Printer Friendly

eMail Article

June 23, 2009

Downside Action Continues...
by Mark McMillan

6/23/2009 12:02:00 PM

Introduction

We have seen the expected pull back, now what?

Like what you see?
If so, subscribe to "The McMillan Portfolio" and see what I'm investing in now!

Three more banks are shuttered

During the last week, three more banks were shuttered by state administrators. Once again, Georgia was among the states involved. Georgia now has 20% of all the banks in the United States closed in 2009 which is a dubious honor, at best.

Want to save $$?
Change to an annual subscription and save 20% off the monthly subscription price!

Market Outlook and Conclusion

On Friday, the TED Spread closed in the normal range only off a fraction of a point from a week earlier. Interbank lending markets are functioning normally.

The price of oil climbed to over seventy dollars per barrel (as determined by the near month futures) before settling at $69.55 last Friday.

As we suggested, a downside move made further progress last week and isn't yet done. Our model portfolio closed significant gains on six positions with anywhere from 75% - 95% gain on each position. These were in anticipation of the move downward which has picked up steam.

Looking at the major market indexes, the Dow and S&P-500 are trading below their 200-Day Moving Averages (DMAs), while the NASDAQ and NASDAQ-100 are still above theirs. The Semiconductor Index, which is a good barometer for the overall market, is moving down toward its 200-DMA and we suspect it will bounce if/when it hits that area.

Last week we stated, "It is now time to aggressively short the market, at least for a short/intermediate term trade. The bears are getting the upper hand and a resultant move could be larger than you would think, even in a single day." We saw some significant movement and there is a bit more yet to come. Monday's move actually put the major indexes into oversold conditions, but things can become more oversold.

We will reiterate what we stated last week, "You need to consider putting on some short/intermediate term short trades and should have already taken defensive action on your long positions. Follow what we do in our portfolio to make some profits on the downside and watch for us to add to our long-term portfolio when we call the next bottom."

You need to be a little less aggressive in adding to short positions here and watch our moves in the short/intermediate term portfolio as we will either attempt to enter short positions on a light volume move higher, or enter long positions when it appears a bottom is likely in.

Our closed positions have netted a Return on Investment (ROI) of 352% in our long term portfolio currently holds an average gain of 70% per closed position. Our unrealized gains on open positions are up more than 88% and we have ample cash to enter new long-term positions as well as short/intermediate term positions.

We believe that you can use this bull/bear clash to your advantage. To see how we will play this actively, you should consider a subscription to the McMillan Portfolio.

I hope you have enjoyed this weekly article. You may send comments to mark@stockbarometer.com. Please don't be shy in expressing your opinions of what you would like to see covered.

If you are receiving these alerts on a free trial, you have access to all of our previous articles and recommendations by clicking here. If you do not recall your username and/or password, please email us at customersupport@stockbarometer.com. If you are interested in continuing to receive our service after your free trial, please click here. A subscription to this service is only $8.95/month. To receive a 20% discount on the subscription price, an annual subscription is available by clicking here.

Mark McMillan
The McMillan Letter

Important Disclosure: Futures, Options, Mutual Fund, ETF and Equity trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in these markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to buy/sell Futures, Options, Mutual Funds or Equities. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this Web site. The past performance of any trading system or methodology is not necessarily indicative of future results.

Performance results are hypothetical. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as a lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.

Investment Research Group and all individuals affiliated with Investment Research Group assume no responsibilities for your trading and investment results.

Investment Research Group (IRG), as a publisher of a financial newsletter of general and regular circulation, cannot tender individual investment advice. Only a registered broker or investment adviser may advise you individually on the suitability and performance of your portfolio or specific investments.

In making any investment decision, you will rely solely on your own review and examination of the fact and records relating to such investments. Past performance of our recommendations is not an indication of future performance. The publisher shall have no liability of whatever nature in respect of any claims, damages, loss, or expense arising out of or in connection with the reliance by you on the contents of our Web site, any promotion, published material, alert, or update.

For a complete understanding of the risks associated with trading, see our Risk Disclosure.

Copyright © 2008-2009 Mark McMillan

Image rendition and html coding Copyright © 2000-2009 SafeHaven.com

« Opinions expressed at SafeHaven are those of the individual authors and do not necessarily represent the opinion of SafeHaven or its management. Articles are available via RSS/XML. Please visit RSSHelp for instructions. »