Wednesday, January 21, 2009

Dow Theory nonconfirmation

We now have a Dow Theory nonconfirmation. The Transports have closed below the Nov. lows but the industrials have so far not confirmed. I expect that the industrials will eventually confirm the move by the transports as it now appears the weekly cycle has rolled over again.

I'll tell everyone what I told subscribers. We are going to get the buying opportunity of a lifetime, probably in the fall of 2010 but you have to get there with your capital intact. Almost every mistake I made last year was on the long side. Duh we are in a bear market!

Make no mistake this is probably the most dangerous market in history. Those that think they are smart enough to play both sides of this thing will most likely end up getting chewed up and spit out before this is over.

I will not be playing the long side anymore with the possible exception of very small positions and only at weekly cycle lows. There are two courses of action here. One can sell into rallies or one can be in cash. Either way, the goal of every investor should be to just make sure they get to the bottom in 2010 with something left.