We have a sell signal to short the market.
Sunday, January 31st, 2010We have a confirmed sell signal in all of the major indexes except the Russel 3000. We never know how long this trend down will last, In the last 3 years, there were two times when the change of trend lasted for only 2 weeks.
Trend Change…Bright red is the signal to go Short
(click on image to enlarge)
What do we do?
This is where you want to be aggressive and get into the sell signals early. Last year when we got the buy signal, the first few weeks had signals that were the biggest winners. The same thing happened when we got the short signal in September 2008 for the sell signals. Take a look at the power scans that are sell signals and put more volume on your scan to get the best of the scans. When Shorting the market, l look for stocks over $20.00 and 20 million shares a week or 4 to 5 million shares a day if I am using the daily scan. The more volume, indicates that there are a lot more institutions involved. They have to be in liquid stocks and ETFs.
ETFs
Type the word “ultra” in the search for symbol box and check the name button in the search for symbol box when you run the scan. This will give you the way to short the market by buying the ultra etfs. These are inverse ETFs. You can also search by the inverse selection box as well. Put some volume into your scans to find out where the institutional money is going to hedge their long positions. The inverse ETFs are the favored way many of the mutual funds hedge their long positions. Also try the name scan of 3x Shares. This is 3 times the indicated ETF. There are many different sectors that have the 3x(times) allocation. Watch it closely and only use it on the daily scan. Only take the weekly signals if you have a larger account and can manage the risk.
Risk Management.
This is what you might call the primary tenet that controls investing. We will never know which one of our trades is going to be the biggest winner or how much we could possibly lose on a trade. That leaves us with one tenet of trading that we can control…Risk. We can control how much we are going to lose. That is why it is important that you use the stop signal to get you out of a losing trade.
Most people who trade, or invest, are thinking about how much money they are going to make on a trade. They should be focused on how much they could lose. That doesn’t mean that you should stay out of the markets. If you are not in the market and don’t take the higher probability trades, you are not going to have the chance to catch the trade that will trend. I have seen many who don’t take a particular trade because they just lost too much money from the last trade. Many trades are made with high emotions, and the higher the stakes in a trade, the higher the emotions. That is why I have always said to take the higher probability trades. With the Wizard we have set up a platform that is designed to take as much emotion as possible out of your trades. Still there are many of you who have called in to support and I can tell in your voice that you are scared to death, that the next trade is going to wipe you out. If you have experienced this, you are trading too large of a position.
In the new Wizard we will be introducing the money management system that will not allow you to show a trade of more than 5% of your portfolio in any one trade. I like the position size of 2% myself. This is the wisest way of making your emotions less of a problem in trading. Many of you are violating these basic risk management principles and destroying your confidence and portfolio.
Remember, we react to the market and take what it gives us and realize that is all we are going to get. When building a portfolio to a greater size, you will have better results with walking up the mountain instead of trying to run up the mountain. Just remember that you do trade your personality. That means 99.9% of us have to take the emotions out of the trades. Believe you me I learned the hard way and hope you can learn from the Wizard that there is an easier way.
I hope you will focus on your position size with all of your trades, and keep your portfolio’s safe from a major swing in value. Always recalculate your position size every month at a minimum to guarantee growth and protect yourself from major losses. If you make money you will increase your position size. If on the other hand your portfolio is down this month, you should decrease your position size.
The Wizard Network
Don’t forget to sign up for the opportunity at theWizardNetwork.com. The engine is running and the take off is imminent. Also, make sure you sign up for the webinars this week. They are on the events tab.
As always, have a great week trading and God Bless,
Gene Stunkel
Creator of the Wizard
This has been a longer than expected trend. It looks like the S&P will go to 1150 if the trend continues. That is my target. I am looking for the turn to take place some where between October the 9th and 12th. If it goes beyond the number or date, other factors, probably international or national are involved. As you know targets are not always hit, but it is good to have one. 
