2009: A Great Outlook

I don’t know about you, but I already made up my mind that 2009 is going to be the first year of the best 20 years of my life. I have much to look forward to. I am hoping to have the great opportunity to teach others what I have learned over the last 17 years of investing and trading. Hopefully you, yes you reading this article, will join me in one of the presentations I will be giving live, at no cost to you. The next is in New York City! I haven’t been there in years!

This year promises to be much better than last year, and there should be great opportunities to build a brand new portfolio, and the markets should raise up again from the ashes of the 2008. You know what they say, as the first trading day of the year goes, so will go January, and as January goes, so will the year... Are we really willing to bet on that? Another great sign is that the major indices tested the lows of 2002-2003 and rebounded quite nicely, can we also rely on that as an indicator?

In reality, my Elliott wave counts indicate that we are currently in a countertrend wave 4 which should go test resistance at 1010, and then continue down to complete wave 5, at or near a new 10 year low. Perhaps this is all euphoria for the new administration, as we are all finally ready to pass the page of the Bush administration. However, the reality is yet to be seen in all of its complete and crude detail. After all, the markets have only been anticipating a continued recession and many have been tossing around the big “D” word (Depression) such as that of the 1930’s.

I don’t know about all that, I am not much of an economist. I long ago gave up on the Elliott wave as the guidance for my trading, although it did serve me well by keeping me away from owning stocks since 2000 (with the exception of one or two stocks). As you know, I don’t own stocks, but I have started nibbling at the S&P500. I have been buying small portions of the SPY every 15 days or so. I will continue to do so, even if the markets go down below the November lows. So long as the S&P is closer to a 5 year low than to a 5 year high, I will buy, very small amounts. I will begin to sell in small blocks, as soon as the markets reach a new 5 year high, but that may take a while, won’t it.

Regardless of what my “forecast” might be, I have the perfect approach for a market that is this bullish in the new year. We do not have to blindly trust the Elliott wave, or even the euphoria of the new year. We only need to let the markets tell us when it is time to enter selected stocks, as the implied volatility of options continues to decline. The fear will subside, but is it for real?

With the PCCRC we have nothing to fear but fear itself, as the previous “Depression-Surviving” president FDR would say. The upcoming earnings season will begin to reveal who are the winners and who are the losers. We need only see those stocks that exceed expectations and/or raise guidance going forward. They may be few and far between, but we need not rush into any other stocks. We can afford to be quite selective. If a stock goes up 10% after earnings, with increased guidance chances are such stock will continue to go up, but if we are wrong, or if the markets continue to pressure down winners along with the losers, we will be alright because such events will bring the I.V. even higher.

So be euphoric if you’d like, but just wait for the right time (earnings) for the winners to show their stuff, then you respond to the move with a PCCRC. There is no need to risk being wrong in advance of the earnings. And when it happens, enter your trade confidently, no matter what happens, the PCCRC will give you good returns.

Happy New Year to all... Thank goodness 2008 is behind us.