WASHOUTS PART 2

WASHOUTS PART 2

By Gary Kaltbaum

We know…we are writing again to you!

We do not like micro-managing markets. Our interest lies more with the big picture. But earlier today, on purpose, we wrote to you about the potential for washouts. We explained what it is and what it means. It is early. Markets are fluid. Markets are insane. We still have casino hour to come.

But we are letting you know that conditions are ripe to where washouts can occur. As we told you, washouts occur on some of the worst down days and after large drops have already occurred…and where the masses have thrown in the towel. We are actually getting calls and emails asking about SHORTING STOCKS. Yes…shorting stocks AFTER 2000 points down. Keep in mind, if a washout does occur, it just stops the bleeding for now as this is a bear market. It is no longer a bull market. Keep in mind, bear market rallies are vicious and stronger than bull market rallies.

We are seeing very extreme numbers today combined with some really good positive divergences. Both the NASDAQ-types as well as the small caps are completely outperforming the Dow and the biggies…a big change from the recent past.

Again, casino hour to come. We can just as easily sell off. Just letting you know conditions are ripe after 2000 points on the downside.

Markets do not go straight down. OK maybe they do.