The goal of every brokerage firm is to have thousands, if not millions, of its customers send them a check every month. So how do they try to make this happen?

They tell investors things that aren't true. They say things that have been carefully crafted to sound factual, logical and reasonable but are not. These things have been repeated so long and so often that they have become the conventional wisdom of Wall Street. They are presented as though they were meant to help you make money in stocks, but they actually were tailored to get your money and keep it. So what are these lies and how can you avoid their pitfalls?

Come hear my presentation on Saturday night, January 3, 2009, at our All-New, Two-Day Investment Seminar in Tampa, FL, and I'll tell you all about Wall Street's Five Biggest Lies.

JAIL BREAK.
What do Bottoms Up, Jubilee, Odd Fellows Long and Pirates Long have in common? Why have these strategies produced explosive profits time after time when the market soars from a bottom?

They all find stocks that have very low RT levels at market bottoms, whether you find these stocks by sorting by VST/RT, RV/RT or GRT/RT Desc. These strategies also find stocks with high RV levels. So the moral of this story is that reasonably good stocks which have been the most beaten down in price fly higher and faster than those that have held up the best. With this in mind, I wanted to create the mother of all explosive strategies. So I came up with a new strategy called "Jail Break."

As if this market weren't volatile enough, now you can put more zip into your portfolio. Direxion Funds, a leading provider of leverage funds, recently introduced eight new exchange traded funds, ETFs, offering 300% leverage. Four are regular funds that go up in price when the underlying indexes go up, and four are inverse funds that go up price when the underlying indexes go down. Here they are:

BGU Russell 1000
TNA Russell 2000
ERX Russell 1000 Energy
FAS Russell 1000 Financial
BGZ Inverse Russell 1000
TZA Inverse Russell 2000
ERY Inverse Russell 1000 Energy
FAZ Inverse Russell 1000 Financial

These stocks will make relatively large price moves on most days and should be a Day Trader's Delight.

If the stocks ranked lowest by VST-Vector are in stock market hell, the ones ranked highest must be in heaven. The top stocks ranked by VST-Vector are supposed to have the best combinations of Value, Safety and Timing, so what have the Contra ETFs been doing up there?

Contra ETFs are strange beasts that go up in Price when the market goes down. Not only that, but VectorVest doesn't compute a Value or Safety Rating for Contra ETFs or for any ETFs, actually, but assigns a Value equal to Price and gives default ratings of 1.00 for Relative Value, RV, and Relative Safety, RS, to all ETFs. So Relative Timing, RT, plays a key role in analyzing, sorting and ranking ETFs. When RT goes up, VST-Vector goes up. When RT goes down, VST-Vector goes down. VST follows RT up or down like a puppy on a leash.

So what kind of a VST does it take to make it to heaven? It takes a VST rating of 1.35 or better. This means that any ETF with an RT of 1.76 or higher will show up among the highest ranked VST stocks. As far as I can tell, the first time a Contra ETF had a VST above 1.35 was on August 15, 2007, when SRS, ProShrsUlShRE showed up in Stock Viewer as the eighth highest stock ranked by VST. Had you bought SRS that day and held it to yesterday's close, you'd be up 14.35% vs. a 34.45% drop in the Price of the VectorVest Composite. But there are many, many ways to do much better than that with Contra ETFs. See, for example, our August 3, 2007 "Strategy of the Week," "How to Make Money with UltraShort ETFs," or see our November 2, 2007 "Strategy of the Week," "How to Make Money with Contra ETFs."

I've received feedback that some of our subscribers are upset that some high VST Contra ETFs have 'B' ratings and have been distorting the accuracy of the Buy/Sell Ratio, BSR. On a day such as October 27, 2008, for example, when the Price of the VectorVest Composite closed at a five-year low of $17.13, 99 stocks were rated a 'B' and the BSR was reported to equal 0.01. No, no, no they said, 57 of those stocks were Contra ETFs and they shouldn't count. The "true" BSR should have been reported as 0.005. Now I have to ask you, does a BSR of 0.005 give you any more information than a BSR of 0.01? Both readings indicate a brutally oversold market.

I must admit, however, that there is something I don't like about these guys showing up as high VST stocks. It's that high VST stocks typically have excellent financial track records and go up in Price over the long-term. Contra ETFs do not have the engine of earnings growth to drive their Prices higher and higher over time. In fact, they will be heading back to Hades as soon as the market begins to move higher. That will be a good thing because we would no longer have any Strangers in Paradise.

Nothing, absolutely nothing, attracts more attention at this MoneyShow Conference in Washington DC than when we begin talking about Timing the Market. One look at our Market Timing Graph, which shows the incredible October drop in the Price of the VectorVest Composite and our market calls and the audience becomes spellbound.

It's easy to understand why this is happening. Most of the attendees here have been told by Wall Street Wizards that you can't time the market, so hang in there and buy, buy, buy while your profits wither away. Now, wiser but poorer, they see the light and more than one person has approached me and said, "I attended your presentations last year and I wish I had listened to what you said."

Yes, we were here in Washington last September and while I had turned somewhat bearish on the market, I tried not to make any predictions. I simply advised my listeners to follow our Market Timing Indicators and they would be all right. Many of them did follow our guidance and they are doing just fine. But they now want to know when this bear market will end. I can't give them an exact date, but I can say it will not be soon. How do I know?

Please refer to the Climate Section of these Views. Each week it reports on the Bullish/Bearish status of the market as defined by the Truth Chart. This week it is reporting that the market is in a Case 7, Bear Market Scenario with inflation, interest rates and earnings falling. We will remain in a Bear Market Scenario as long as forecasted earnings are falling. You may get a visual of these data by clicking on Graphs on the Main Menu Bar, selecting Market Climate Graphs, a Period of 5-Years, and both S&P Earnings fields. Then click on Get Graph.

This graph shows how dramatically S&P 500 forecasted earnings rose from 2003, leveled off and peaked on January 4, 2008. Its trend indicator turned lower even as earnings continued to rise because the momentum of the earnings gains lessened. Then the trend indicator fell below 1.00 to 0.99 on February 15, 2008. This is when the bear market began.

The bear market will prevail until the S&P 500 earnings trend indicator goes back above 1.00. I expect to see several months go by before this happens. Not only does the S&P 500 trend indicator move quite slowly, but analysts are cutting earnings forecasts and companies are reporting lower earnings. Taken together, these factors suggest that it will be at least six months before we see the birth of a new bull market. Of course, this does not preclude the occurrence of powerful Bear Market Rallies.