Question

Anna – I enjoy your book and learned a great deal about the specialist and market makers.. You said for us (your readers) to write you if we had a question. I am trying to relate the “specialist practices (eight laws) to today’s market environment; however, I’m a little confused. This is what I’m hearing today. On Wednesday and Thursday 11/13-14, CNN had someone pushing the market to buy long by saying that our 401(k)’s are the most ever and that the DOW might hit 16000. Of course it did and I can see people on the side feeling like they might lose out and then buy here. But, then Carl Icann was on Monday 11/11 talking about sell and that the market was at a top. Then Larry of Goldman Sacs on Monday 11/19 said pension should be selling here. The messages are not in sync, since prices are at high, I would think they would be pushing people to buy more long positions vs telling them to sell. Can you help relate these messages to the Richard Ney eight laws. I’m confuse because I’m wondering when will the market makers come in to let prices fall. Thanks in advance for the explanation.

Answer

Many thanks for your email and delighted my book is helping you make sense of the financial markets. With regard to your questions I will do my best to answer these as follows.

First, whenever someone such as Carl Icann makes a statement about the market, he is probably talking his book – in other words he is probably holding huge short positions and is certainly using the media to talk the market down. Goldman Sachs are the arch exponents of this practice, and anything they say will not be to your benefit but only to themselves. They are notorious in every sense of the word. In today’s webinar I suggested that traders steer clear of broadcast media but instead read one traditional newspaper such as the FT (or WSJ) and follow a site such as www.zerohedge.com. All newspapers will have an agenda but as long as you recognize this fact you can use it to your advantage. Everything else can be ignored. This is why this methodology of using volume is so important. It never lies and when the market top is reached ( which it will do ) then volume will tell you and also reveal when the market makers are actually preparing to sell.

Finally, if you are trying to manage your own investments you may wish to look at www.highgrowthstock.com (Ron Brown & Ian Woodward). Ron has extensive knowledge of using volume & price. I am not affiliated in any way with them other than Ron kindly recommends my book to his clients & David & I have presented to his group. I hope the above helps and once again many thanks for your kind comments and may I wish you success in your trading and investing. Kind regards Anna