I made an extremely huge purchase on 5/27 (bigger than normally would have been for a pattern like that–no max green BOP and too volatile) as the chart really was a beauty. However, a quiet pullback KNOCKED ME hard hitting me with a huge 18%. That put the final touches on a great return gone wrong. My 34% return on Monday is now a lowly and pathetic 7.5%. It is simply shocking that all of my biggest longs pulled back HARD from “HOT” patterns.
With action like this there is no way that I can continue to commit to going long stocks in bulk. From DGLY, ACM, VISN, SOL, BRKR, and BKE. If the stock started to build a perfect pattern, you can be sure it has now been destroyed. Let me tell you something my friends: if you think this happened in 1999 and 2003 you are completely wrong. In fact my “perfect” chart patterns only stopped working last year. They used to have anywhere from a 70-80% win/loss ratio during bull markets to 50-60% win/loss ratios during bear markets. But since last year only AFSI, APPY, TESO, OIIM, and RICK have worked. I guess we can count DGLY as workign this year with its lame return. But besides these winners, stocks like INXI BYI BLL SNDA ESEA FALC all setup in near-perfect to perfect chart patterns last year and FAILED. So for the first time in 12 years, I had more “beauties” fail than succeed. Well so far this year, it is no different. BRKR, BKE, and ACM have failed to pop immediately and put huge gains on the table. The only one that did pop and is still working (BARELY!) is DGLY. So this year, I am 1-for-4 and last year I was 5-for-11. 2007 and 2008 are the first two years I have been under 50% on the charts that make me go “wow, wow, that is beauitful.” Instead, now I go, “where are they and why will they not work?”
Eventually this will change but it is clearly obvious to me the way the “near-perfect” to “perfect” charts are acting that this market is no way near a bottom. So many people were calling me a moron back in January for not loading up on LEH, BSC, JPM, GS, and other gems like BAC. I wonder where those “kind” and “friendly” people are today. I told you then and I will tell you now, you never have to go long the exact bottom of any market or go short the “exact” top to make a ton of money in the market. I told these rude people then that those stocks were OLD LAGGARDS. Everyone has heard of these stocks thus making them a WEAK investment. Your biggest winners that will make you rich and change your life you probably have not heard of yet. So fall those that told me I was stupid for not buying LEH and BAC in January you are now eating your words.
I just hope everyone who thought you had to go long the banks then did not and that if you did you now are eating your words and learning a valuable lesson. I also said back then that you could be late by MONTHS from the stock market bottom and still make a ton of money. One of these examples continue s to be a great long for me.
