Stock Inefficiency is best found During Times of Hardship

No matter what side of government intervention you're on, it's agreed that it has an affect on the market. Whether that effect is a shorter bear market or simply a prolonged slide is debatable. Today's guest blogger is Tony of Tony is going to share what he thinks the similarities between the great depression and the current state of the economy means for the markets. Be sure to comment and let us know what you think.


There are four most important factors that caused the Great Depression during the early part of the 20th century.

1.    Stock market crash that went from October of 1929 to summer of 1932. Stocks dropped over 80% during this period.

2.    Massive bank failures – regional and community banks failed by the thousands. The remaining banks were reluctant to write any new loans due to the collapsing financial system. Continue reading "Stock Inefficiency is best found During Times of Hardship"

Ladies are putting down the lipstick and picking up the necessities.

Ladies are putting down the lipstick and picking up the necessities.

US consumer have been used to spending hundreds on self-gratifying purchases; things that entertain us, make us look rich and make us attractive. However, the recession has emptied the movie theaters, the BMW dealerships and the cosmetic counters.

The things we once wanted are being put on the back burner to afford the things we really need. I learned how dire times really are when Elizabeth Arden (NASDAQ:RDEN) and Estee Lauder (NYSE:EL) came out with their sales and earnings forecast last Friday.

Watch my new video here:

Take a look at this video of Estee Lauder and see where we got short this stock using our "Trade Triangle" technology. What's nice about this technology is that it can use previous market action to help you get in and ride the trend (to profit from news and earnings). How valuable would that type of information be to you?

Every success in the markets,

Adam Hewison
Co-creator, MarketClub

4 Facts Bernanke Can't Deal With

Well Chairman Bernanke finally rolled the dice. The question is, what will be the results of this unconventional bet? The U.S. is now officially in uncharted waters. We have never seen interest rates this low before, and the U.S. has never been in such a precarious position.

Chairman Bernanke's proposed solution is a simple one. Let's do everything the exact opposite of what we did during the Great Depression and let's see if we can spend our way out of it. This is an unproven thesis and there's no guarantee that it's going to work. What if it doesn't?

I think right about now we need to have a reality check and look at the facts as we see them:

Fact #1: The consumer is in a state of shock. With the collapse of the stock market, the American people have seen the value of their property rapidly diminish in value as well as the depletion of the retirement programs they may have had in place. This double whammy basically destroyed consumer confidence, which is going be a difficult task to correct as the public is waiting for the other shoe to drop. So, let's say this dramatic drop to record low interest rates doesn't work, then what? Well the Fed will just print more and more money which will create its own set of problems in the future. Mark my words, the amount of money to be printed will be close to $5 trillion as the FED is determined to get us out of this hole. This in turn can only mean one thing in the future ... rampant inflation. This is something that we are all going to have to deal with down the line.

Turkeys, Trillions and Thanksgiving

Have you ever built or remodeled a house? If you have, then you know that it always takes longer and cost twice as much as you first estimated. This is exactly the position that the US government has put itself in, only this time the house is the whole country. Now we have to gut the country and totally redo everything. It's likely to take twice as much time and cost US taxpayers twice as much money to get out of this recession.

Do you know how many zeros there are in a trillion dollars? I really didn't know myself, as that is way above my pay scale. So, I looked it up on Google and there are 12 zeros behind the 1. When this mess is all over, we will be lucky if the government doesn't spend 5 trillion dollars (5,000,000,000,000) to get everything back to some form of normalcy in the US markets.

We are continually seeing new people being trotted out in front of the cameras and microphone saying that this bailout is going to cost $700 billion and something else is going to cost $350 billion. I have a deep suspicion that they have no clue and no belief in what they are saying or doing. It's also amazing to me that the people that got us into this mess in the first place on now in charge of getting us out of this mess. This does not seem like a very smart idea to me.

One of the most interesting things about the markets is that they never tell you when a bottom is in place until much later. I think that the many economic problems that are currently sitting on the back burner, will warrant this market to continue its slide to the downside. If you haven't seen my video, "How Low Can The Dow Go," I recommend that you check it out.

The technical outlook for the stock market remains negative in my opinion. There's a great deal of overhead resistance in this market which leads me to believe we will still see further downside erosion. Unlike a bull market that constantly needs to have positive inputs like earnings and positive outlooks, a bear market simply can fall on its own weight.

One thing we rely on to tell us when the market switches gears from a negative to a positive trend is our "Trade Triangle" technology. Presently all of our "Trade Triangles" are in a negative mode for all the indices, and show little or no signs of turning up.

So what's an investor to do?

Do you buy and hold because it looks cheap? That is not the way I believe you want to trade this market. The closest parallel we have to this market is the crash of 1929 and the bear market that lasted into the early '30s. We've only been in this crisis mode for a little over a year and I believe we have a way to go before the recovery begins.

We still have a downside projection for the DOW at 6,600 and we see little or no reason to change that technical target at this time.

Make no mistake about it, these are difficult times for many people, and many people will lose their jobs before business and the markets pick up. There's still the mess with General Motors (NYSE_GM), Ford (NYSE_F) and Chrysler to take care of. How much is that going to cost? In my opinion, the auto industry has been in decline and denial since the '70s, and any money that is given to them is like throwing money down a rat hole unless there is a major new business plan and a severe downsizing of those industries.

No matter what rough times lay ahead, keep the faith, keep your head down and the computer on, because there are some great trading opportunities that I know will be coming up soon in the marketplace.

From all of our staff both at and MarketClub, we wish you success in the future. To all of our American friends and clients, we wish you a very Happy Thanksgiving. We still have a lot to be thankful for in this world.

Adam Hewison
Co-creator, MarketClub

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A Word of Encouragement for the 'Average Trader'

I'm going to cut right to the chase...READ THIS!! Our good friend Norman Hallett from has been an expert in the psychology of trading for years! He's helped, and helping, thousands of traders a day to get their minds right. So read this article and check out Normans site.


"Deep recession!"


"End of the world as we know it!"

Anyone who's tuned into CNBC or CNN has heard these statements of doom and gloom.

They may or may not be true.

We are not in control of what happens to the economies of the world.

We ARE in control of how we handle our personal finances in light of these possibilities and, as traders, how we choose to TAKE ADVANTAGE of all situations... including this one.  No, ESPECIALLY this one.

We know that price action is a reflection of what is perceived "to be", not what is.  We know if we take a position and employ money management techniques, then
if we are wrong in our position, we will get pinched and not punched... and we'll re-analyze and go again.

It's the way of the trader.

For the trader, the greater the economic challenge, the greater the opportunity to better ourselves and our family... through our trading.

When most individuals are hiding behind excuses, the trader steps up to the plate.

We are lucky, indeed.

But don't fool yourself. Being a trader, is not easy.

I look at markets in turmoil and I "feel" for the average trader.

The average trader has every good intention, but lacks the two basic elements to consistent trading success...

A formulated trading plan, whose elements are the components of a good trading system or systems, is the first element. And having the mental and emotional discipline to run that plan is the second element.

The GREAT NEWS for the 'average trader' is that it doesn't take years to elevate your level of trading... months, yes, but not years.

The further GREAT NEWS is that we are in historic times.

The opportunities that will unfold over the coming weeks, months and years could result in windfall profits for those traders who choose to master the two elements mentioned above.

Shake-outs like we are experiencing now in the marketplace yield new super-trends that may be followed.. and ridden... by those who are prepared.

So should you "drop back and punt", and stand aside while the market displays its current violent ways?

Only you know the answer to that.

Are your two basic elements solid?

Is your trading plan MEANT to handle extremely high volatility?

For any average trader... these are the type of markets that exploit your weaknesses.

FOR YOU, it's time to re-group and prepare yourself for the opportunities that are about to present themselves as the smoke starts clearing.

Adopt a solid trading plan, based on a solid trading system. AND

Start now to make the development of your trading discipline a PRIORITY.

Without COMMITMENT to these two elements, you will not succeed on a consistent basis and will not be able to take advantage of the opportunities to come.

This is NOT the time for excuses.

It's your time for admission... recognizing that you do, in fact, possess these two elements, or admit that you don't and work NOW on shoring them up.

I've been trading for 25 years I can say with confidence that the opportunities that are about to unfold will be historic.

Fortunes will be made.

The Disciplined Trader with a tested trading plan and possesses solid trading disciplined will gather the money of The Average Trader who continues to downplay both.

It's time to prepare.

Norman Hallett