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Time to SELL!!!


2000, 29 Aug, Tuesday (Hey peeps! Note the date!)


Stock market (DJIA) reaches a high of about 12100, just barely over its all time high in January of this year. Smart money sells everything, expecting a bottom on/about Tuesday, 24 Oct 2000.

COMMENTS: 1. (000812) As of this date, all things point to the Dow continuing its recent bounce from its recent bottom. I believe that one of two things will happen in the next few weeks, first that the Dow will stall just below its January high, or second, and more likely, that it will stall just over the high, yet under 12100. Either way, if I am right, the end of August will be a VERY good place to SHORT the market. As of this date, the Dow is at about 11000. Worst case scenario would be for it to crash back to about 7750 on 24 Oct 2000, a very steep decline from its projected high. All we can do is to wait and see. As for me, I will be SHORT beginning the end of August just in case this is correct, with open orders to cover my positions on 24 Oct 2000.

2. (000814) If the DJIA does by chance SIGNIFICANTLY exceed 12100, the NEXT target high is 16900. As to when that could/would happen I do not have the foggiest idea. My best GUESS at this time would be 6 August 2002. However, I reserve the right to change this GUESS at any time as more info becomes available.

3. (000826) The DJIA was at 11247 yesterday. Since the projected high point is now only two business days away, I see no way that the Dow will exceed its January high this year. In addition, chart patterns in BOTH the Dow and the S&P are forming rising triangles, getting closer to the point every day. Soon, probably VERY soon, they will break out of these triangles. MOST of the time, rising triangles indicate that prices will break out to the DOWNSIDE. Since these triangles have been forming for several weeks, and they are relatively steep to the upside, I project that when the markets break out of them, that they will go down TWICE as much as the recent rise. In the S&P, this calculates out to going from about 1533 to about 1317 for the FIRST dip, which, if you are short ONE S&P contract at 1510 and cover at 1380, converts into $32,500. If you are unable to risk the S&P, you could try the mini-S&P, which using the same drop, converts into $6,500. No matter what, put a stop at 1540 just in case I am wrong.

Another possible profitable play, if you would rather be long than short, would be to buy puts in the DOW or S&P, or to buy calls in GOLD and SILVER. You could also buy futures contracts in GOLD and SILVER. The contracts could be a little riskier, but since they are more liquid, it is not likely that you will be locked into them when you want to liquidate.

If you think that the Dow will continue going up, please consider the following facts. As anyone should know, the industrialized world runs on oil. As of today, crude oil is at or near record highs, AND LOOKS LIKE IT WILL GO MUCH MUCH HIGHER. Unless we get a miracle, it is too late to stop the rise of crude oil to approximately $64 per barrel from its current $31 per barrel. We are just now starting to see the effects of this ripple throughout the economy, and there is no hope in sight for lower prices any time soon. To make matters worse, there WILL be a heating oil shortage this winter EVEN IF WE HAVE AN ABNORMALLY MILD WINTER. Think about what THAT will do to housing prices when people are spending between $1000 and $1500 per month for heating oil, or even more if the winter is abnormally COLD. Not only will that cause housing prices to drop, but it will also cause a glut of large, hard-to-heat houses on the market. Now, if you don't use heating oil for heat, just remember that pretty soon you WILL start to see price rises of the SAME magnitude for natural gas, coal, electricity, AND ALL OTHER ENERGY SOURCES.

Another thing to think about is autos and what high oil prices will do there. This world depends upon a vast transportation system, ALL consuming massive amounts of energy. When gas prices get to $3 per gallon for the cheapest grade of gas, you will see massive layoffs throughout the transportation industry and its supporting industries. I think gas prices could EASILY go to $5 per gallon, ESPECIALLY IF THE GOVERNMENT TRIES TO RATION IT. Bottom line is that there is NO VISIBLE WAY THAT THE DOW CAN KEEP GOING UP. In fact, it is beginning to look like that there is no way for the Dow and the other indices to do anything except come crashing off their current highs.

4. (001020) The DJIA has been extremely WILD for the last several days, moving two, three, and even FOUR percent in ONE day. It looks like that we may have one, maybe two more severe down days before it turns around for a few weeks. Even though the DJIA is currently about 10140, it is still quite possible for it to drop to my target price of 7750 noted above. If it is going to drop to that level, it should happen next week, but not later than the last day of this month. We don't have much time left, so the next week could be an extremely wild ride.

I am still short, but am making plans to become flat or long next week. As noted above, Tuesday, 24 Oct 2000 is my target day. Once it arrives I will be looking for good places to become long. If the DJIA gets to 8100, it is time to BUY, BUY, BUY!!! The target price for the S&P is about 1000, so if it drops to anywhere near that level, I will definitely be BUYING, BUYING, BUYING!!

5. (001105) This market is something else! Just two weeks ago the DJIA was hovering around 10000. Now it is aiming for 11000! Will it make it? Probably. Will it continue to 12000? Only if Bush wins the election, and then maybe not for several weeks. Looking at the S&P, it has been flirting with 1450 for days. It cannot seem to get above that number and stay there. Since there is a MAJOR downtrend line at about 1450, the most likely scenario is for the S&P to stay around 1440 until after the election, then DIVE for 1385. If that level HOLDS, then the S&P should make new highs in the next month or so. If the 1385 level does not hold, then the next S&P target is 1220 around the end of the year. If Bush wins the 1385 level will probably hold, but if Gore wins, I seriously doubt whether even the 1300 level can hold.

As for me, starting tomorrow, 6 Nov 2000, I will be reversing my long positions and going SHORT the market. I see no way that the market can go any higher without FIRST testing the 1385 level. If this level is shattered, then we will be in the second (out of probably three) major dumps from the August highs.

6. (001123) As almost everyone in the whole world is aware, this debacle we call 'Election 2000' is creating great uncertainty throughout the world. Everybody is wondering why the most important and richest country in the world is acting like a 'banana republic.' Our worldwide influence is eroding at an increasingly alarming rate. If we don't get a STRONG president soon to repair the damage caused by this debacle, we may lose everything, possibly including our freedom and our country.

Companies and financial markets hate uncertainty. When things are uncertain, companies, nations, & people in general quit spending money for anything except necessities. And this results in very poor showings in company profits, which spills over into the financial markets. Unless this debacle is resolved very soon, we may someday look back and conclude that this election debacle was the straw that broke the camels back. At this point there is NO reason to believe that the financial markets can recover any time soon. In fact, there is now EVERY reason to believe that we are at the very edge of the GREATEST depression EVER. And, if so, history will look back and blame this election debacle for being the key which pushed us over the edge.

As of the close yesterday, 22 Nov 2000, the NASDAQ is almost 50% off its highs earlier in the year. During the last two weeks there have been NUMEROUS bankruptcies of high tech companies, and hundreds more whose stock is down 80% or more from their highs. That looks like depression material to me, especially when you consider that in 1929 the stock market DROPPED ONLY 37%!!!!! The DJIA is again heading for the 10000 (closed at 10400 yesterday, down about 12% from the January highs. There is no reason at this time for the DJIA to stay above 10000. In fact, there is every reason for it to drop to the 7000 area, a 40% or so drop. The S&P closed at about 1325 yesterday, down about 16% this year. Currently, the S&P looks like it will not stop dropping until it gets to about 1280 near term, and about 1100 or possibly 1000 by the end of the year. Based on chart patterns, even if the election debacle is over tomorrow, it is TOO LATE to stop this hemorrhaging of the financial markets. At best all we can expect for the forseeable future is 'dead cat' bounces and 'bull traps.'

My stratagies, therefore, are focused on the markets making weak recoveries and major dumps. Until the market gives positive indications to the contrary, I will be selling on EVERY bounce in the market. At this time, I doubt that any of the financial markets will make any kind of a decent recovery before next Spring at the earliest. If this election debacle continues, I doubt if we will even have any recovery next year. People hate uncertainty, and unless something positive happens with this election soon, they will continue pulling money out of the economy for the next several years. If that happens, these markets could EASILY lose 95% of their current value before this is all over. Should that happen, you will see the HIGHEST unemployment rate that this country has EVER seen. In effect, our country could EASILY become a REAL banana republic, economically as well as politically.

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Forbidden Territory

Written 12 August 2000. Posted 12 August 2000.

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