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How to Dodge the Market's Knockout Punch

By Jeff Clark
Thursday, September 11, 2008

In boxing, they call it a standing eight count.
 
The fighter gets hit with a punch that's not quite hard enough to send him to the mat. But it's enough to cause the referee to step in and stop the fight for eight seconds.
 
It's a welcome break, and it's what most investors need to take right now.
 
The stock market has pummeled both bulls and bears alike. And trying to trade this market has been like trying to go toe to toe with Lennox Lewis. You might last a round or two. But Lennox is going to win the fight.
 
Sure, the market rallied yesterday. And if you bought stocks at the end of the day on Tuesday, then you're happy with the results.
 
But who in their right mind did that? Most stocks sold off hard early this week, and there wasn't much action to encourage investment.
 
The stock market is not rational right now. Stocks don't go up or down based on fundamental or technical factors. They move at random.
And there's no sense to it.
 
So as a trader, buying or selling stocks right now is like stepping into the ring against Evander Holyfield in the prime of his career. It doesn't matter how good your jab is.
 
You can stick your chin out and take the punch. And maybe you can last the round. But most people will be down for the count.
 
Traders can't afford to suffer a knockout blow.
 
So when the match is out of hand, and what used to work doesn't work anymore, then traders need to step away from the fight and take a standing eight count.
 
A standing eight count gives you time to rethink your strategy, gain your composure, and figure out the best way to get back into the fight.
 
And for most traders, it's the right strategy right now.
 
Best regards and good trading,
 
Jeff Clark




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Biotech still raging... ImClone hits new 52-week high on takeover offer.
 
China's down 65% this year and dropping... China Cablecom, Chalco, Gushan Environmental, Xinyuan Real Estate, China Digital TV, and China Direct hit new lows.
 
 Total destruction in mining... big miners Cameco, Anglo American, Yamana, Southern Peru Copper, and Goldcorp at new lows.
 
World's largest water stock, Veolia Environnment, hits a new low.
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1221.53 +1.3% +10.1%
Oil 38.31 +1.4% -0.6%
Gold 138.07 +2.1% +16.3%
Silver 28.60 +2.4% +53.6%
US-Dollar 80.67 -0.8% +8.1%
Euro 1.32 +0.6% -12.1%
Volatility 18.01 -7.1% -19.8%
Gold Stocks 581.56 +3.0% +17.0%
10-Year Yield 3.02 +0.7% -10.7%

World ETFs
Symbol Price
Change
52-Wk
USA 122.89 +0.3% +11.3%
Canada 30.50 +0.2% +16.2%
Russia 21.94 +1.4% +18.1%
India 37.85 +0.3% +22.3%
Israel 16.69 +1.3% +10.8%
Japan 10.64 +0.6% +6.5%
Singapore 13.73 -1.1% +18.8%
Taiwan 14.78 +0.4% +19.2%
S. Korea 57.31 +1.3% +23.4%
S. Africa 71.87 +1.4% +28.2%
China 44.42 -1.4% -0.6%
Lat.America 53.17 +0.7% +8.4%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 137.59 +1.0% +18.9%
Big Pharma 64.14 +0.0% -3.2%
Internet 72.07 -0.1% +23.4%
Semis 16.22 +1.2% +29.4%
Utilities 31.28 +0.2% +1.5%
Defense 18.52 +0.1% +10.6%
Nanotech 10.03 +0.4% +1.6%
Alt. Energy 10.08 +1.3% -3.3%
Water 18.49 +1.0% +14.5%
Insurance 16.14 +0.4% +21.1%
Biotech 20.54 -0.2% +28.1%
Retail 19.70 +0.3% +30.2%
Software 24.79 +0.8% +25.9%
Big Tech 53.87 +0.3% +22.7%
Construction 13.10 +0.9% +15.7%
Media 13.64 +0.5% +26.0%
Consumer Svcs 67.39 +0.2% +24.5%
Financials 55.04 +0.3% +7.4%
Health Care 64.30 +0.1% +2.0%
Industrials 63.54 +0.5% +21.0%
Basic Mat 74.35 +1.1% +25.3%
Real Estate 55.32 +0.1% +25.0%
Transportation 91.77 +0.7% +26.9%
Telecom 22.59 +0.5% +17.8%