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Mr Dow Hits Hard…Well, So Do I 
- Consider the price action in the Dow since Tuesday. Then, as you read thru this, think about my mindset right now, and contrast that with the bailed and failed Dow short carcasses that are, sadly, spread throughout the gold and hedge fund communities.
- When I start a campaign in a market, I'm there for: Victory. I play to KILL. I began my campaign to short the Dow on Tuesday July 21. Feel free to write that down. The vertical upside action you saw in the Dow on Thursday July 23 is: new long Dow positions being taken and badly underwater Dow short positions being thrown in the garbage. Markets move up and down in price… on loss-booking by the bulk of those who are closing their positions.
- I don't book losses. Not tiny ones and not big ones. What I book are: profits. If the Dow rises 2000 points from here I'll be shorting it all the way up. In larger and larger size. Picture a cage fight. I've just entered and I'm ready for a 100 round bare knuckle fight. I look around the Dow cage. All I see are wiped out Dow Shorters. Mangled and financially dead. They should have TRAINED before entering the Dow cage. Because I've professionally allocated my risk capital with respect to "King" Price, my odds of defeat are microscopic. Consider the following points:
- IF you are considering shorting the Dow as a TRADE, I think you need to be prepared to short it for a THOUSAND POINTS higher. Maybe 2000. I'm not interested in picking the top. I'm interested in selling INTO strength.
- Look out your Dow window. Do you see strength or weakness? I see strength. So, as a professional, I'm a seller. Where the Dow peaks before falling will be: Where I place my largest short position. Looking at the one year chart of the Dow, the RSI is getting very overbought. Extend the periods to 2 years and it is even more so!
- We've just come thru one of the biggest periods of insider selling on record. Not THE biggest. But a good amount. A fact now swept under the rug by the Dow superbulls.
- Do you see any talk from the gold analysts about shorting the Dow now? No. Except for Team Pinocchio who claim they've called every market top and bottom ever, most are quiet. They tried and tried to call a top. And failed and failed. You probably know this well, having acted… on their words.
- When you see the Dow Bears disappear as price moves badly against their predictions, you can be confident they are dealing with severe margin calls, and are just generally demoralized. If you want to fight the bankers in the stock market, you need to show up with more than an ultra-leveraged popgun with one cork in it. I'll show you how to do that.
- Many of you remember when I said almost exactly at Dow 6500 that if that level failed and stayed failed, banks and mkts could close, but I was buying the Dow anyways. I bought at 8000 down to 6500 in a pyramid. That's 1500 points of being "wrong". I then booked a truckload of profits as the Dow soared. If the Dow had broke 6500, if it had fallen to Dow 100, I'd be on the buy ALL THE WAY DOWN.
- I don't like openly shorting the Dow or any major mkt. I prefer the bear funds, so you can't lose more than you invest. We'll see how it goes, but I have no problem being "wrong" for 2000 points. If today is the high, well, so be it. I guess I'm a MINI winner if that happens.
- Don't invest (risk) anywhere near in a Dow short program what you would put into a Dow long pyramid. It's a trade and a gamble. And no more. When I see people in the gold community talking about shorting the Dow like you are buying gold bullion, I get an ILL feeling. There isn't a MANDATE to short the Dow (and bonds) if you believe in gold as money.
- Can you be long and short the Dow at the same time? Of course you can. I am. And I'm happy, and getting happier. I have a rule of thumb of 70% long, 30% short max. For all the major mkts. Meaning any campaign on the short side should be no more than about 1/3 of your risk capital for that mkt. For most of the major mkts, the bankers carry both long and short positions at all times. Why? Because it makes money.
- If you "take a shot" at shorting a major mkt at one price point, well, you're on your own… as mentioned above, I still have my Dow core LONG positions I put together with my Pyramid Generator (Pgen) between Dow 8000 and 6500. All are at a profit, some at very fat profits. So if the Dow soars against my shorts, have I lost money? NO.
- Keep it simple. Don't get into spreading your capital over a bunch of companies that some tipster knows will collapse.
- If you want to short the Dow, GET SERIOUS. Throw your top calling fantasies out the window and come to war.
- I don't want to see you bust out on this. It's pathetic enough that the gold community tries to beat the bankers in the leveraged gold game, but to take them on in the SP500 futures market on max leverage? If you can't short thru a thousand Dow point RISE, you shouldn't even consider playing the game. 2000 or 3000 points is more like it.
- For those of you who make the decision to tackle the Dow shortside, remember, I don't take prisoners. You don't need to either. You've got a battallion of financial soldiers and weaponry. I'll show you how to Use Them. And use them professionally. If you want to be a professional Dow investor, you need to approach the Dow as a soldier. Imagine you get the death penalty if you don't win this war.
- That is how you have to look it. My face changes when it's market battle time. Most people enter their market trades when they feel smug. A catastrophic error. Likewise, if you act like Sour Grapes and short the Dow because you "demand" it falls, or because it is "overvalued", you will fail.
- This is about YOU. NOT about the Dow. Think about that.
- When you approach the market order screen losing shouldn't be an option. Smile when the Dow falls. Not now. After the Dow has moved against us 5 or 10 times, and we're in the heat of the battle, that is the normal course of events as you begin placing your orders.
- Your mission is not to call the top in the Dow. Your mission is to make money for YOU.
- Think very hard about what you did and felt at Gold 905 two weeks ago. That is the Dow. Right Now. Keep in mind that I'm not saying 9000 is the top.
- What I AM saying is the Dow Short Team just BUSTED OUT this week into Dow 9000 strength. It's CARCASS CITY. Just like the gold long team busted out into Gold 905 weakness. Some grew despondent. Some just plain blew up. Some ran away. Bottom line: They SOLD OUT and FAILED. Gold falls on loss-taking by existing longs and new shorts being put on. Gold rises on loss taking by shorts and new longs being put on. The loss taking is done by the Speculators. After blowing it into Gold 905, many went SHORT GOLD. Way to go! Now at 960 they don't have a clue what to do. Most shorts are pretending they are out. "I'm strategically waiting for a low risk long entry point." I say: "Sure you are. Why is all that sweat pouring down your face?" I don't believe any of their stories. I say: Any more UP in gold and they are FRIED. Most are already fried, and now they are terrified gold is going to go vertical with them standing there with NONE or naked short!
- What you have just seen as the bankers play with their gold yo-yo, will be repeated. As they try out their new Dow yo-yo.
- If you want to make money shorting the Dow, the time is NOW. Enter the Dow cage. Ready for a 100 round fight. As I did with gold into 905.
- Look at the Dow chart above. The daily RSI is the most overbought in a year! Price has extended way thru the upper keltner supply line. The left shoulder of the warped head and shoulders bottom is vastly bigger than the right shoulder. There's a lot of resistance right here at 9100 and more at Dow 9700. I'm very comfortable shorting into any and all strength up to 9700. And higher if need be. The Dow may well be making a head and shoulders bottom. But there's a lot more work than needs to be done to create a balanced right shoulder. Some of that "work" could involve a two thousand point move. And it could be: DOWN.
- While the daily Dow chart is getting very overdone, the weekly chart is sort of "midships". The monthly chart shows many major technical oscillators flashing monster buy signals. The PROBLEM is that the Dow can move around 1000-2000 points without changing the picture on the monthly chart by much. Dow Theory has given a substantial buy signal. But the rule with Dow theory is you buy on the NEXT substantial correction AFTER the buy signal. Not the day it flashes!
- Mr. Dow isn't exactly a lightweight opponent, to put it mildly. So using lightweight tactics won't work, even if you have heavyweight analysis. Mr. Dow hits hard. I hit hard too. And I'm beating on Mr. Dow right now. I'm going to beat him into the ground. I can't wait for next week. Bring it on! Suggestion: please read the sign on the Dow cage before climbing in.
- It says: "100 round bare knuckle cage fight". Not: "Disneyland Dow Video Game".
Special Offer for Gold-Eagle readers: Send me an email and I'll rush you my double barrelled Dow Shotgun Report. The DSR. With details on how to carry long and short positions in the Dow at the same time, just like the bankers, and engage in profit booking on a regular basis, just like they do! I'll include exact buy and sell points (twenty of them!) for a hypothetical $100,000 of Dow risk capital. And give you the opportunity to customize the risk and reward to fit your personal profile! I've turned many amateur investors into professional investors. Now it's your turn!
I receive a large volume of emails daily.
Please use freereport2@bell.net to request a free report.
For questions, my personal email: s2p3t4@sympatico.ca Thanks!
Thank-you
Stewart Thomson
Graceland Updates
Stewart Thomson / 1276 Lakeview Drive / Oakville, Ontario L6H 2M8 Canada
Stewart Thomson is a retired Merrill Lynch broker. Stewart writes the Graceland Updates daily between 4am-7am. They are sent out around 8am-9am. The newsletter is attractively priced and the format is a unique numbered point form. Giving clarity of each point and saving valuable reading time.
Risks, Disclaimers, Legal
Stewart Thomson is no longer an investment advisor. The information provided by Stewart and Graceland Updates is for general information purposes only. Before taking any action on any investment, it is imperative that you consult with multiple properly licensed, experienced and qualified investment advisors and get numerous opinions before taking any action. Your minimum risk on any investment in the world is: 100% loss of all your money. You may be taking or preparing to take leveraged positions in investments and not know it, exposing yourself to unlimited risks. This is highly concerning if you are an investor in any derivatives products. There is an approx $700 trillion OTC Derivatives Iceberg with a tiny portion written off officially. The bottom line:
Are You Prepared?
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