Wednesday, August 11, 2010

Whats Different About Trading in Bear Markets?

How Do You Ride A Bear Market
Whats Different About Trading in Bear Markets?

I sat down to talk with Jeffrey Kennedy, EWI's Senior Commodity Analyst and editor of The Futures Junctures Service, about his upcoming Online Academy trading tutorial.

Vadim Pokhlebkin: Jeffrey, next month you and your EWI colleague Wayne Gorman are starting a first-ever 8-session trading course called "How to Trade in a Fast-Moving Bear Market." I hope to be able to attend, as I'm sure are many of our readers. But I can also imagine some people wondering, "What 'bear market'?" Stocks have been up for more than a year now. The crash of 2007-2009 is becoming a hazy memory. Yet your course has "bear market" in the title -- and not just any bear market, but "a fast-moving" one. Can you explain?

Jeffrey Kennedy: You mentioned Wayne Gorman, my fellow course instructor -- he, actually, has a great answer to this question, and I know you are also interviewing him soon, so I won't steal Wayne's thunder. For my part, let me say this.

First, what I primarily focus on in the course is the application of the Wave Principle as a trading methodology. The tools and techniques I teach work equally well in bull and bear markets. And secondly, no bear market is a straight drop from 100 to 0. Yes, there are dramatic moves to the downside -- but there are also rallies along the way, just as dramatic.

A good example of that is the bear market in commodities from 1980 to 2000. A twenty-year bear market, yes, but during that time, there were many instances where soybeans or wheat, for example, would double or almost triple in price. (The 2007-2009 stock market crash also offered a few other vivid examples of this. -- Ed.) I've seen this over an over again: In bear markets, prices swing hard both ways. So what we try and do with this course is actually prepare you for both.

VP: Many visitors to already have trading experience. Some have done it for their own accounts, others did it professionally. Is trading in a bear market really so different that you have to teach it?

JK: Wayne Gorman and I have taught this trading course before; we've done at least 30 or 40 tutorials now, from New York to Sydney. And one thing never fails: There is always someone in class who's new to trading -- and they walk away feeling enriched, because, they tell us, they really did learn something. But what's even more exciting to me as an instructor is when I have professional traders, traders who have been in the business for 20 or 30 years, sit through my portion of the tutorial and say that they've walked away with a new way to look at the market, or a reaffirmation of their old trading discipline. So I know for a fact that regardless of your trading experience, the upcoming Online Academy has something to offer.

VP: You said Wayne Gorman and you have taught this tutorial before in a live classroom setting. How different do you expect the September-October Online Academy version to be?

JK: Absolutely the same. The material Wayne and I are teaching online is the same we've taught in classrooms. The huge plus is the convenience. Instead of having to travel to New York, or London, or Chicago, or wherever we've taught in person before, here you get eight two-hour online sessions presenting the same material, minus the jet lag.

VP: I'm sure your students ask you about your background. What can you share about your qualifications as a trading tutorial instructor?

JK: I've been with Elliott Wave International since 1993. I have both actively traded the markets and been a professional technical market analyst for almost 20 years. I am a member of the Market Technicians Association, Technical Securities Analysts Association, American Association of Professional Technical Analysts, and the UK-based Society of Technical Analysts. As one of EWI's Senior Instructors, I've been teaching trading with Elliott for over 10 years, have done individual consulting for traders, as well as presented in front of groups of over 300 people. My colleague Wayne Gorman and I have taught together dozens of times before, and students tell us we make a good team.

VP: Thank you for your time, Jeffrey. Hope to be able to join you and Wayne in September.

JK: My pleasure!

Get more details here, about the upcoming September-October 8-session trading course with Jeffrey Kennedy and Wayne Gorman.

The Economic Crisis No One Saw Coming: A Convenient Untruth

The single most convenient untruth about the 2008 (and counting) financial crisis is that it was unforeseen. For two years policymakers have insisted "There was no way to know ahead of time" that the liquidity boom would come to a screeching halt. Back in November 2008, in fact, the usually tight-lipped Queen of England herself publicly described the turmoil of international markets as "awful" and openly asked a panel of experts from the London School of Economics "Why did nobody notice?"

Her Majesty is right: Most financial authorities did NOT notice the crisis before it was too late. Comedy Central's "The Daily Show with Jon Stewart" of all places provided the most poignant evidence: A March 2009 video montage shows executives and economists from the world's leading financial firms repeatedly forecasting continued upside strength in stocks, plus renewed bull market growth in financials -- right as debt markets came unhinged and the US stock market headed into a 50%-plus selloff.

Dubbed the "8-Minute Rap" (after the "18-Minute Gap" of Nixon's Watergate tapes), the Daily Show video feature sent an equally powerful message, as the video here shows.

Yet even as the mainstream authorities failed to detect the economic earthquake moving below their own feet, somebody did "notice" well in advance. That person was EWI's president Bob Prechter.

The clip below is from a 2007 Bloomberg interview. Clear as PLAY, the foreseeable nature of the crisis emerges from Bob's October 19, 2007 interview.

As the historic trend change began to unfold, Bob issued this timely insight:

"We've seen the first crack in the credit structure with a huge drop in commercial paper... These are the harbingers of a change toward the downside for the stock market, commodities including oil, and the debt market itself."

Don't believe the convenient untruths. Get objective market analysis today.

Download this free report that contains valuable market forecasts directly from the desk of Bob Prechter.