Jim Cramer was yelling about buying overvalued stocks on October 31, 2007 while I was continuously writing about selling, distribution days and taking profits. He also predicted that the banking stocks would be the top performers in 2007 – go figure (at least he paid his $50k bet for losing that prediction). YES, I did upload daily screens and stocks with the strongest relative strength ratings so I am not the superhero of calling this first bear market push but I feel very good about what I wrote (especially since the number of readers continues to increase – that says it all).
Looking back, I offered at least a dozen high quality, highly detailed articles about some type of selling, profit taking or market distribution days. Shame on anyone (including me) that ignored the signals as they slapped us in the face, week after week!
Take a look at some of the highlighted articles I wrote as the market was topping. I think this list contains some of the best work I have ever done on this blog or my former equity research website. Finding growth stocks and presenting them during an up-trend is the easy part. Selling and profit taking is the hard part; let me correct myself – selling is the hardest aspect to grasp when trading (in my opinion of course).
A Review of Articles Talking about Selling, Profit Taking and Market Distribution:
- 10/03/07: Is Shanghai a Nasdaq Déjà vu
Well, the current two year rise of the Shanghai Stock Exchange Composite Index looks remarkably similar to the rise of the NASDAQ of the late 1990’s and the charts below explain better than I can!
- 10/04/07: A Technique for Profit Taking
What do you do in a market like today when you have profits in multiple positions but you don’t want to give it all back? You want to continue to ride the winners but at the same time, you want to maintain the unrealized gains in your account. HOW?
- 10/12/07: Distribution Day
This was the largest showing of volume in two months and is not healthy because it was pure distribution. It was only the second distribution day over the past month so we can’t call this a bear run but please be on the lookout for a possible correction of 5%-10%. Technology stocks led the decline as BIDU gave back 10% of its amazing run.
- 10/15/07: How to Make Money Selling Short
- 10/17/07: Inverse ETFs
Have you ever wanted to short the market because you knew it was going down but your were too overwhelmed, nervous or even scared because you were unsure of how to do it. Well, Inverse ETFs may be your thing.
These inverse ETF’s closed Wednesday with gains of 13.42%, 15.43%, 22.31% and 18.76% since I wrote about them.
- 10/18/07:The Real PTR Climax Run?
I was early in September by trying to locate a climax run in PTR in this post:
Petrochina (PTR) Climax Top? However, the HUGE volume on the latest push to new highs clearly indicates something is going on. - 10/20/07: Second Major Distribution Day
Technically speaking, we now have 4 distribution days for the NASDAQ and 3 for the DOW over the past month. It’s now time to start focusing big-time on the market leaders to see where they are going to take this market. If they start to roll over, you better be quick to take profits and even quicker to take losses.
- 11/01/07: CROX getting Swallowed
I wrote a post titled Will CROX get Eaten? on September 20, 2007 and strongly noted the declining institutional support (see numbers below). Someone was jumping out of the stock and we now know why!
- 11/08/07: Market Corrections, Bears and the Big Picture
Keep in mind that nearly 75% of all stocks follow the general market trend. Your cash doesn’t need to be committed to the market at all times. This philosophy is suited to making the most money in bull markets or markets trending higher.
- 12/11/07: When to Sell
Why do so few books exist on the subject of “How to Sell”? Selling techniques are far more complicated than buying techniques and subject to considerably more emotional pressure, than those of buying.
I promise that I will get back to analysis and uploading charts by next week the latest. That’s what I love doing most anyway and it seems to be the biggest draw in traffic.
Chris: I already bought “Stay Mad”. What is the name of your book going to be?
Did you read the article about Jim Cramer stating that indididual investors shouldn’t even invest in stocks because they will most likely lose in the end. They should stick with mutual funds, iras, 401k, etc… His whole show is about helping the little guy, and he comes out and says this. What do you think about that?
Good job Chris, that’s why I don’t follow Cramer.
Cramer is a big mouthed know it all whom I have NO tolerance to listen to or watch. Thanks Chris, now I know I can use the big mouth as a contrarian indicator. Chris, with the Fed moving on interest rates most likely next week, I smell a bottom here. Thanks again for you valuable insight and expertise.