Transcription:

Hey, Dan Murphy here. I am back from the holidays. I took a mini vacation to go see my family in the Napa Valley which at this t5ime of the year is absolutely gorgeous. Most people go there in the spring or summer. We need to really to go during the fall. It is just fantastic.

I just want to get over a few things. We will start with the top-down approach. Timing the overall stock market which I trade the S&P 500, since it is the most liquid of all the markets here in the United States.

We will start with the top-down and what my smart money indicator which is a long term timing model. That is either bullish or bearish. Which one is it? It is still bearish from a few weeks ago. I have to say that it cut nth top over here, but it is not that an indicator.

Nothing is perfect out there. I know everyone wants to find the Holy Grail. This is about as close to it that I have found, but it still you do need to be aware that it is not going to find the exact tops, exact bottoms, but what it has done since 1965 is catch the meat of the move.

You guys get my fish analogy, hut for those who do not; here is my stupid fish here. Trust me I can draw a whole lot better when I am not drawing on one of these tablets. My handwriting is pretty decent. I am not into calligraphy or something, but it is much better than you think. I am just using one of those bamboo tablets.

Let us just cut off the tail, cut off the head there. When you eat a fish that is pretty much what you are going after. The same thing with the market, I want to catch the meat of the move. I will let everyone else fight for table scraps trying to catch bottoms and tops.

That is stuff that does not make money for me. I have abandoned ship on that particular way of thinking. I did that a long time ago.

Let us go ahead and get back to this stuff saying that it is bearish. What I told you before, what I do is simply reverse the rules of bull market, which says, “Hey, buy the dibs and the bull market and then sell rally.”

Now I just want to do the opposite which is, sell rallies and buy the dibs. We got a pretty decent rally over there and yes I did go short and I recommended the same thing with the clients. We are in that for better or worse now. Looking forward to climb and I will go ahead to cover my short positions on that.

The next thing I want to talk about is… Let, me zoom in a little bit here so we can really check out this chart. I would recommend turning on the volume on this one. This is important. What happened on Wednesday was a poster child of how I view all the seasonality. People always talk about the seasonality of the market, all those almanacs.

Talking about the market, let us say from November to May when the market do most of their upside. Then there are matters like solid May and go away or buy Thanksgivings or for Christmas presents, that thing. That is pretty much what we are at right now.

But, you know Wednesday before thanks giving is one of the most significant upside biases of all the days of the entire year. In fact, many of the different indicators that I look at for seasonality, and look at the different almanacs, and so forth that discuss the seasonality market. I find it to be very cur fit. In going forward, I have significant doubts about whether these things will continue in the future as I have in the past.

To me, as a system designer, it just looks like another cur fit monstrosity. It is how I view the whole thing. So, I really caution you. There are many different shiny objects that are all over the internet. You go on people’s free blogs. Sometimes, the most expensive information out there guys is misinformation or bad information. I want to cautio9n you about this. There are a lot of people with opinions out there. There is very few with the experience in trading and with real money in the real world.

I can never forget when my economics professor was teaching me about trades in the market. Frankly, I know that he has never traded in the markets. He had the scholastic mentality about trading in the markets.

We had this big, Duke-him-out session. I quit. I was done. As I watched my economics professor drive off with his beat up old Honda, I was thinking, “Man, this guy does not know what the hell he is talking about.”

It is of interesting that we are now, again, we are now in the situation where the brainiacs, the people that live in books, in theory are at the driver’s seat of our economy. a scary thought, right? They are thinking of a world that is perfect or something, based on the rules that they made up in their Kenzy and Economics textbooks. Frankly, that is not how the real world works.

Scary times we live in right? The same thing, again. I just tie it all back with the almanacs, the seasonality. This stuff is more geared towards textbooks or in many ways, it is actually very cur fit information.

Wednesday was just yet another reminder of that. Again, this is supposed to be the Santa Clause rally time as we go into December, into the Holiday Season. I have seen that lots of times, but there are no guarantees at the future.

That is why I would rather look at things that do work. And the things that work, just be aware of the two different players in the market; the smart money and the dumb money. We are hearing about this all the time, about the 99% or the 1%. All that stuff.

You know that most money is controlled by the 1%. It does not really do you a whole lot of good looking at the many different polls out there. These are polling people t5hat have an opinion. They do not have any money.

You need to identify those two groups. That is where I spent my entire career dong. It is not like I will give all my recipes, but hopefully you can see me as not another shiny lieu in this big see of money or information but as something more of a light house, a guiding light towards what works.

Again, I will just sum it up and close it up with be aware and beware of seasonality. Go see Napa during the fall! Be different! So, rallies.

I will leave it at that. Dan signing out.