Well, I keep preaching and warning about how fast you can get slammed, job number 1 is to guard against loses, looking for profits is job number 2, now you see why.

As traders, we need to self examine all the time, in order to stay sharp. So, what went wrong?

The set ups all happened. INTC delivered, AAPL delivered, inflation and housing data came in good, charts looked fantastic, etc.

One thing I forgot, the Market is the Boss. The reports came in, the market decided they were not good enough, I stayed bullish anyway, and now we are not in the drivers seat.

It is worth repeating a thousand times, the Market is the Boss. When INTC delivered, and the market took it down, we should have moved out of our semi positions immediately.

The anticipated reaction didn’t happen, thus the warning flag was issued, yet I chose to ignore it.

Moving forward, I don’t plan on compounding one mistake with another.

I think we will get a second chance on VSEA, but we will have to hold it for a little time.

Looking for an exit in TRMB close to or above our buy price tomorrow. If we don’t get it, will take that one into the weekend as well.

Lesson learned, Market wins, Jon Anthony got spanked and is currently grounded.

Put it behind us, and lets move on. We have a lot of money to make.—Jon

Don’t panic, selling is over done. We got nailed by a famous somebody who told everyone this morning on TV to sell tech, in particular Semi Conductors.

This is the types of bias we try to avoid, but he didn’t call me last night and give advance warning.

The stocks are not going to zero and the world is not ending.

Let the day play out, then we will look at it again. --Jon

Intel and Apple both delivered, just as we were looking for, but so far, the market doesn’t care. It’s to that point I want to give a little trading insight.

The stock market is a Jekyll and Hyde. When you are trading, its important to know which person the market, is week to week.

How you know is to look for the reaction to news and earnings.

Sometimes the market thinks bad news is good news, and good news is fantastic news.
The dark side of the market says good news is bad news, and bad news is the end of the world. So, what market are we in today?

JP Morgan blows out earnings, stock up 4 cents. INTC and AAPL deliver, stocks drop. RACK misses, stock gets a 40% hair cut.

Its clear the sell side of the market is getting the upper hand and thus caution in our trades is a must.

We need to move our bias to a cautious, pop fly sell stance.

We trade any market, thus we are never bearish. We just tend to be in cash a little more, and tend to sell faster in the negative markets.

For tomorrow, I am a little more bullish than you might imagine. Keep in mind, if we lose some, we will only be giving back a little of what we made last week, which was very good week. As you know, we are not about losing anything, but right now we are backed into a corner, with little options.

On TV tonight, the sell side folks are out in force telling you to sell, so I tend to lean the other way when I see that.

Apple did 2xs its normal volume today, which may say its sold out for now. I think that money might be put back to work in other areas, and AAPL could even finish higher by Friday.

If you were conservative and sold before the close today, which a lot of folks tell me they did, stay in cash until the weekend so we can see what direction we need to go next.

If you decided to be aggressive, then stick with that. Let the morning play out and see if we get a pop that we can sell into later in the day, or if things are green, take them on into Friday.

I will check back with you tomorrow—Jon

Even though I don’t like the market reaction so far to INTC and other stocks that have reported, I am long into the close.

This puts us at risk, and takes us out of the drivers seat, but I am willing to take the chance.

Conservative traders should close out their positions. Will update tonight after Apple earnings report.

--Jon

Once again the lack of 5 trading days has made our job a little tougher. If they could have taken tech down on Monday, could have really flushed out the weak hands and given us much better setups. Since that option wasn’t available, the flush of weak hands today was not enough.

Because of this, the strong upside I was looking for probably won't materialize.

Looks like INTC came through as expected, beating numbers and guiding higher for next quarter. While INTC no longer maters like it used to in the 90s, a bad earnings report and lower guidance would have been bad for tech.

Now we just need AAPL to come through, and we could be moving higher into Friday.
Given the nice pop in Apple today, I wonder what the street knows that we don’t yet.

Looks like food stocks got the love today from traders as shares like BG, POPEZ, MON, all had monster moves.
Expecting that money to come out of those stocks and rotate into our plays starting tomorrow.

Any disappointment from AAPL is a strong sell signal.--Jon

Looking for markets to turn higher before the close as traders try to get in prior to INTC earnings release.

I feel like INTC expectations are low. With the release of Vista, Mac sales ramping up, and taking market share from AMD, I think INTC will deliver the numbers we need to move the markets higher.

For now, our bias remains positive.

--Jon

At the time of this writing, it is my belief the coming trading week will prove to be a profitable one for those on the buy side of the market.

Many experts are concerned that the market is over bought and due for at least a 7-10% correction. The indicators that I look at do not show this to be the case, but we are getting closer. Usually, some of your best gains will be near the top of the market.
Since we are traders, not long term investors, every situation sets up well for our hit and run style.

This week, we will get earnings from big players such as C, Apple, IBM, Intel, and GE. Also we will get Inflation data, CPI, Fed Beige Book, and the Fed Chairman himself speaking on Thursday.

The bears will for sure try to latch on to some of this data and make a case for the down side. However, for now, our trading bias will be to the upside until further notice.

I think INTC for example, will beat estimates and could even raise guidance going forward. Same for Apple, whom I also believe Wall Street estimates are too low and the new I-Phone profits are not priced in.
Intel powers Apples Macs and you know the I-Phone will probably sell out the first week its available.

If I am wrong about these two earnings reports, our bias immediately switches to the down side, and we will move into cash until the dust settles.

---Jon

All long positions have been stopped out in accordance with the next number rule. Some stocks continued higher after we sold, but your trading rules will save you from taking big loses in the long run.

Once again we had another solid week of upside gains, with no down side, that’s what's its all about!

I won't be available Friday, so I am in cash until next week.

I will have next weeks target list of stocks to members by Sunday night. Sign Up to get added to our mailing list. Keep in mind that list is subject to change.

Thanks again for trading with us, have great weekend!

--Jon

We have some solid gains that require protecting. Its too much work to get the gains, to just sit back and watch them fade away.

We expect and will only except green arrows.
If the stocks are down 1 cent tomorrow, we are gone.

Currently we are up $440 for the week, far exceeding our weekly goal of $100, assuming 100 shares.

Hopefully tomorrow will be icing on the cake and the rally will continue.

The ASIA sell off has stopped with stocks currently in the green. Might be some bounce back plays there for tomorrow.

We do appreciate you trading with us. We will do our very best for you. --Jon

It is a shock I know but looks like the pattern of no follow through will continue today.
Although we have some promising set ups, if you have traded for any length of time you learn to sell first and ask questions later.

With the entire world selling every sector, its best to move back into cash and wait for another day.

If VSEA opens higher and runs, we of course wont fight that, but I am expecting to be back into cash this morning right away.

Use $46 level as your guide. Ok if stock goes a little below early, can it retake $46 after the morning decline. If so, we are going higher, if it can not hold $46, move into cash.

Our portfolio of stocks is producing winners, even in this time when a lot of investors are getting slammed.

For example HANS made nice move yesterday, giving us plenty of gain possibility. I passed on the stock because of shareholder lawsuit, which was a mistake.

The portfolio will continue to rotate a bunch until the dust settles, so please don’t trade from the prior weeks list. Always be trading from the current list that will go out every weekend.

This is all part of the game, so don’t get frustrated at the lack of big wins. There will be plenty of them to come very soon.

We are performing very well against the market and other services that are simply just losing money.

Stick with it and do not get bearish. This is just part of the game.

Bottom line; the money coming out of oil and commodities has to go somewhere. For now, seems nobody can make up their mind, but I am certain the money will be put back to work in stocks, verses other investments.

Having said that, I would welcome an nice, sharp, sell off to clear out the weak hands. –Jon

We missed entry of SNE by 5 cents, even with a very lose trigger range. Ughh!!!!!! We were successful entering VSEA, now we just need a push from the market.

The market continued its up/down ways today, however, I am seeing some follow through in some sectors.

Watch the morning futures, to see if we have the wind at our back. If so, VSEA could give us a nice ride the rest of the week. Use next number rule as sell signal.

I have been asked to put out prior to the market open Monday, the play list, or list of stocks I am trading for the week, every week. So starting this weekend, you will have the list of stocks, narrowed down from 8000 stocks; to a workable list of stocks that I think will provide us with some upside, and at the same time limiting our downside risk if our entry is not spot on.

I keep pounding the downside protection issue, and will continue to do so. The first part of succeeding is not losing. That is job #1.

To illustrate, please look at shares of ESCL. I first came across this stock over a year ago under $10 a share.

We run a scan for fun that brings forth the best stocks under $10. Last year the list produced NTRI at $4, and GROW at $9. The scan also produced several other winners, along with 250 losers.

It’s a fun list to look at, as I am a stock market junkie, but I don’t do anything with it, because we don’t play these stocks.
(Email me if you want it, I will send it to you every 2 weeks)

ESCL went past $30 a share, because everyone thought they were the next EBay, then in about a day, gave it all back because of accounting problems.

Last week they said no accounting problems, stock bolted from $6 to $12 that day.

I told Wiki Jim that the fix was in, watch these new investors get slammed.

Sure enough, stock drifted back under $10 to $8, then today, the final nail in the coffin, NASDAQ delisting the stock.

Moral to the story once again, stick to trading, if you must invest, stay away from these types of stocks or your investing career will be over, fast.

For fun last year, we also created mock portfolios every time the news was talking about a sector.

We put the stocks mentioned in the news stories in a mock portfolio, to see what the gain or loss would be in 52 weeks time.

Last year the news was Bird Flu, Ethanol, Chinese Gaming Stocks, Wireless, Oil, a few others.

We can report, that even though the market went to new highs, every single one of these portfolios loss at least 7%, 52 weeks later.

---Jon

The market was hoping for a rate cut, got confirmation today, that’s not going to happen.
Yet market doesn’t sell off.

Oil is dropping like a stone, putting more money in consumers pockets and directly back into the economy, yet market doesn’t rally.

IBM upgraded, price target raised. Citigroup says taking an 8 cents a share charge 4th quarter. Two DOW stocks, two different directions.

Bush says more troops to Iraq, good for defense stocks. Democrats say get out of Iraq 4-6 months, bad for defense stocks.

Our portfolio of stocks did well today, but no follow though in 2 weeks.

When in doubt, stay out, but I am in the mood to make some money. This cash is burning a hole in my pocket.

Lets buy something Tuesday!!

Our Trades:

Good news first. While other well known services that advertise on TV every morning are saying how they only lost 3-5% last week, and counting that as a good week, the Trademechanic put another $50 in your pocket and warned you about the bear trap, prior to the market open Wednesday. At the Trademechanic, losing at all is not a good week, no mater how bad the market is.

Big part of the Trademechanic is always looking at our trades, seeing where we went wrong, and what we did right. We want to teach you to fish as a trader, so you can feed yourself for a lifetime.

Over the last two weeks; I have caused us to not make as much money as we should have for 2 reasons. I want to go over that, in order to educate and remind me to stick to my own trading rules.

First, not using “The pop fly rule” fast enough.. It is my natural tendency to look for follow through in our picks. At Trademechanic, we are not hot for the action, looking to get in and out a bunch of times. We prefer to go long on Monday, and have the stock go up every single day until we sell on Friday.

My mistake is when I see nothing but break downs in sectors; I need to call the “Pop Fly” rule right away until new leadership emerges. Had we sold all our picks on the first pop in price over the last two weeks, we would have booked close to $1 gain on every one of them except Citibank, in a 2 weeks span that was very difficult.

Second mistake, not using the “Next Number” rule. Typically when a stock hits our trigger price, when the stock crosses above the next number up, like $55 to $56, or $55.50 to $56.25, the “Next Number” rule goes into effect.

We simply watch this stock, and if it can not hold the $56 price, we sell. The reason is because over the years, stocks have shown if they cant hold that next number after the first cross, then they are not likely to go back up above it again.

Had I stuck with that rule, we would not have lost on Citi, locked in more gain on INFY, AKAM, DRIV, and a few others.

I ask you to review these 2 trading rules, and use them in your daily trades. I will add these to the morning Trade Alerts.

Our goal every week is to get in, take a few $100 off somebody’s hands, then get back into cash, every week, without giving up any money.

Mission partially accomplished week ending Jan 5th.

Industry Best Details:

Friday Jan 6th:

Week Ending Jan 6th:

Jon's Notes:

As you can see, our trading performed well against the top industry sectors in the market, which all lost ground.

Looks like some bottom fishing gains were possible Friday in the oil patch, we also went that route, and was right on JOYG, wrong on RTI.

We want to compare ourselves to the top industries. This way we know if we are out performing or at least keeping up!

I believe, as traders, with the ability to move around, we should be able to a least perform as well as the top industries each week.

Next week:

No trade for Monday, we don’t have an angle, no need to put our money at risk. Let the market trade a day, so we can collect more data. There will be some trade picks, but not Monday.

Need to hold our cash at this point, because the bear is coming for it.

The market bias is now to the downside, we will trade the “Pop Fly” rule until things change.

What ever happens, we will play it as is, with no bias towards one group or another, market up or market down.

We can play any game, just need to know the rules!