CONSOLIDATION

There was a bit of consolidation that took place today as the market moved back and forth. It tried to sell off in the morning, but the buyers came in again and held the 1000 level in the S&P 500. The longer we hold this level, the more likely it will be that we will breakout again (above 1007). Watch the 995 area on the downside. I think this is a key short term support area. If we break this support...especially in a sharp drop...we might begin a larger correction. It's hard to find new catalysts or reasons for the market to continue to go higher. CSCO's earnings were okay, but the stock sold off in after hours trading. Keep an eye on the Nasdaq. The Tech stocks started this move and they might signal the end of the move. The Nasdaq was down a larger percentage today than the S&P 500 and DOW. Again...this is not a bad area to take some profits and build some cash. If we do breakout, you can buy the breakout. If we sell off hard, we can look to profit on a small put position to the downside. If we move sideways....well..we will start all this again tomorrow. Here are some stocks from The Market Trend Signal's (www.markettrendsignal.com) new MuscleStocks scan: RDN (wait for a bit of a pullback after today's move), DRN, NTES, HA, CAR, and VNDA.

THE MARKET WANTS TO HURT THE MOST TRADERS

What was the intra-day high on the S&P 500 today?...1007. I told you there was a bit of resistance there (11/4/08 high). The buyers rushed back in again during the last 15 minutes of the day. Every time the market pulled back the smallest bit, the buyers took it higher. If we break 1007, we could get another big move. If you can't watch the market tomorrow, set up contingent orders so that you can play the possible breakout. On the cautious side...and I do have a responsibility to be cautious sometimes...I am concerned with how bullish the "crowd" is getting. For those that have taken my Elliott Wave course, you know how important it is to analyze crowd behavior. This clue is more advanced than the clues we use to analyze trend. It's a lot more intangible. We know that the trading crowd gets most confident at or near a market top. Almost every trader on the financial news shows today believes that the market is going higher. Almost every website is talking about how much further we can still go. The only ones that appear bearish are the ones that we know are short the market and we can see the stress on their faces as they try to give reasons why the depression is still around the corner. I've been through this a few times before and it feels the same every time. You feel like there is no way it can sell off right here because EVERYONE feels it is going higher. The reason why we are all bullish right now is because we are all long the market right now. We wouldn't be long if we didn't believe that we could go higher. The problem is that if there isn't any new money that can come it to "keep the party going", we will inevitably begin to drop. There are reports that some fund managers, that have been in cash or have been short the market, need to buy in right here so that they don't get left in the dust. This could extend the mania for a bit longer. This is why we will watch for the 1007 breakout. I want you to really pay attention to what is happening in the market right now. This will be a very valuable experience if you pay attention and feel the emotions. Listen to the predictions and how many people believe the predictions. Watch the price movements to see the buyers rush in during the smallest pullback. Take all of it in and remember this...THE MARKET WILL ALWAYS ATTEMPT TO HURT THE MOST PEOPLE (traders). I know that sounds sadistic...like the market is a living breathing thing...but that is one way to know what move will likely happen next...it is the one that will hurt the most people. If traders have bought 200,000 contracts of the August $15 call, then that stock will probability shut down at $14.95 on expiration Friday just so those speculators would lose on all those contracts as they expire worthless. My first warning signal is a sharp move below the 5 day simple moving average. I may start to cash in profits. If we sell off sharply at the end of the trading day and close below the 10 day exponential moving average, I think we might looking at a correction underway. Build cash if you can.

SUCCESS STORY

I agree with Fred and my wife is happy too. I finished classes in late Jan. and began trading in earnest in early Feb. at first I had mixed but modest results. Shortly after the first week in march I Gradually became more successful... and more aggressive as market conditions improved. I've made numerous trades both options and stocks at the rate of about 33 to 47 trades per quarter. Some have been Jerry's picks from the blog, some from Jesse's Market Trend Signal, some from Virtual Investing Club and some from my own research and charting. Since the end of that first week in march my main account value has increased by slightly over 76000.00 dollars or if you prefer slightly more than 298%. I will not hesitate to recommend this education to anyone interested in taking charge of their financial future. Jerry we appreciate your blog more than you know. Even though many of these trades are on my own through research and due diligence, it is because of the classes, the support, and the confidence that you provide for me and others that I would even attempt this.

Thank you again so much from me and my family

Keith H.

SUCCESS STORY

Hi Jerry; You're right, we as students need to start communicating more on the blog and not just leaving it up to you.So here goes. My biggest success story happened last night. My wife told me she was really glad that I had taken your class and my answer was, IT WAS WORTH EVERY DIME. Then we went inside and I pulled up my brokerage acc.After seeing that she wasn't really glad, she was really, really, really glad I had taken your class.

Up until mid March of this year I considered myself to just be getting the feel of this business. I had about 2000.00 in my acc. with some successes. The middle of that month I deposited an additional 10000.00 in my acc. and really went to work.My most profitable option purchase to date is WAT, purchaser at market on a Mon. morning and sold three days later for about 97% return. This I think was in April. Here are some others. HOG BIIB RDN GE USU SWHC STX CI FAS RBS TUP.

RDN and CI have been very profitable.

Long story short, With Jerrys help and education, I've had an overall increase in my acc. of about 70%-80%.

Yes I have made my fair share of mistakes, as will anyone.I consider it part of my business overhead but continually try to keep them to a minium.

. To everyone who reads Jerrys blog, Lets do our part and get in those success stories. He's doing a great job guiding us.

Fred B.

1000

I told you last Thursday that if we broke above the 990 area on the S&P 500 there was a strong probability we would make a run at 1000. We broke above 990 on Friday and we gapped up today and topped out at 1003. Do I think the market is overbought?...YES. Do I think you should short the market right now?...NO. Although it is difficult for me to buy into new positions here, I can't ignore what the market is telling me. Remember the characteristics of an uptrend? We are breaking above resistance levels and the support levels are holding. When the market does start to sell off, the buyers come back with a vengeance and push it higher. The path of least resistance right now is higher. This is when it gets hard to trust the trend. The danger is that you will finally buy into the trend just as it reverses. How do I decide what to do? Well lets look at the two main possibilities. First, I buy in right here and we drop down in a sharp pull back. Second, I short the market right here (or buy puts) and we move much higher. Since I don't know the future, I will look for the path of least resistance. I know I will lose money when the trend reverses, but there is no way to know when the trend will reverse. The choice is to keep losing money shorting the market and trying to pick the top, or go with the trend and lose money only once when the trend finally does reverse. This is definitely a dangerous area. What I do (and you should know this by now) is to go to a larger-than-normal cash position. I will continue to buy into the trend, but with only a small amount of my total capital. I want the cash so that I can take advantage of what will happen next. If we pull back and it looks like the uptrend will continue, I have cash available to buy in at the lower prices. If the trend does reverse and go down, I have the cash to take advantage of the move down...or just hang on to the money I have made. Earnings season is winding down and August is traditionally a slower month...but this market isn't following traditions. For trading opportunities, stick to the leaders until this trend reverses. AAPL, IBM, GS, JPM, MMM, GOOG, BIDU, and FCX. For those dying to short the market, at least let it show you some weakness. One of those areas where the probabilities could start to shift would be the 982 area on the S&P 500. If we break below this support area, we could be dropping to at least the 950 area. I see some possible resistance at 1007 (11/4/08 high). We'll see what happens tomorrow.

SUCCESS STORY

I bought the MON calls on 7/16 for 3.80. I sold on 7/23 at $6. I am kicking myself for not holding longer, but a sweet profit for a week. Thanks, Gregg

SUCCESS STORY

Jerry,

I greatly appreciate your time and effort in maintaining your blog spot as well as the education I received from your course training.

Since the beginning of July 09 I have increased my account value by 39%. I followed the ABC patterns as well as your suggestions and traded calls of AAPL, FCX, GS, IBM, QQQQ (as well as DIA, SPY and AMZN which I mentioned previously).

I look forward to your mentoring, thoughts and insight into the market during the week.

Thanks again

Rob