I have a special place in my heart for bottom callers. I feel their pain even though I have never in my nearly 13 years of investing tried this game for more than a small moment. I have had mixed results using that methodology vs. the methodology that helped make me a lot of money in 1999, 2003-2006. 2007 was a grind but what a lot of people don’t seem to understand is that this bear market of 2008 is not CURRENTLY in a bullish uptrend.

Some people have made comments that the market is in a “FTD” since the Nassy flashed a signal not too long ago. First of all, the volume that day was weak. Second of all, the price gain was weak. Third, the price did not retake the 50 day moving average which history has shown greatly increases the odds of a bull market starting. In a bear market the sad fact is that there will be a lot of bear market rallies that flash a FTD that do not and will not work. It happens. For those that understand and get this it is pretty easy and comprehends pretty well: NOT ALL FOLLOW THROUGH DAYS WILL SIGNAL A NEW BULL MARKET BUT NO NEW BULL MARKET HAS EVER!!!!!!! STARTED WITHOUT A FOLLOW THROUGH DAY.

So that signals that you will have FALSE follow-through days but that also means that eventually one of these Follow-through days will unleash a powerful rally where good money can be made. To help increase the chances that it works, usually the index needs to be up over 3% and volume needs to be much higher up to 25% higher than the day before. And hopefully the previous selloff came on lower volume. This most recent selloff came on heavier volume so it definitely does not meet the requirement of a quiet selloff.

Another problem is the Nasdaq and SP 600 rallies are on LOWER VOLUME compared to the selloff and the IBD indexes are lagging. In a true blue bull market the Nassy and SP 600 will lead on HIGHER VOLUME and the IBD indexes will lead the market higher on higher volume. None of this is the case. The fact the IBD indexes are lagging is proof in and of itself that this is a bear market rally.

That is why all the breakouts fail. That is unless they are basically near-perfect like XSI which I recommended in the chat room as a stock I wanted to add to a lot. I did not add a lot to my total holdings and instead made it a regular larger buy but nothing huge. Whoops. That 25% in one day gain could have completely turned around my whole year into a GREAT YEAR. However, it is simply to risky to risk too much money in such a low volume stock in such a rough market. Newbies will never understand this. But market professionals will.

This market is too difficult for newbies. You are failing because you are trying to trade a bear market like a bull. Buying stocks like URBN, TRLG, and MPWR “IN BULK” are not wise moves when 3 out of 4 stocks are falling.

I will ask everyone one more time. Where were you in 2002 October when this started? Where were you in 2003? 2004? 2005? 2006 when the last HUGE gains were coming to an end? Where were you in 2007 where CANSLIM stocks did well compared to the market? You now join the market and expect to make money? Wow. You remind me of all those that missed the bull market from 1994 to 1999. All of a sudden everyone shows up at the top in January February and March 2000. I was wondering where all these people were the last five years. The truth is that the public always shows up at the top.

This bear could last two years which is historically how long bear markets last when they go past the six month mark. Get ready for it and remember CASH IS KING during that time. I can go long XSI and make a lot of money in beautiful chart patterns but 99% can not find stocks and read charts like me so I don’t advise investing like I do. CASH IS KING and be careful out there. Learn to save money in rough markets so that you have more to use when the charts are REAL GREEN and REAL PRETTY with a market trending higher on higher volume. ALOOOOOHA!!

Last 5 posts by Joshua Hayes

• Following Through on Friday's Gains Stocks Stage Another Rally on Strong Volume - June 2nd, 2009
• Small Cap and IBD Indexes Lag the Major Indexes with Volume Higher Across the Board - May 29th, 2009
• Are Items That Fill Up Your House too Expensive? Then Rent Them at Aarons Inc. - May 27th, 2009
• Finally We Have The IBD Indexes Leading The Way As Stocks Rally On Heavier Trade - May 27th, 2009
• Ending in Mixed Fashion Stocks Fail to Close Out With Gains Seen Earlier in the Session; IBD Indexes Take the Lead - May 20th, 2009