Bear Market Investing

Bear Market Investing – Sell In May And Go Away?

Today’s market action was a sure sign that we are still stuck in a bear market investing environment.

What started out as a great day, with the market exploding out of the opening gate and looking like a sure rally day, quickly turned to crap for both the Dow Jones and the NASDAQ. Both markets peaked at around 11:00 AM EDT. The Dow held up a little better than the NAS, but both indexes fell off a cliff (again!) in the last hour of trading. Folks, this is what a bear market looks like.

The old adage “Sell in May and go away” looks right on so far in this bear market investing scenario we are in.  The adage is based on stock market history, with the best months for the market being the November through April time period, and the worst May through October.

So again, unless you know what you’re doing with shorting stocks or buying put options, perhaps the best thing to do right now is simply go 100% to cash until we see sure signs of a market turnaround.  I’ll tell you when I think that will be in this blog. There is a certain series of events that have always happened in order for a new bull market to take place. So stay tuned – you’ll read about them here.

But there are a few more things you can be doing in a bear market investing scenario. One is to keep watching the market each and every day. The market is extremely oversold, and quite often will reverse back to the upside at a fierce pace. It gave a few hints of that today before it went south. But there are quite a few bottoming signals out there on individual stocks that worked today.

Another thing you can do during the market’s “down time” is to enhance your education in the art of science of investing and trading. Please feel free to browse the Products and Services section of our main site for many unique books, CDs, DVDs,  and other educational materials to help you in that area.

Finally, you can work on your mental fitness for trading. Often called the “missing link” for successful trading, mental fitness and preparation is crucial for your investing and trading future. Along that line, I’ve decided to launch a new series of articles originally written by my new friend Norman Hallett, CEO of Subconscious Training Corporation, the world leader in mental training software. Norman is a CTA and professional trader, as well as an expert in the area of mental fitness in trading.

Let’s kick it off right now…

“Mental Fitness for Traders” Series

You’ve Got a Great Trading System… So Why Are You Losing?
by Norman Hallett, former CTA/Trader

You’ve done your homework.

Countless hours of seeking out the right guru (or piecing together your own system). Weeks of monitoring your guru’s daily trade picks (or paper-trading and back-testing your homemade system). You’ve done it by the book.

No seat of the pants trading for you!

OK, now you’re confident. It’s time to put your money where your homework is.

You’ve had your coffee and your first trade signal is before you.

Confidence high. Trade made. First loss. Not a problem.

You understood before you started that successful traders both win and lose and “losing is part of the overall winning”. You’ve also heard more than once that “successful traders don’t win on every trade.”

Moving on, still confident. Next trade made. Another loss, but…

This one hurt your pride a little because you got stopped out early in the trade, and then the market rebounded and would have hit your profit target if you weren’t stopped out.

You double check.

Yep, you placed the stop where your trading system told you to place it.

You kind of had a feeling that the early weakness in the market was just profit-taking from the previous day’s trading, but you’re trading a system and you must stick to it. Wounded, but resilient.

After a good night’s sleep and a few mouse clicks, your new daily trades are in front of you.

Hey, this one looks good! It’s a little bit more risk than yesterday’s trades had, but look at that profit potential!

With a smiling face, the trade is executed. With a nice start to the trade, you’re feeling good and you’ve moved your stop to breakeven, just like your system said.

Surprise piece of news! – market reverses – blows through your stop – an “unexpected” loss.

Is something wrong with the system?

Has the overall market “personality” changed, affecting your system to the Core, rendering all your back-testing irrelevant?

Your confidence turns to doubt.

You decide to “watch” the next trade… I mean, isn’t it wise to make sure the system gets back on track before you “throw good money after bad?”

Isn’t that what a conservative trader does?

Trade watched. It wins!

In your head, you beat yourself up a little because you know that when you started your “live” trading, you made an agreement with yourself to take the first 10 trades “no matter what”… and here you wimped-out and missed a big winner that would have gotten you even.

What’s happening?!!

What’s happening is that you are out of control. Your emotions are ruling your trading.

The above scenario plays out in every trader from time to time... newbie and veteran alike.

The winning trader senses what is happening and nips it in the bud. The winning trader spends time EVERY DAY, working on “the discipline of trading”.

He/she reads a chapter in his/her favorite psychological trading book, scans the “ten commandments of trading” that hangs on the wall over his/her desk, listens to his/her mental training software for traders…

Something… Every Day… before trading begins.

There are many more losing traders than winning traders… and it’s seldom about the trading system.

In my career, I’ve come across at least 50 systems that I consider A+, yet I know, for a fact, that MOST traders that have traded these systems have lost.

Why?

They were not in control of their emotions.

Are you?

**Norman Hallett spent 21 years as a successful trader and CTA before starting Subconscious Training Corporation.

His company developed TradingMind Software:
http://directyourmind.directtrack.com  

It is the industry’s leading mental/emotional training tool for traders who understand the importance of being disciplined and focused in their trading.

And now, on to business…

The markets teased us today by gapping up on the open, only to fizzle out to losses in the last hour of trading. As I said in the introduction, this is bear market action. Remember, as a rule, the market’s open belongs to the amateurs, and the close to the professionals.  So you’d rather see the market gap DOWN on the open and close strong, not the opposite.

But, as usual, there were several stocks in the market totally ignoring the bear market investing background. Here’s one of them now…

Stock For Review

Our Stock For Review today is GROW – U.S. Global Investors, Inc.

GROW got lots of support today on its 50-day EMA, reversing 12.35% and forming a Bullish Harami. Trading volume was 194% above normal.

This stock may just help your portfolio “grow” in the near future!

Most Recent Double-Digit Percentage Gainers In One Day…

Here are a few of the DDPG’s since our last update:

None this time.

Product Of The Day

Frustrated by the bear market investing scenario right now? Use this “down time” wisely! Get ready for the inevitable market bounce - it could be huge! Single-day double-digit percentage returns are common in this environment.

Here are some tools to help you in this area:

Trading Mind Software! Get “mentally fit” for trading in the fastest time possible.

Read more about this incredible TradingMind Software!

Bear Market Investing Special!

Finally, I will do what I can personally to help you quickly “get up speed” with one of the most powerful – yet simple – investing and trading systems I’ve ever used. Be ready for the market bounce in 30 days.

Sign up for my Trade Your Way To Wealth Quick-Start E-Class right now, and I’ll knock off 500 bucks for the first ten students who enroll! Your success is guaranteed! If interested, click on the link below, and Tim will send you a special coupon code to sign you up immediately.

Click here to get your special coupon code to knock off $500 from the regular price!

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