Bull or Bear? Pick a Side and Fight
Have you ever wondered why we refer to the daily battle of buying and selling that takes place on Wall Street as the bulls vs. the bears? I think it has to do with the nature of each beast’s relationship to man. A bull sees its target, puts its head down and horns up, and charges ahead no matter what obstacle is in its way. A bull doesn’t stop until it either kills or is killed by the matador. A bear spends much of its time in hibernation and hiding, and it only makes its presence known at the moment of attack. A bear keeps away until a victim enters its territory. In trading we’ve got to take the same approach as these two beasts. If we do the work and determine that we should be bullish, we’ve got to charge ahead on the long side and disregard obstacles. If you’ve ever been long a stock that was charging higher, you know how great the temptation can be to sell early and lock in profit to make sure it doesn’t slip away. Ignoring the negatives in a real bull trend higher is a difficult skill to attain, and perhaps the best we can do is try to hold on a little longer each time we’re in one. In the same vein, if we do the work and determine the appropriate stance is bearish, we’ve got to wait for the market to come into the area we want, then attack and leave. Bulls charge relentlessly, and bears maul swiftly. This is the proper way we should think about our own trading. Each one of us has to determine for ourselves whether we are bullish or bearish. There’s much work that goes into that conclusion, but once we’ve chosen a side, we must use our capital to fight. As for myself, I’ve determined that the appropriate stance for my irreplaceable capital is on the bear side. I’m in 75% cash and waiting for a spot to short. I’m waiting for price to come into the area I want, about $53,000 on the Dow Jones Industrial Average, and then like a bear, I’ll attack. The market is leaning bullish now with the SPX and NDX breaking higher so the DJIA could get nearer the $53K level in the last weeks of September or by the first couple of weeks in October. I’m looking to short the DJIA ETF, the DIA, at around $530 with a tight stop above $537.75 which is the high for September. Above $540 on the DIA and I’ll flip to bullish and scramble to get long something. I’ve also incorporated a time stop into my trade plan: if stocks haven’t started to decline by Halloween, I’ll abandon the bear side for the rest of the year. I’m not going to hold on to a losing position just because I’ve done a thorough analysis and decided I’m bearish. DIA Trade Plan: But what exactly are the facts that give me a reason to be bearish? Merely being “concerned” about stocks’ advance is not a rigorous analysis. Professional speculation requires real analytical work, especially when trying to pinpoint a bull to bear turn. I’ve done the work that leads me to the conclusion that there’s a near picture perfect analog to the 1929 and 1987 crashes. I’ve kept a checklist of signs to indicate when the turn in the business cycle is approaching, and I’ve been keeping an eye out for the anecdotal evidence I remember from the 2008 crash like constant road construction as municipalities rush to spend the record high tax revenues from a previously booming economy and signs of excess like the Hummer EV, which is a nearly exact replica of the sign of excess of the Hummer H2 I saw in the housing boom leading up to the 2008 crash. But a proper analysis requires more than just anecdotal evidence to be taken seriously. So I’ll present my bear case here for anyone to pick apart. Below is a video showing my analysis of the 1929 and 1987 crashes and how they resemble the current market in 2026. 1929 and 1987 Comparison to 2026 video: In addition to the historical October crash analogs, I see further evidence that we are in the early stage of a bear market when I look outside the popular stocks. Aside from several mega cap technology stocks, the underlying market health has been deteriorating for some time. The transports and utility stocks are not confirming any of the bullish narrative. On the contrary, they are looking more like tops. I’ve never seen a bull market in stocks work out with the transports and utilities in a compromised price structure like they currently exhibit. DJT: DJU: The housing stocks are also showing stress. Housing is a major driver of consumer spending which is 70% of our economy. With Warsh’s latest rate increase, I don’t see how housing will pick up without a major move lower in house prices. Neither higher rates or lower prices are going to be supportive of higher economic activity in the short run. XHB: Warsh’s latest rate hike also reminds me of 1987. Alan Greenspan was selected as the new Fed Chair in August of 1987. He thought that business activity was too hot and consumer prices were about to skyrocket so he took rates from 6.5% in August to 8% by October 1987. The rate hikes proved too difficult for the bull market to charge through. The rate hikes were the banderillas thrust into that bull market’s back to wound it, and Treasury Secretary James Baker’s October 18th remarks that he would tolerate a much weaker dollar in response to the Bundesbank’s rate hike was the estocada, the fatal blow delivered to the bull market. Stocks crashed the next day. So far, Warsh’s tenor as Fed Chair is a great analog to Greenspan’s just before the 1987 crash. Aiding my bearish stance is the fact that we’ve
Continue Reading -->META Is Going To $1000
The entire AI story changed for Meta Platforms (META) this week. And the stock quickly surged to $770+. David Prince discusses what it takes to get this to a $1,000 stock: David also goes over: What the new AI narrative means for META How he and the Inner Circle have traded this stock Expectations for other hot names like DELL How he’s been looking beyond the macro picture The setups he currently likes And more! Work with David inside the Inner Circle VTF®
Continue Reading -->When to Go BIG in a Stock Position
ATTN: Sami Abusaad and James Rich Young’s next Pristine Mentorship is on the calendar for October through December 2026. Spots are running out! Sami made waves for his large positions in Ethereum and SpaceX. And people always want to know “when should I get big in a stock? Here’s the answer: Sami breaks down the exact conditions for a supersized trade, including: The time horizon he requires What he needs to see in the technicals The risk-reward He also shares when he DOES NOT go oversized. Want to learn how he makes these gamebreaking trades? Consider his Pristine Mentorship, which he co-leads with James Rich Young.
Continue Reading -->SanDisk Is Going to $2,300
ATTN: Sami Abusaad and James Rich Young’s next Pristine Mentorship is on the calendar for October through December 2026. Spots are running out! On September 1, Sami Abusaad said SanDisk (SNDK) was his #1 idea. He is still bullish: SanDisk has been on fire. And there was a strange clue on Friday that tech stocks like SanDisk, Micron (MU), and Intel (INTC) were ready to rally. That’s one reason SPY and QQQ remain all-out bullish, though the Russell 2000 is still a problem child,. Sami explains in this new video. Want to learn how he makes these gamebreaking trades? Consider his Pristine Mentorship, which he co-leads with James Rich Young.
Continue Reading -->The SpaceX War: Bullish Chart vs. Insider Selling
JR Romero is bullish on SpaceX (SPCX), and in his newest video, he his new breakout level and his initial target. But watch the whole thing because it gets more interesting in the second half: SpaceX has a very bullish chart, riding the 20 day moving average upwards. But many observers are worried about insider selling. So you get an in-depth philosophy lesson from JR on how he balances bullish technicals with supposedly negative news. And yes, JR has knocked SpaceX in the past, but he can’t ignore the upside potential here.
Continue Reading -->Bottom-Up Roadmap for Stocks Over the Next 6-9 Months
Every trader, in order to be successful, must have some systematic process for identifying, entering, and exiting trades. Each trader’s specific process is going to be unique to their own experiences and beliefs. My own process has been developed over almost 20 years in markets, first as a hobby while I was a telephone salesman in a cubicle for a big tech company, next as a trader on a prop desk, then as a professional equity portfolio manager for a small RIA, and lastly as a refinement when I completed the CFA exam. Because I operated in both the trading and investing worlds, my process is a combined approach that incorporates both fundamentals and technicals. Similarly, I combine both a top-down and bottom-up approach to asset, sector, and individual stock selection. In previous posts I’ve explained my top-down reasoning why my view continues to be that we are in the contraction phase of the business cycle. This week I’ll present what my bottom-up analysis reveals to us as we try to anticipate price movements in the stock market over the next few quarters into 2027. As opposed to a top-down approach which starts from trends and works down more granularly to individual stocks, a bottom-up approach starts with individual stocks and works up to extrapolate larger themes. A bottom-up approach is a wonderful antidote for the narrative heavy environment in which we currently find ourselves. An analysis of individual stocks often reveals that a popular narrative is not gaining traction in the stocks that should be strong if the narrative were true. As a naturally born contrarian, I’m skeptical of any popularly accepted narrative, and I rely heavily on scrolling through thousands of charts a week to verify that the prevailing narrative is being validated by price. Thankfully, we don’t have to go over thousands of stocks to get a workable roadmap for how to deal with this market into 4Q 2026 and early 2027. A smaller sample of stocks is enough so I’ll keep my bottom-up analysis contained to a manageable list of sectors and stocks in this week’s post. I’ve taken the leading stocks in the sectors that are most crucial to the US business cycle at the moment: semi-conductors, transports, industrials, utilities, chemicals, and basic materials. The industrial sector contains seven sub industry groups: aerospace, automotive, construction, distribution, electrical equipment, building products, and machinery. I’m focusing on just the leading stocks in these sectors because I think they are a full representation of the most influential narrative in the stock market today: the AI buildout. I want to analyze the individual stocks in these sectors to discover any clues they might tell us about the future path of the AI buildout, which will dictate the path of the US business cycle, which will ultimately influence stock prices. We start at the bottom and work our way up to get to our goal: anticipating the movement of stock prices. The sectors and stocks we’ll analyze seem like a lot of material to digest, but I’ve distilled the information down to a basic form that is easy to absorb in a short amount of time. It’s a useful exercise for anyone risking their capital in the stock market. These are the stocks we’ll be analyzing in each sector; semi-conductor: ADI, AVGO, MRVL, MU, QCOM, TSM, and TXN; transports: UNP, NSC, CSX, JBHT, ODFL, DAL, and UAL; industrials: aerospace: GE, RTX, BA, LMT, GD, HWM, TDG, LHX, and NOC; auto parts: MGA, BWA, and MOD; construction: PWR and FIX; distribution: URI, GWW, and FAST; electrical equipment: ETN, VRT, and EMR; building products: TT and JCI; and machinery: CAT, DE, PH, ITW, CMI; utilities: SO, NEE, and DUK; chemicals: APD, DOW, LYB, SHW, ECL, PPG, and DD; and basic materials: BHP, RIO, FCX and NEM. I’ll begin on the fundamental side and analyze the valuations and end with a video on the technical side to show what I think the price and volume structures are warning us about. The only goal I have when analyzing fundamentals is to answer the question “do I want to own this stock?” That means I like to think as a business owner would if he was considering pouring all his family’s capital and his life’s energy into a business. I like to take the 15 year average of pretax income as a rough estimate of what the company would be able to earn on average over a business cycle, in other words, its earnings power. If the market cap of equity is 10 times the average earnings power, I know that stock is probably below fair value. If 10x is below fair value, 20 times the average 15 year earnings power is about the top of the limit. 20x means there’s very little room left for good price appreciation from an ownership perspective. Stocks that trade this high are for rentals only, not ownership, as they are mainly earnings growth stories that can experience temporary, but powerful price movement in either direction. The market cap to earnings power ratio over this 15 year time frame is what I refer to as the PE15. I like to see lots of sectors with low PE15s because that means too few positive outcomes are priced in, and any good development will cause money to flow in. If enough sectors of the market have low PE15s, it means the market is attractive as a long term asset. Long term buyers are what create price trends that last. However, if the market is unattractive to long term money, I would not expect a new price trend higher to materialize in the next 6 to 9 months. The PE15’s for each group of stocks by sector and my assessment of the potential for a proper trend higher are listed below, but if you want to jump to the conclusion without any of the detail, here it is: with a couple exceptions in mainly chemical commodities, natural resources, and small auto
Continue Reading -->The Survivor Market
Bad news? Who cares? This market is a survivor. Keep reading for the evidence. Skip Ahead! This Is the Survivor MarketWe May Have a New AI SuperstarCrypto Is Back on TopSentiment Is Not BullishThe Great Rate Debate ContinuesNext Week SHOULD Be QuieterThe Pristine Mentorship Is Open This Is the Survivor MarketSeptember is historically the worst month of the year for the stock market. And we’ve had plenty of tricky news to navigate, including:Hot CPI & PPI reportsThe FOMC raising rates and signaling more hikes comingThe 10-Year Treasury Yield hitting 5%OpenAI’s Sam Altman and Anthropic’s Dario Amodei calling for a slowdown in AI developmentCrude oil hitting $100+ because of ongoing Iran tensionsBut all things considered, we’re hanging in okay.The SPX is down 0.7%, while QQQ is up 0.1%. And the leading semiconductors are up, with SMH rising 1.4%. Technically, the S&P tends to fall an average of 0.6% in September. So we’re doing worse than usual. But falling just -0.7% in the face of all the aforementioned bad news is impressive. This market is a survivor. And it may be thanks to all this bullish AI news:We May Have a New AI SuperstarThe market got a short-term spook Monday when OpenAI’s Sam Altman and Anthropic’s Dario Amodei called for a slowdown in AI development. But we keep seeing more and more signs of staggering demand for AI infrastructure. This week, networking equipment maker Ciena (CIEN) announced it expects 30% compounded annual revenue growth through 2029. Power infrastructure name Forgent Power Solutions (FPS) skyrocketed this week after a monster earnings report thanks to data center demand. By the way, FPS is a clear candidate to be the next AI superstar. It’s growing like mad, dropped gigantic guidance, and it’s still 40% off the highs:Meanwhile, neoclouds CoreWeave (CRWV) and Nebius (NBIS) both implemented price increase for compute capacity. And Nvidia’s Jensen Huang said the company will double chip sales next year. The good times just keep on rolling. And that’s helping hold up the economy and market.Crypto Is Back on TopBitcoin and Ethereum have been a mess this year. But they’ve picked up steam, and the Grayscale Ethereum Trust ETF (ETHE) is now 70% off the lows. And it looks like it may be breakout out of its month-long range.Sami Abusaad just explained the bull case for ETHE on Wednesday, when it was trading at $19.33. Sentiment Is Not BullishThe latest AAII Sentiment Survey shows that just 28.8% of investors are bullish.This is down from 38.0% last week, and it’s well below the long-term average of 37.5%. Meanwhile, 53.3% of investors are bearish. This is the highest bearish reading since May 1, 2025. Yes, 2025. Not 2026. Plus, CNN’s Fear & Greed Index is at just 28/100. Fear & Greed was in the mid-60s in August. The crowd is not exactly in manic depression mode. But there is not a lot of joy out there.The Great Rate Debate ContinuesThe FOMC raised rates by 25 bps on Wednesday, with Chair Kevin Warsh saying “The plain fact is that inflation is too high and has been for too long.” The CME’s FedWatch Tool now shows the market is pricing in a 58% chance of a 25 bps rate hike at the October meeting.And it’s pricing in a 44% chance of a third hike at the December meeting. This has the 10-Year Treasury yield at just over 5%. And this is fascinating, because there was a time when people were worried about the 10-year hitting 4.5. Now we’re way past that and the stock market just keeps on chugging along.Next Week SHOULD Be QuieterBased on the calendar, you’d think the market should be quiet. We have no economic data Monday because of the Yom Kippur holiday. And after that, we have some Treasury auctions, Durable Goods, and Michigan Consumer Sentiment. And Costco (COST) is the lone big earnings report. However, it feels like anything could happen with Iran, and at some point, higher bond yields will matter.The Pristine Mentorship Is Open Sami Abusaad and James Rich Young’s Pristine Mentorship is open! (spots are limited) In this video, they take you through the 4 steps to becoming an elite trader.
Continue Reading -->Ethereum Is Going Higher. But There’s a But…
ATTN: Sami Abusaad and James Rich Young’s next Pristine Mentorship is on the calendar for October through December 2026. Spots are limited so check it out. Sami Abusaad owns over 10,000 shares of the Grayscale Ethereum Trust ETF (ETHE). Does that mean it’s time to load the boat? Only if it holds Sami’s key levels: Sami explains: The major breakout in ETHE, and what it means Why there is risk of a major breakout failure How we’ll know if Ethereum will continue higher Why he thinks any breakdown will be survived The key relationships between the daily, weekly, and monthly charts. Yes, this one is nuanced. But that’s exactly why you should watch the full video. Want to learn how he makes these gamebreaking trades? Consider his Pristine Mentorship, which he co-leads with James Rich Young.
Continue Reading -->Why Trading the Pristine Method®? Sami and James Answer.
ATTN: Sami Abusaad and James Rich Young’s next Pristine Mentorship is on the calendar for October through December 2026. Spots are limited so check it out. Why do Sami Abusaad and James Rich Young love Trading the Pristine Method® (TPM). Because it’s logical: The interesting thing is that TPM® is the only trading method James and Sami ever studied. They never bothered with any other systems. Because Pristine worked for them the first time around. And then it kept on working. Want to master TPM®? Consider the Pristine Mentorship, which Sami and James lead together.
Continue Reading -->SpaceX Is Going to $210+
ATTN: Sami Abusaad and James Rich Young’s next Pristine Mentorship is on the calendar for October through December 2026. Spots are limited so check it out. Sami Abusaad doesn’t care about the news. The charts say SpaceX (SPCX) is going to $210+. See why he bought the stock 3 different times recently: Sami goes over: What the monthly and daily chart say about the stock The level that could catapult SpaceX to the $21o to $220 area What could actually put the stock in danger How he handled the IPO His current stop, and how he plans to trail his SpaceX position By the way, here are Sami’s entries from the Number Ones newsletter: As you can see, Sami has trade the stock as a swing as follows August 11: Started the SPCX long at $139.31 August 24: Added at $138.11 August 25: Added at $138.56 And with the stock near $157 on September 17, this “triple long” is up nicely over the past month. Want to learn how he makes these gamebreaking trades? Consider his Pristine Mentorship, which he co-leads with James Rich Young.
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