul Jones: Story here

These managers are patiently waiting to take over your shares when your fear factor boils over Thursday, turning their greed gauge on auto pilot in search of inexpensive generals. Will you allow them that satisfaction?

Four examples of best-in-breed generals at these levels are: Apple (AAPL), America Movil (AMX), Chicago Mercantile Exchange (CME), and Google (GOOG).

POTC feels the S&P index could settle above 1,000 by Thanksgiving, and as the bear rally gains momentum from one or two other positive developments mentioned above, then 1,100 on the S&P could well be reached before we wish you a Happy New Year.