When things got very bad and the leaders started to breakdown in November, Mauitrader said it looked like we might finally be getting into a real bear market. But then IBD called a Follow-Through day at the end of the month, so we followed the trend. There were not a lot of longs acting right, but I did manage to get HRBN in early Dec which I am now up 33% on. But more importantly, even though it was a confirmed rally, Joshua urged us not to get too long and not to trust the previous tired leaders as they rallied on low volume.

There were significant days when his scans would reveal bear undercurrents. I noticed in the buys and sells on the site that many longs were not working and had to be sold, but very few shorts had to be covered. This gives you an idea of the slant of the market, even though it was rallying. On 12/11, which was a distribution day, there were 13 new shorts! I took 3 then. One was ESI which I have a 20% gain on. GS was one of the 13, but I added it later. More longs came up, and I only took the best CANSLIM ones with good bases, but they kept failing. Another harbinger.

Then this Wednesday there was another distro day and 9 shorts again. I took 2. One was JBHT and it has done something like 7% in 2 days. This whole time I have only covered one short. There were fewer good longs showing up and the few I did take, I had half of them fail. That was indicative of the underlying weakness of this past rally, and it showed itself Friday.

Using my account as a contrarian indicator, however, when I have these “euphoric” days or big gains in my account, that is usually a turning point in the markets. I had similar days in May 2006 and July 2007 when I was long and bullish. Now I am mostly short, so watch for a bounce this week!