Dow Down . . . Find Motivated Sellers And Enjoy Massive Returns

Hi Boyd,

I just returned from an stock/option trader's group meeting in Houston and there was a lot of discussion concerning the fact that the head and shoulder's pattern on the S&P 500 is now broken...and that the next really strong support is wayyyy down there.

The fact of that 'break' creates a big concern since many believe that we have further to drop before we will get any kind of a relief rally. And, many may also get caught in a short squeeze when Wallstreet decides it is time to turn it - on a dime -fiercely and quickly...possibly when the VIX is at about 60 as it was after the lows following 9/11. Hmmm....

There are others who believe that we will surely get a strong bear market rally in time to soothe people's spirits... beginning possibly in another week...or at least a few weeks before election season approaches in the fall...it will seem like 'happy days are here again' -- but then after that event...look out! And prepare to experience another stronger 'leg down' later this year which will likely be very troubling to those who threw all their money at this coming rally...thinking that they were getting in at THE bottom...only to be sadly mistaken.

It is also thought that the removal of all foreign stocks from the S&P 500, which was reshuffled on Friday to only include American companies, might have contributed to the waterfall toward the closing. However, now more support levels are broken which will now become resistance...and that doesn't help the bullish traders.

I am reading a new book by Robert R. Prechter of Elliottwave.com fame - called "Conquer The Crash...You Can Survive And Prosper In A Deflationary Depression". Very, very interesting.
It provides tactical advice on how to prepare yourself financially in these economically troubled times.

If the worst doesn't happen, it's still nice to be prepared in every way possible.

My sister thought that IBM was a steal at $100.00, and now she wishes she had read some of the forecasts that I subscribe to. I tried to share with her, but she discarded the information and is now really sorry since she waited it out. Till she read Warren Buffet's recent remarks about how long he believes it will take to turn our economy around and begin the next new bull market in stocks. Now she is a believer, unfortunately AFTER she has lost a lot of money though.

Just sharing what I'm hearing as I travel in financial circles in the past months. Of course all of these financial advisers could be very, very wrong.

But from all I'm seeing, I am definitely feeling a little bear-ish these days, :-)
Amber

> Hi,

> As a skilled chart reader yesterday's drop
> in the Dow is what I would call a "Bad
> Sign." Yesterday "should"
> have been a modest up day, followed by a
> nice rally. Anything is possible at this
> point....

> Best,

> - Boyd