|Look Out Below
|June 26, 2007
Any daredevils out there? Enjoy jumping out of planes or going bungee jumping in your spare time?
Well then, my daring friends, this will be a week for you! I’m expecting this week to be the most volatile week we have seen year to date.
ADX: The Weakest Link
Unlike a lot of indicators, the Average Directional Index (ADX) doesn’t tell you whether a trend is bullish or bearish. Instead, it measures the trend’s strength on a scale of 0 to 100, where 100 is strongest and 0 is weakest. The method for calculating it is complicated to explain, so just remember that readings below 20 are considered weak and readings above 40 are considered strong.
On June 15, the ADX for the QQQQ hit 13.81, and Trending123’s alarm bells started going off—after all, that’s well below the “weak” threshold of 20. But get a load of this: the NASDAQ composite just hit 10.82 in the ADX. That’s not just weak, that’s in critical condition.
So if you thought the gains in the NASDAQ since March have been strong—you’re right. But if you thought the trend has been strong—well, when the string of gains snaps, boy, are you in for a surprise. With the ADX as low as it is, anyone trying to go long now is reaching for the weakest link. Trending123 can help you find the investments that are safe in this type of volatile market. Click here to join Trending123 now.
It all started last Friday when the S&P 500 slid so far that it clocked its second highest sell-side volume day in over a decade. Contemplate the magnitude of the word I just used: decade!
Though the cheerleaders out there may be spinning a different tale, managing not to speak of the day in quite so fantastic a fashion, I’m here to deliver the truth. And not the truth as I see it but the truth as it really is. For, as I’ve said many times before, we simply can’t mold this market into what we want it to look like. It is how it is!
Go Away in May — It Really Works!
There’s an old bit of Wall Street that goes “Sell in May and go away” referring to the fact that the stock market’s weakest season runs from May 1st through October 31st. Many financial advisers will try to steer you away from going away in May, telling you that it’s not a phrase to trade by. Well, they just want to make sure you stay with them.
What better way to keep you on-board then to “guarantee” you more money, in the way of new buys? Well, there is no real guarantee and what might seem like a bucket of bargains could very well lead you to Loserville—where the gains are marginal but the losses are great. And who wants those odds?!
I certainly would never bog you down with absolutes when it comes to investing your hard-earned money. You’re gonna win some with me (click here to learn about some of Trending123’s past gains) and you’re gonna lose some.
But I’ll be darned if I’m going to keep you in this market when I can see with my own two eyes that it’s crumbling! To me, that’s just insane.
I got everyone out at the end of April because the charts told me everything I needed to know. And ever since then, the charts have continued to paint the same disturbing picture.
- Example: the Utility index. For this month alone, the utility index is down 7% — it’s now at lows not seen since March of this year! When did it top? Back in May.
You might not think that the Utility index is a major player. But I assure you, those with deep pockets, invest their money in diversified portfolios — portfolios that don’t just include the RIMMs and the Apples and the Googles. You can bet that serious investors are playing across all sectors and that the utility index is front and center on their scorecards.
Let me tell you something else you may not have known: this index is one of, if not, THE most interest-rate sensitive sectors. Why? Because they have the most debt on their balance sheets. And when we are in an environment that has increasing interest rates, it costs them more to have a balance sheet that is saddled down with debt — it eats away at their earnings and in turn, their dividends. It creates a nasty snowball effect. So rising rates are not considered bullish among these types of interest-rate sensitive groups.
The utility index, the S&P 500 and the DOW all have one thing in common — they all topped in May.
The only (safe) way to play the market right now is through inverse funds. We have a couple we are playing at Trending123 right now — click here to find out what they are.
If you are ready to see the complete picture — the one that the cheerleaders of this market aren’t allowing you to see — then I highly encourage you to check out what I have been telling my Trending123 subscribers. My job and my joy are the same: I want to help as many people as will listen to invest wisely…meaning that I want you to secure as many profits as possible while deterring the losers that will get you nowhere but in the red.
Please join me today to discover what Trending123 can do for you.
P.S. What kind of gains have my Trending123 subscribers experienced? How about: Hansen Natural Corp—up 23.95% in 4 days, Berry Petroleum—up 27.20% in 6 weeks and Zoll Medical—up 109.91% in 4 months? Good looking gains in short periods of time — that is our aim. Click here to find out how Trending123 can help you toward 10%–30% gains in a matter of weeks (and sometimes days)!