REVEALED:  HOW WALL STREET CREATES A MARKET TOP!

Lessons from the 2007 top that can save you a fortune...right now!

Market tops don't occur spontaneously. They are engineered to trap the bulls who believe that bull markets last forever. Someone has to hold all the stocks as the market goes into a bear market. It's a cinch that the Wall Street firms don't want to be the bagholders. Read this story about how Bert Dohmen warned his clients during 2007-2008, which is so similar to the environment in 2011.

BEAR MARKET PROFITS!

Bear markets offer greater opportunities than bull markets. We just sell short, buy put options, and even trade some of the bear market rallies.

Wall Street tells you “Buy and Hold,” while they sell like crazy.  They need you to buy, so that they have someone to sell to.

Well, I call it the way I see it.   I have no conflict of interest.  My only goal: to make my subscribers money so that they stay with me for a long time.

Profit with me!

UNSURPASSED in ACCURACY:  BERT'S FORECASTS in 2007-2008

 People usually ask an analyst, “What have you done? Show me a track record.” And then the advisor may pull out some fictitious numbers showing huge gains.

Well, we don’t play that game. We want to show you actual advice from Bert Dohmen:

Below are major forecasts of Bert Dohmen before and during the turmoil of 2007-2008.  The actual issue is noted, the headline is there, and the text is directly from the issue.

From Wellington Letter April 3, 2007, headlined: 

 “THE MAKINGS OF A PERFECT FINANCIAL STORM”

 We expect the "huge liquidity" everyone talks about to disappear in a puff of smoke, or bankruptcies.

I believe that this will be the great surprise of 2007. The argument for all the bulls has been the great liquidity. When it disappears, the only liquidity they will find is by selling assets. And that includes stocks.

 Wellington Letter July 24, 2007: 

“THE FINANCIAL STORM IS STARTING”

 In our SMARTE TRADER service, we said that the latest upmove is manipulated. The gains in some of the widely watched, major indices, controlled by a few stocks was masking the subsurface selling of the majority of stocks since the beginning of June. Only technical analysis can tell you that.

The chart of the S&P 500 shows the false upside breakout this month. When a stock, or index, makes a new, important high, and then reverses downward, breaking the previous high to the downside, it’s a false breakout. These lead to very strong declines most of the time. In June, that’s exactly what we were looking for. We said there will be new highs in the indices, but they will be false breakouts.

 NOTE: It was the exact top, followed by a very severe market decline into mid-August.

 Oct 15 Wellington Letter:  Headline: 

Top of the Rally!

 If Goldman Sachs and some other firms bought in a big way to produce the rally, they will now sell to get rid of what they bought, as they realize that the credit crunch is not going away, that the economy is weakening, the consumer is feeling stretched, corporate profits will reach zero growth, and then go negative. They are not “long-term hold” people.

Now that the masses are very bullish, and mutual fund managers are buying, these firms have someone to sell to.

The DOW JONES INDUSTRIALS index (daily) has exceeded the July high. Our view was that we could see a false upside breakout in some of the indices. False breakouts are denoted by a return below the breakout level within about 5-7 days. And that leads to a sharp decline. So far, all the evidence suggests that this was a false breakout. (Note: it was!)

The rally since August was engineered and manipulated. The volume was much too low to suggest that it is a normal continuation of a bull market. A rally after a plunge on lower volume is the hallmark of a “secondary top,” which is then followed by a more serious, and longer term decline.

The “rising wedge” formations on the charts of several broad indices are ominous. The NASDAQ rising wedge was just penetrated to the downside, which strongly suggests that the top is in place, and that a meaningful decline is ahead. The prudent investor will act accordingly.

As we know now, the 5-year bull market top was made on Oct. 11, 2007, two trading days before the date of this issue.

 Oct 30 Wellington Letter headline:  

DON’T GET TRAPPED!

“The Fed will cut rates, but the market will decline, probably sharply, thereafter.”

In spite of all the obvious and significant negatives, optimism is almost at euphoric levels. InvestorsIntelligence.com takes a weekly survey of investment advisor sentiment. On Oct. 24 it showed that the bulls retreated to 56.5% after reaching a 34-month high the previous week at 62.0%. That 62% is rare and usually only seen at important tops.

Nov. 12 Wellington Letter:

"BEWARE OF BOTTOM-FISHING!"

The NASDAQ was manipulated upward in the last stage of the rally in November. It was easy to do this with primarily a handful of stocks, such as Apple, RIMM, Google, Amazon, etc. This kept the vast majority bullish, while the pros were selling and selling short. We called it an “engineered bull trap.” In fact, our October 30^th issue, at the time that everyone expected a rate cut by the Fed a few days later to start another strong upmove, was headlined:  “Don’t Get Trapped.”

CONCLUSION:

The trap for the bulls slammed shut. Usually it takes a year from the start of a recession before the recession is widely recognized. Therefore, don’t be like the economists on TV, who wait for that recognition to give you a sell signal. And don’t go bargain hunting unless you are a trader or an active investor who knows how to trade a rally.

December 5, 2007 Wellington Letter was headlined:

"THEY DO RING A BELL ON WALL STREET-although a little late!"

It is often said that they don’t ring a bell on Wall Street when it’s time to sell. Well, actually they do, but you have to listen closely. On Nov. 27, the bell rang.

Goldman Sachs downgraded 17 major stock sectors. Never have we seen such a massive downgrade by a firm on one day. Instead of focusing on the sectors and whether GS is right or wrong, we should focus on the message: Wall Street is now done selling their own huge portfolios, and they are nicely positioned to profit from a bear market.

In mid-July we declared a bull market top had been made, and just before the plunge, headlined the issue “Bear Market.”

The rally from August to October was the “distribution” rally, which lured the less sophisticated money managers into the market, and gave Wall Street the buyers onto whom they could unload.

This means that from now on there will be less support for the market. Wall Street found the “bagholders” and Wall Street firms are now free to make money on the short side. In fact, GS can now become outright bearish in its forecasts without hurting its own portfolios.

The reality is that we are seeing the greatest credit contraction in the history of the U.S., one which is still in the early stages. Credit contractions are brutal. There is usually no place to hide, except ultimately T-bills.

December 14, 2007 Wellington Letter

THE FED DOESN’T GET IT!

The Fed is targeting its “Fed Funds rate” at 4.25% now, but all the government’s debt instruments, except for the 30-year bonds, have lower interest rates. This is a very unnatural state of affairs. The Fed has to get in gear with market forces. The bulls now talk about a “soft landing” for the economy. Yes, and it will be in quick sand and mud, and possibly a brick wall after that.

It is now obvious to me that we face a very long and possibly deep recession. Furthermore, we will see a bear market that few think is possible. A 50% decline in the DJI (from this year’s high) is a good possibility. But it will take time. 

There will be bank failures, forced mergers, and governmental bailouts. Our largest financial institutions will see significant portions of their stock owned by foreign entities before it’s over. The U.S. is now continuing the path of its long-term decline into irrelevance, which started in the year 2000.

CONCLUSION:

The denial of reality on part of the Fed is absolutely astonishing. The industrial world has never seen a credit crunch of current proportions. The CEO of Wells Fargo said that "conditions in real estate have not been seen since the Great Depression," commercial real estate is now starting to cave in, because over-leveraged real estate speculators cannot make debt payments. The retail sector is in great distress. Banks are refusing to lend to each other. The problem is distrust and lack of confidence. Everyone is afraid of bad surprises.

A declaration by the world’s central banks that they will be “lenders of last resort” would lift confidence. It would be like the FDIC insurance on your bank account: you’ll probably never need to use it, but it gives customers confidence.

We will see an avalanche of poor corporate results published over the next 12 months as the economy goes into recession. Be prepared, and profit!

December 27, 2007 Wellington Letter headlined:  

THE RECESSION HAS STARTED!

The write-downs of bad investments for Wall Street firms are getting bigger. On Dec. 19, Morgan Stanley reported results. The write-down increased from $3.7 billion announced last month to $9.4 billion. That’s a huge increase. It means that the situation is worsening, which has been our point for months. The write-down meant that it had to raise new capital quickly in order to meet capital requirement.

THE ECONOMY

I have written in these pages over the past month that we are now in a recession, while the majority of economists said we won’t have one even in 2008.

The Japanese bubble, which burst in 1990, was produced by 1% interest rates. The U.S. bubble was produced by 1% interest rates as well. Japan has now had 17 consecutive years of declining real estate values. That’s deflation! The U.S. bubble however was much bigger, and much more extended. Therefore, the aftermath of the burst bubble should be worse than that in Japan.

 MONEY MARKET FUNDS ARE DEFAULTING

 What we have been warning about since July finally happened—a quasi money market fund for institutions stopped redemptions. Columbia, a unit of Bank of America, says it is shutting its $12 billion Strategic Cash portfolio. Imagine, just months ago it had been a $40 billion fund.

IMPORTANT POINTS FOR THE NEW YEAR (2008):

1. A number of huge bubbles have burst. Once a bubble bursts, it can’t be reflated. The problem is not subprime, or mortgage resets; it’s excessive leverage employed by Wall Street and other participants in the mortgage derivative markets.
2. The government and the Fed are creating different programs to rescue the credit markets. None will work. Excessive leverage and excessive debt must be liquidated through bankruptcy. Lending shaky borrowers more money just postpones and adds to the problem.
3. A bear market doesn’t start from one day to the next in all sectors of the economy and the markets. Money flows from the obviously weak sectors to those that are remaining strong. But one by one, the ripple effect starts to deteriorate all sectors. You don’t see the strong sectors pulling up the weak ones as the economy weakens. It works the other way around. So, don’t be fooled by the areas that stay strong.
4. The bulls point to the strong international economies, counting on them to support the U.S. Yes, the petro dollars accumulated abroad will be recycled, many to help large US financial companies stay alive. But that only prevents disaster. It doesn’t produce a bull market. The interest rates these foreign investment entities are demanding are sky high. Only a company on the edge of insolvency would pay it.
5. Once the August lows in the major market indices are broken, we have huge, long-term top on the charts. All the stock above that level will then become potential supply for selling if the indices should poke their heads back into that area. Large tops lead to large declines.
6. In the economy, it’s always a chain reaction. The high oil prices (along with well financed lobbyists) produced the ill-designed subsidy program for ethanol. This caused grain prices to soar. That makes it unprofitable to raise farm animals, causing shortages of meat and dairy products. This causes much higher prices for these products (wheat has tripled) and cheese (which has doubled) produces pressure on restaurants, causing them to raise prices. This comes at a time that the consumer is already eating out less. The combination of lower demand and higher costs cause that industry to suffer. That causes more restaurant workers to lose jobs, etc.

SUMMARY: When credit availability contracts significantly, a recession or worse is inevitable. And now we are seeing the greatest credit crunch since 1930, not only in the U.S., but worldwide. The implications are very serious. (Bert Dohmen, Dec. 27, 2007)

NOW FOR THE GOOD NEWS:

The above clearly shows that Bert correctly identified the major trends of 2007, but also the exact tops, plunges, and rallies. This is only possible using sophisticated technical analysis, something which 95% of the traditional analysts have never studied, and therefore dismiss as “voodoo.”

With Bert's help you can make great profits during these times. He will help you avoid the traps which Wall Street sets for investors, and show you how you can make great profits whether stocks rise or plunge.

TRADING A HISTORIC MARKET CRASH

NASDAQ 2000

              The track record of SMARTE TRADER speaks for itself. The results have made it the premier and most successful subscription service for short-term traders available anywhere.

              The chart shows some of the timing recommendations in the year 2000. You can see for yourself  how much that advice would have been worth to you. 

              The bear market of 2000-2002 was the most devastating market decline, in terms of dollars, in history.  Wall Street continued to advise investors to “hold for the long-term.” Well, that advice cost many investors utter devastation of their retirement nest egg.  And it had nothing to do with the attack on 9/11.  But our subscribers were prepared.  They sold and sold short.

              In 2002 one of the leading mutual fund families had over 16% of its huge stock holdings with a loss of 90% or more.  So much for “Buy and Hold.”

              But one group made significant profits: short-term oriented traders, either professionals or those who had the advice of the best professionals in the business.  And that includes subscribers to SMARTE TRADER.

              SMARTE TRADER  helped investors and traders avoid the traps… and profit from the sharp declines by selling short.  It’s the happiest bunch of investors you’ll find anywhere.  In fact, in early October 2000, I compared the NASDAQ chart to that of gold in early 1980’s. The similarity to the gold crash was striking. Here is what I concluded:

                                     When the NASDAQ Composite was near the 3000 level, Bert warned that it would eventually decline to 1500 (the high had been over 5000).  That prediction was considered “extreme”, but that target was reached!

              You see, chart patterns reflect human emotions: fear, greed, complacency are all depicted.  And these emotions always repeat.  If you know how to interpret the charts, you will be far ahead of the crowd.

This chart shows his major forecast of important turning points  in the year 2001.

Subscribers know that Bert usually, but not always, catches such turns within 1-2 days.

Note how he pinpointed the bottoms of declines, and then the rally tops.  For a trader, it is important not to be perpetually bullish or bearish.  The market goes in waves.  A trader must go with the waves.  You must be like a champion surfer:  when the wave runs out, you get off.

NASDAQ 2001

AFTER THE CRASH: GOING AGAINST THE CROWD

              Look at September 2001. After the terrorist attack of 9/11, there was gloom and doom everywhere. Bert wrote at the time, that once the stock markets reopened, after a brief shake-out the market would rise strongly.   It did!

              The Nasdaq Composite rose 42% over the next 10 weeks.   His “buy signal” of Sept. 24 and 27 (depending on the service) were right on.   Subscribers smiled as the perennial “gloom and doomers” stayed on the side, and short-sellers were bloodied.  For Bert’s subscribers it was a great opportunity.

              And in early 2002, Bert advised to sell short again, just when Wall Street had turned bullish. The subsequent decline was devastating for those following Wall Street advice. The plunge didn’t stop until October that year.

              Technical analysis shows what the insiders are doing.  These insiders are the first to know when business is deteriorating, when their company is running out of cash, that the doors for new financing are closed, etc. Wall Street analysts won’t tell you that until you have lost most of your money on the stock.  But it takes years of experience to interpret the signals correctly.

              Bert analyzes the markets  8-12  hours a day for you, using the most sophisticated analysis techniques.  As a subscriber to SMARTE  TRADER  you will have confidence in your trades. You will know that a pro with over three decades of trading  experience is on your side.

REFLATION and BERT’S BUY SIGNAL

              An experienced trader has no preference whether to buy or sell short.  After closing out all short positions in early October 2002, SMARTE TRADER advised buying soon thereafter. The bottom of the devastating bear market had been seen. He wrote:

“Very interesting is the fact that the close on Oct. 9 was 776.76 (on the Dow). We round that up and we get 777…the closing low on the Dow in the big bear market of 1982, 20 years ago, was 776.90 on Aug. 12, 1982. This is 777 rounded off. Coincidence or a signal?”

              You see, they do “ring a bell on Wall Street.” Our technical indicators gave very loud “Buy” signals.  In spite of all the skeptics and “gloom and doomers,” we got on board. The bottom of the worst wealth devastation in history was in place! In early January, 2003, Bert wrote a headline: “REFLATION BRINGS OPPORTUNITIES.”

              He wrote:  “Yes, they do ring a bell on Wall Street. And this one will go down in history as the one that changed the investment markets for many years to come.”   I turned very bullish on gold and wrote in January 2003:   “This could be one of the most important investment areas for investors for several years… After having been bearish on gold for 21 years, except for the intermittent rallies which lasted up to one year, I am now a gold bull.”

 SP 500/ 2001-2004

Over the next 11 months, gold stocks soared.  Look at some of these gains: Newmont Mining +70%, Bema Gold +207%, and Gold Star +283%. The HUI Gold Bugs index of mining stocks was up almost 72%.

In early January 2003, I also strongly recommended the homebuilder stocks.  At the time, Wall Street was bearish on the complex, citing that the “housing bubble” had burst.

Over the next 11 months, this was one of the strongest groups.  Here are some of the gains

on my recommended stocks: D.R. Horton +137%, Ryland  +148%, Centex +113%, Toll  Brothers +99%, etc.

              Such gains are certainly better than the 1% offered by money market funds… or even the single digit gains produced by the majority of hedge funds this year, which charge you heavy fees, such as 20% of the profits, plus a management fee.

AN INCOMPARABLE TRACK RECORD

              In January of 2005, national magazines carried the story that some of the well-known billionaires of the world had sold the dollar short in excess of $20 billion, expecting a further decline. But Bert predicted a sharp rally in the US dollar, stating that these billionaires would lose billions of dollars in their short positions. The dollar rallied. Bert was right!

              For the same reasons, he advised selling international bond funds, which had done so well for subscribers as the dollar declined in 2004.  It was very timely advice.

              Once again, ask yourself how much the above advice would have been worth to you in just the first month of the year? The subscription fee is inconsequential in comparison.

              This is the kind of advice that makes SMARTE TRADER a favorite for professionals and amateurs alike.

              You can easily see that the “long-term hold” approach which Wall Street preaches doesn’t work. In fact, it can lead to financial ruin. For the next several years, you have to be a trader, or active investor, to make money in the markets. And that’s what our SMARTE TRADER  can do for you.

 "While most investors Weep, SMARTE TRADER Subscribers Reap."

When the market topped out and reversed direction on April 23rd, 1998, a "sell" signal was issued by Bert Dohmen, the founder of the award winning Bert Dohmen's WELLINGTON LETTER.

Commentary on June 16, 1998: "The way the blue chips were kept down today while the rest of the market was strong is indicative of a short-term bottom. As you can see everything is being engineered for a good rally the rest of the week."

On January 24, 1997, Bert Dohmen declared that a short term market top had just been made and that even if the blue chip indices made a slightly higher high over the subsequent weeks, the broad market should undergo a strong correction. As it turned out, January 22 was a short term top in the broad market. The correction in many sectors was severe over the next 3 months. On May 2, 1997, Bert Dohmen issued a fax alert to subscribers to immediately get fully invested. He declared that a "melt-up", rather than a "melt-down" predicted by the bears, would occur.

Recommendation made on July 11, 1997: "Fixed income investors should consider the Zero Coupon mutual funds, such as the Target Funds offered by the American Century Mutual Fund Group. The Zero Coupons are in effect a leveraged play on long-term U.S. Treasury Bonds. A gain of 50% over the next 3 years is probable.

Simply put, you need to know what to do, and when to do it. Maybe it's time to take advantage of the timing strategy of these Bert Dohmen services.