9:33 am - Market Outlook by Bill Wermine

Dear Traders,

Expect a 300 to 400 drop in the Dow and a drop in UK European markets and a short rally in the USD in the short term as fear grips the markets - perhaps to mid August. Use this rally to offload any US Dollars or US assets - central banks around the world will use any rally to offload their USD.

The US economy has not bottomed despite the talking heads on CNN/ CNBC and Bloomberg. Unemployment is at a 26 year high, the average work week in June fell to 33 hours, the lowest on record since 1964, house prices are still falling, foreclosures are up, California is bankrupt, the government has nationalized the auto companies, Citi Bank, AIG, Fanny Mae and may soon pass a cap and trade bill which will increase taxes, create a huge new bureaucracy and raise the prices of energy-


My brother just retired and took a holiday accros America. He told me of boarded up shopping complexes and a mood of uncertainty-

The US is moving to socialism the same as Europe. It will mean more regulations, less freedom and slower growth.

The KLSE is holding up well and use this opportunity to sell all your speculative shares- especially those that have had a good run. Only hold super blue quality dividend shares.

For CPO and CI futures traders, I wish to share some advice from Dr Janice Dorn, Trading Psychaitrist and writer of the Trading Doctor.


When I first started trading grain futures 20 years ago, I noticed a pattern in my trading. Every time I made a big profit- I would give most of it back on the next trade.

This happened several times and cost me a lot of hard earned profits and I never knew the reason. I finally committed to taking a holiday every time I made a big winner and stop trading for at least a couple of weeks. My account grew after this but even so I never knew the reason until reading Dr Dorn's blog about a month ago.

The reason is that we have a chemical in our brain called dopamine. The word dope comes from this word. Dopamine is the greed chemical. A big winner will release this chemical and in order to get another dopamine fix we will aggressively get back into the market to make another kill. Emotion will blind us. We will disregard our trading plan. We will forget about position sizing.
and we all know the result.

The reason Genting casino has all the lights, and 3 million dollar jackpot signs, Mercedes S class cars waiting to be won is to stimulate player's dopamine. The world class entertainment are all designed to release dopamine and get us to lose all our money at the tables.

There is another chemical in our brain called serotonin. This is the fear chemical. It happens after a big loss and can cause us to crawl into our shell and make us afraid to pull the trigger. I am not sure how this chemical works and will ask Dr Dorn to clarify.

If you wish to subscribe or wish information contact her at support@thetradingdoctor.com . She is the real deal.

Have a profitable week ahead
Bill