Investors beware: Stocks are headed lower very soon. Low enough that we could be on the verge of a double dip recession this year. And while that’s a fairly gutsy prediction to make, it’s one that making itself clear from a technical perspective right now. Want to avoid getting burned in this market? Here’s everything you need to know…

Take a good look at the chart below… It’s the NASDAQ 100 Index off the 2007 peak. Does anything jump out at you? It should:

In the past I’ve talked about ABC’s. I’ve talked about Fibonacci levels. I’ve talked about trend channels. That’s a big picture chart. Now let’s zoom in and look a little closer at the chart above.

If the charts above don’t give you some pause, I don’t know what will. Those who are long only? You better be prepared!

Those who are wise enough to take control of their own destiny vs. allowing a traditional Wall Streeter to do so? Better start to think about hedging the long side of your account. Those who have 401(k) plans investing heavily into equities, you might want to think about raising some cash. Those who have IRAs and can’t short? Better be looking at inverse ETFs.

Those who see it for what it really is? Get ready to have some fun on the short side.

Right now, the S&P 500 is setting up the same way the NASDAQ 100 did back in 2007 JUST BEFORE The Markets gave back 10+ years worth of gains. You don’t want to potentially have to go through that again do you? After all those who fail to learn from history are doomed to repeat it…

But not so fast — right now there’s one thing missing: the C Wave of the “ABC down” I’ve been talking about for weeks here. By the time that wave is clear the damage will already have been underway and as we’ve always said you’re late to the party

So the big question at this point is: If this breaks are you going to be prepared to take action or be a deer in the headlights?

In the past couple of weeks I’ve filled Penny Sleuth readers in on some short side actions to take in just such a situation. Hopefully you have been paying attention [Ed. Note: If not, you can check out our archives here…]

Week after week, we’ve been laying out the most likely outcome here based upon technical analysis. Now’s the time to pay attention. Not being vigilant in this market could end up being a serious mistake…

Sincerely,
David Grandey for the Penny Sleuth
AllAboutTrends.net

February 25, 2010

David Grandey

David Grandey is the founder of All About Trends, an email newsletter service revealing stocks in ideal set-ups offering potential significant short-term gains.  A successful canslim-based stock market investor for the past 10 years, he has worked for Meriwest Credit Union Silicon Valley Bank, helping to establish brand awareness and credibility through feature editorial coverage in leading national and local news media.

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