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Joshua "MauiTrader" Hayes is CEO, President and founder of Big Wave Trading Inc., a Maui, Hawaii-based stock market advisory service. Hayes is a well-respected stock trader who combines fundamentals, technicals, psychology and money management to trade professionally for his personal,... More
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  • Stocks Breakdown on Heavy Volume 18 comments

    From the get-go the market experienced heavy volume selling as the market reacts to the possibility of another economic downturn.  Yesterday the Federal Reserve said it would reinvest its mortgage holdings to US Treasuries.  Initially, the market cheered the move, but today clearly the market did not like what the central bank had to say.  Small caps once again fared the worse as the Russell 2000 closed down 4% on the day.  The Dow dropped more than 265 points finishing down 2.49%.  Today’s breakdown is a warning sign of things to come, especially when the move was accompanied with heavy volume.  Do not hope, this market is unforgiving and you should take the necessary precautions.


    The major indexes are now below their respective 200 day moving averages with the NASDAQ taking out its 50dma too.  Not only are they below them they broke down from the averages today.  Back in early July the market failed to complete the head and shoulders pattern, but now have gone onto form a second shoulder.  No one knows where we are heading from here, but judging by the amount of selling today any rebound here would have to be super powerful to get the bulls back in charge.

    Traders will certainly be focused in on tomorrow’s  jobless claims numbers.  The issue with jobless claims figures is they do not include those job seekers who have given up.  Once again, we would need a massive reversal on above average volume.  In the meantime, the major averages are hinting we have lower prices in store for the market.  Even today a few leaders were hit hard and even though they are still above their key moving averages the big volume selling can not be ignored.  If more leaders fall in the coming days it’ll mean this correction will go deeper.

    It appears the July 2010 lows is where the market wants to go, but the question will be like May and June will the market find support?  This question the market will answer in the coming days, but anticipating a turn will be like trying to catch a falling knife.  Many times in our market commentaries we have warned about trying to catch a falling knife as it is not a highly probable trade.  Majority of the time what is seemingly a cheap stock will get cheaper blowing up your trade.  Stick to the highly probable trades rather than plugging your nose and jumping into a stock trying to find a bottom.

    This market is in a correction and it will take us to find buyers supporting this market in big, big volume.  In the meantime, cash continues to be king until this market can find proper footing.

    Disclosure: Long EZCH PWER
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Comments (18)
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  • Bron
    , contributor
    Comments (177) | Send Message
    The short (inverse) ETFs are the place to be. I bought SDS, TZA, and FAZ all the way up, during this recent rally. I had no faith in it (the rally) at all. Last week, I also bought VXX and UUP as correlated plays. Also holding a substantially larger cash position than usual. Learned that lesson the hard way.


    The robots took it right to the edge, but they can't juice it forever. Sooner or later the piper has to be paid.


    This is all fine and dandy for us traders, but I feel sorry for the hard working Americans whose 401k's and such are about to be ravaged. Hopefully, they will raise cash as you and others advise, but too many rely on financial advisers who rarely do them well.
    11 Aug 2010, 10:12 PM Reply Like
  • Joshua Hayes
    , contributor
    Comments (359) | Send Message
    Author’s reply » I agree with you 100%. The hard working Americans will suffer more than the experienced trader in the stock market will. If this market cracks wide open, they will be telling them to buy all the way down.


    FAZ TZA are my favorite 3x inverse ETFs to use to play the bear side of the market.
    11 Aug 2010, 11:39 PM Reply Like
  • Bron
    , contributor
    Comments (177) | Send Message
    Yea...if these things (ETFs) had been around yea many years back, it would have been a lot easier. Especially for the small trader like me. And especially during bear markets.
    12 Aug 2010, 12:18 AM Reply Like
  • Wise Investor
    , contributor
    Comments (35) | Send Message
    Now the WHOLE market is breaking down? Really? You mean like how you were so adamantly sure PCLN was breaking down back 7 weeks ago? Well, I'm just curious and wondering how those short shares on PCLN are doing since your very "lame" article on June 26th? My longterm investment in PCLN increased more than 360k since that day and assisted in giving me a total return of 28% in my portfolio so far this year. Can you say the same with your BIG WAVE trading techniques? I don't think so. I hope your "followers" didn't tread in your footsteps by shorting PCLN, but then again if they did, they wouldn't be following you any more. We're getting near oversold conditions again for the WHOLE market, but feel free to short to your heart's content. That'll provide more upside to the bull camp when the market as a WHOLE turns again. I find that Bears' growling is much worse than the bite. You can take that to the bank!
    15 Aug 2010, 04:29 PM Reply Like
  • Joshua Hayes
    , contributor
    Comments (359) | Send Message
    Author’s reply » I like how you focus on ONE STOCK THAT I NEVER TOOK A POSITION IN. OMG, can you believe I got something wrong? I guess you are perfect. Awesome! Focus on that one stock and ignore ALL THE GAINS I have made since 1996. Brilliant! :)


    I can't control the market. All I can do is react. Since the July lows stocks were working higher. Guess what? We had no volume. Hence why I kept saying CASH IS KING. How many times did I say CASH IS KING during the most recent uptrend. 100x? Probably.


    Anyways, the best traders are very flexible. This market is in trouble now and until Tuesday-Friday I hate to tell you it, it was best to be ready for the market to rally.


    This is not a powerful trending market one way or the other since the flash crash. CASH IS KING. and NOW the short side is the side to pay attention to to make big money until the market starts to rally on heavier volume. I don't have opinions. I trade based on facts. You should learn how the greatest traders of ALL TIME traded and then maybe you will learn how to be "in the flow of the market." With low volume overall, there is no flow. This is the methodology I use. If you want to argue with it, that is your foolish decision. I have 15 years of full-time trading for a living under my belt using this methodology. What do you have?


    You can hate on me and my methodology all you want but facts are facts. This is the methodology I use:


    February 2, 2010 - Los Angeles, CA – Investor’s Business Daily’s CAN SLIM® Investing System was the top-performing investing strategy from 1998 through 2009, according to an independent, real-time study by the American Association of Individual Investors (AAII). The study – which tracked over 50 leading investing methods through all the stock market’s ups and downs each month for the past 12 years, including the recent financial crisis – found the CAN SLIM system gained 2,763.3%, compared to a 4.9% gain for the S&P 500 over the same period; an average of 35.3% a year versus 3.3% a year for the S&P 500.
    16 Aug 2010, 02:56 PM Reply Like
  • Market Speculator
    , contributor
    Comments (46) | Send Message
    I guess CREE and AAPL are fairing well.
    16 Aug 2010, 03:35 PM Reply Like
  • Wise Investor
    , contributor
    Comments (35) | Send Message
    Never took a position on PCLN? Riiiiiiiiiight. Now tell us your version of the story about Goldilocks and the 3 little bears. So essentially what you're telling potential readers about that "very lame" said article you wrote regarding PCLN on June 26th is that you had no interest and no position on it? So you were just breaking wind trying to pressure shares downward because you had nothing better to do and oh yes you had no position in the stock? Nice try. No, actually a sucky try. Everyone does something for a purpose and you obviously wanted PCLN shares to spiral downwards. Your intent was clear and concise. Your assertion was so assured that it would continue its descent that you wanted shareholders to keep unloading the stock (so you can benefit from it). Anyone with reading comprehension could see what your motives were and trying to backpeddle that fact didn't work then and it doesn't work now. Too bad for you and other shorters on PCLN that it ramped upwards with increasing volume purging through all moving averages returning to extremely bullish form. I hope you lost a ton. I'm sure it's not your first mistake either and no I'm not perfect either. Isn't that awesome??? 10% of my portfolio holdings are losing stocks, but at least I still believe in the long term prospects of good companies and don't go shorting them hoping they fail. I don't "BET" on a company to lose. I only place buys on companies that I believe will appreciate in the long term, but you and others such as yourself have made that type of return hard to come by nowadays. Oh boy! The reason the market is in such a funk these days is due to mercurial speculating traders such as yourself. You've essentially driven most of the long time investors out of the market altogether due to your high frequency short and cover trading. Notwithstanding your trading "techniques" you've exercised the past decade, which have nothing whatsoever to do with the issue we're discussing, your calculations and chartology blew up in your face tenfold this time. Perhaps you should initiate a short position on PCLN now since it's gone up more than 100 points since your article. You may actually be riiiiiiiiiiight this time. I hate bears and what's worse is a lying bear that has bad market breadth!!!
    16 Aug 2010, 04:13 PM Reply Like
  • Joshua Hayes
    , contributor
    Comments (359) | Send Message
    Author’s reply » Oh wow man. I never took a position in PCLN on the short side. Ask any of my subscribers. You have a screw loose buddy. Great luck.
    17 Aug 2010, 12:14 AM Reply Like
  • Joshua Hayes
    , contributor
    Comments (359) | Send Message
    Author’s reply » FROM MY ARTICLE:


    What is worse is that the downtrending 50 day moving average is inching its way closer to the 200 day moving average and appears to be only a few days away from a very important technical pattern that is historically very bearish for stocks after such an uptrend--the death cross. If the 50 day moving average closes below the 200 day moving average and the stock price meets at these key resistance lines and then reverses on higher volume, I will definitely be looking to get short despite the strong fundamentals.


    For those of you who are not familiar with my investing, I just want you to know that PCLN was a long position in my IRA from July 2009 to May 2010 when it was in an uptrend. In the stock market the trend is your friend, when you know how to use the trends, and the trend for this stock is now definitely down.


    17 Aug 2010, 12:15 AM Reply Like
  • Joshua Hayes
    , contributor
    Comments (359) | Send Message
    Author’s reply » Wow, dude. I just read your whole rant and I am completely sure of one thing: You are insane. You know nothing about my methodology, how I invest for a living, or anything about the CANSLIM methodology.


    You seriously need psychological help if you think my investing methodology is what is wrong with the market.


    Wow man. You are seriously insane. Great luck in your insanity, buddy.
    17 Aug 2010, 12:19 AM Reply Like
  • Joshua Hayes
    , contributor
    Comments (359) | Send Message
    Author’s reply » You need to go to my website and study my past big winners that I have held. On the homepage scroll down to the bottom and begin a lesson in humble pie. You think you know a lot about the market but your rant proves you know nothing and just want to appear smart. I am sorry but when the market is trending up I will begin to buy stocks again. You can continue to hold PCLN all the way down when it finally stops rising. You are clearly in love with this stock THAT I OWNED IN 2009 and will not be able to ever sell it. You will be like those that bought MSFT INTC and CSCO post-2000.


    Best of 1999


    * CAMP 8-16-99 to 3-9-00
    * MGIC 7-1-99 to 12-2-99
    * LMLP 11-4-99 to 3-27-00
    * WEDC 12-22-99 to 3-27-00
    * SSTI 6-28-99 to 5-1-00
    * NEWP 12-16-99 to 3-9-00


    Best of 2000


    * MWAV 9-11-00 to 11-6-00
    * TMR 8-16-00 to 1-16-01
    * CRUS 8-2-00 to 10-23-00
    * CERN 7-31-00 to 10-31-00
    * ORI 7-25-00 to 12-28-00
    * EXTR 8-3-00 to 10-16-00


    Best of 2001


    * GNSS 10-3-01 to 1-9-02
    * CACI (now CAI) 4-4-01 to 6-13-01 58%
    * TTWO 5-9-01 to 6-7-01
    * PETM 5-29-01 to 6-5-02
    * SLXP 1-24-01 to 6-29-01
    * FIC 4-5-2001 to 7-16-2001


    Best of 2002


    * SSYS 12-17-02 to 10-14-03
    * NTES 7-30-02/10-29-02 to 10-13-03
    * USNA 11-18/11-19-02 to 11-5-03
    * SINA 10-28-02 to 1-26-04
    * SOHU 10-11-02/3-26-03 to 7-14-03
    * RKT 1-23-02 to 4-18-02


    Best of 2003


    * NIHD 1-6-03 to 1-26-04
    * NANO 9-4-03 to 1-13-04
    * ECGI 7-7-03 to 9-22-03
    * NENG 5-23-03 to 12-2-03
    * HIL (now HILL) 3-7-03 to 9-2-03
    * CAMT 9-8-03 to 2-12-04


    Best of 2004


    * TZOO 5-14-04 to 12-27-04
    * NAVR 4-14-04 to 1-11-05
    * NVTL 1-5-04 to 4-12-04
    * ANTP 12-6-04 to 1-3-05
    * GPIC 10-18-04 to 11-29-04
    * AAPL 8-26-04 to 1-13-06


    Best of 2005


    * ARD 7-29-05 to 4-13-06
    * GEOI 5-27-05 to 6-15-05
    * BCON 7-12-05 to 8-23-05
    * TSCM 12-1-05 to 7-6-06
    * BOOM 2-15-05 to 4-26-06
    * GIGM 12-19-05 to 5-11-06


    Best of 2006


    * MA 8-2-06 to 5-29-08
    * KNOL 1-12-06 to 5-4-07
    * MAMA (now CNIC) 12-8-06 to 12-21-06
    * PTT (now VCGH) 9-26-06/11-16-06/11-17... to 2-23-07
    * HRZ 9-27-06 to 7-19-07


    Best of 2007


    * SHOO 8-7-07 to 1-14-08
    * LVS 11-12-07 to 4-21-08
    * DRYS 8-22-07 to 10-29-07
    * VDSI 1-4-07 to 10-15-07
    * MTL 9-27-07 to 12-26-07
    * FSLR 5-22-07 to 12-26-07


    Best of 2008


    * GOOG 1-4-08 to 3-10-08
    * CBEY 1-7-08 to 3-10-08
    * SIGM 2-19-08 to 4-15-08
    * GRMN 1-8-08 to 4-30-08
    * XCO 5-30-08 to 7-1-08
    * DGLY 4-16-08 to 5-14-08
    17 Aug 2010, 12:23 AM Reply Like
  • Wise Investor
    , contributor
    Comments (35) | Send Message
    First off, your reading comprehension is limited at best. Au contraire, my last post was not a rant, but a succinct and concise exposure critiquing your fallable methodology of stock chartology. According to your assertion of how Priceline's 50 day MA had trended below the 200 day MA showing it had entered a "death cross" fall, you had to have taken a position on it or else you did "NOT" follow your own methodology. Secondly, I am never in "love" with the equity I own. I buy stocks for the assumption of a long position and I hold onto said position as long as possible unless some extraordinary event occurs that make me change my mind on the long side and then I sell partial or full shares in said equity. If you read my original post on June 26th, I disclosed that I sold some of my shares in PCLN accumulated at 68 and 82 dollars at the hit prices of 258, 249.75, and 228.48. I am still holding long 3600 shares bought at 48 and 54 hit prices. It's funny that you feel the need to validate yourself by posting past positions in previous years that you "supposedly" held in order to vindicate your misaligned view on PCLN. Just admit you were wrong on PCLN and move on. If you had held your positions LONG on PCLN as I did instead of moving in and out of hundreds of other positions, you would've garnered the huge gain in share price. Now who's looking insane with a screw loose? I'm ahead by more than 360k (just in PCLN) since your article while you've been twiddling your thumbs trying to figure out where to scrounge your next short position. I'm sure I've made a tremendous amount more holding LONG positions in just PCLN BAC CRM NFLX ESRX & FFIV than you've done in several hundred of your short trades, but that's besides the point. The point of this discussion is that your downside position on PCLN was invaribly wrong and irregardless whether or not you took a short position on it, you missed out on a possible LONG side gain of near 130 points due to your chartology error. Hurts doesn't it? Better luck next time. Lastly, my "sanity" keeps me grounded and I "invest" not "short" equity I believe in the long term and it's done very well for me save 11 stocks in my 82 stock portfolio that are below what I bought them. I'm up 29.8% for the year in a market that's down YTD, so chew on that ....... buddy!
    17 Aug 2010, 05:04 AM Reply Like
  • Wise Investor
    , contributor
    Comments (35) | Send Message
    Happy Days!!!!!!!!!!!!!!!!!! Make that 9 losing stocks in my portfolio of 82 stocks! POT and MOS are now above what I bought them for and POT is trading 30 points above my averaged stock buy prices of 112.82. Are you short POT too? Too bad so sad if you are this morning. See what holding LoooooooooooonG does for a Wise Investor? Good things come to those who wait! Oh and I sold 800 of my 1800 shares in POT @ 145.68 pre-market this morning. After all, I am not in love with any of my stocks and know when to take some profit and play with house money. PCLN is up near another 24k for me too this morning at a new 10 year high. Still wanna short it now? Sanity in an insane market by playing LooooooooonG is definitely the way to play! Try to put that in your short wave radar. LOL!
    17 Aug 2010, 09:57 AM Reply Like
  • Joshua Hayes
    , contributor
    Comments (359) | Send Message
    Author’s reply » Wow man you are crazy. You clearly do not ever check my site. You really have lost your mind. I refuse to communicate with someone as crazy as you anymore. Seriously, you are very scary. Please leave me alone.
    17 Aug 2010, 01:54 PM Reply Like
  • Wise Investor
    , contributor
    Comments (35) | Send Message
    Of course I'll leave you alone and I'm sure all your so called "followers" that apply to your "Cash is King" principle are leaving you alone also or at least laughing at you. You're short equity and haven't bought anything on the long side and the market's ramping up, just like I called it the other day. How's that cash of yours doing today? Earning a respectable .50 percent? I'm up over 40k in my PCLN shares alone today and my portfolio is up 34.6% YTD while you're sitting on your cash doing "nothing" with your shorts exploding in your face. Now go sit in the corner and cry about your short positions. Is POT one of them? LOL!!!!!!!!!!!!!!!!!!!!!
    17 Aug 2010, 02:10 PM Reply Like
  • Wise Investor
    , contributor
    Comments (35) | Send Message
    That 134 point run up on PCLN sure hurts doesn't it? LOL!!!!!!!!!!!!!!
    17 Aug 2010, 02:17 PM Reply Like
  • Joshua Hayes
    , contributor
    Comments (359) | Send Message
    Author’s reply » Market_Maven: Initiated short on PCLN @ 306.50


    Here go freakout on this guy for a while. Maybe he will play your game.
    17 Aug 2010, 02:43 PM Reply Like
  • Wise Investor
    , contributor
    Comments (35) | Send Message
    If you don't want any further communication from me, please stop responding to "my" posts or else I will be cordial and respond back to you accordingly. Instead of proper communication, you just brush off everything I've stated as being a "rant", "crazy", "insane" etc., while you're simply just plain upset or embarrassed that your calls on both PCLN and this most recent article you written about the market tanking back to July lows have both blown up in your face. I've made both calls correctly and I'm no market guru ( LOL!!! ) like you. I just see things half full instead of half empty like you seem to do and I've done inordinately well going LONG on all my positions save 9 of them at this point. I feel sorry for the investors that folllowed your advice by shorting PCLN back then due to your post (June 26th) or not buying PCLN when it was absolutely a BUYING opportunity as I had stated in response to your article. If you don't want differing responses to anything that you put out in print, simply don't offer your opinions. You will get differing opinions no matter what your approach or technique might be. Lastly, as far as Market_Maven going short on PCLN at this juncture, I actually agree with this user although I don't believe in short selling (and have never shorted any stock), but after such a humongous run on PCLN, this user is absolutely validated in trying to make a short term gain on it, but I wouldn't sit on it longer than a few days or it'll ramp up to the next level. I don't go looking for an encounter, but you invite tete a tete based on your articles. Don't like the opposing side, then don't print your opinions. PCLN is down 2 points from Market Maven's short position so he's got some beacoup bucks, but I'm still up 36k for the day on it woohoo!!!! LOL!!!!!!!!!!!!!!!!!!!
    17 Aug 2010, 03:15 PM Reply Like
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