I've mentioned before that I have been in this business for a long time. I don't do that to pat myself on the back, but to affirm to you that my observations are from a professional background of a huge number of financial events that, when added up, provide me with a unique pair of glasses through which to see the current financial picture.

For what that is worth to you, I try to give the current day's bearish and bullish news a "tweak" that I hope gives you an extra leg up in your efforts to build a solid and consistently profitable portfolio of investments.

So, in the spirit of wanting to give you a bit of an "extra leg up," I want to devote this week's column to what I call "a funny feeling" about this market.

As you know from last week's column, my Super Chart went bearish at the close last Friday, six consecutive weeks below the Super Chart Keyline. This is the eighteenth time that prices have crossed — up or down — the Keyline since the early part of 1965.

In all that time, only once did I feel this "uneasy" sense about what was going on in the markets. That was in 1987. That was the year that there was a second stock market crash in the 20th century.

Story Continues Below

I can still very clearly remember standing at the quote machine of the broker I was visiting that day and watching the number -500 appear to all of us standing there. There was a clear, audible, collective, and sudden sucking in of breath that affirmed that this was truly a moment that would not be forgotten by any of us.

The -500 was, of course, the amount the Dow Jones Industrials had dropped from the open until about 2:20 p.m. that day in October 1987. And please remember, this was when the Dow was in the mid-2000 range. Today, that would be like the Dow Industrials dropping approximately 2,700 points in one day. You can see that it was an incredible day.

Yes, it is true that this event changed a lot of things in the brokerage and banking business. But, that is not what I want to talk about here. I want to look at what happened next.

I recall that within a few days of this event, the then and still famous Sir John Templeton was invited to the well-watched (but now extinct) TV show called "Wall Street Week."

The moderator, Louis Rukeyser, spent the first two-thirds of his show telling viewers that things were really bad everywhere. He said this was going to change the whole U.S. economy for the worse and that he and his colleagues would do their very best to help viewers just get through it. I believe I recall him saying that it could be as long as four to six years before we really began to recover.

[Editor's Note: The Top 3 High-Yield Stock Investments]

The guest, Mr. Templeton, was then brought on the set. I think there was only 8 minutes left in the show at that point. Rukeyser's habit was to first have the show's experts comment on the week's financial events and then wrap up the show with a well known financial figure.

Mr. Rukeyser introduced Mr. Templeton and asked his first question. I think I have it pretty close when I say he said, "Mr. Templeton, isn't this about the most damaging event to the economy since the 1929 crash?"

Mr. Templeton looked directly at Mr. Rukeyser, smiled a broad grin and said, as best I remember, "Oh, LOUUISSSS! (He drew it out to emphasize that Louis was being a bit upbraided). True, this is a difficult event for us, but it will be looked back on in the future as just a blip on the charts (he was very right about that). This country is strong, vibrant, and moving along really quite well. I am buying stocks heavily today and will for the next few weeks, for, to me, they represent some of the best prices we will ever see again."

To say that "LOUUISSSS" was at a loss for words is to put it politely. He never expected to hear that response.

But, I remember that I chewed on Mr. Templeton's words for weeks. Then, I did a funny thing. I began to look at all sorts of economic charts. What I found was startling to me. There was no huge drop in shipments or orders of manufactured goods. Unemployment was not racing up the charts to double digits. Personal income was not tanking. Construction was not coming to a halt and bankruptcy and foreclosure rates were remaining, in light of the situation of the day, relatively stable.

"What," I asked myself, "was going on here?" If this 1987 crash was a close repeat of 1929, where were some of the dire numbers to at least partially support the coming depression? The answer was simple. They didn't exist. There was not going to be a depression.

What had happened in the stock market, though it had a devastating effect on its participants, had been heard by Main Street, but, except for a few scattered geographic locations, the impact had been shrugged off.

It was then that I began to suspect that the 1987 event was no 1929 event at all, not even close. And if that were true (which it turned out to be), the time to buy stocks for the long-term was now! That was what I wrote in my newspaper column and in my newsletters of that day.

Some of my readers thought I was daft (my good colleague, John Browne, would say that is a British expression, I believe, but it feels right to use it here). I even remember receiving some not so nice mail from obviously badly injured investors that said, in no uncertain terms, "Mr. Whitmore, you are nuts!" But, I was convinced that the Super Chart had been duped. Its signal was a true one, but then was not supported by events that followed, and time proved me right.

Now, I am recalling those 1987 events again for a reason. There is something that "just doesn't feel right" about the current crop of charts and economic data being reported today. We are, and I repeat, according to my Super Chart, in a bear market.

Yet, the unemployment numbers are just a bit soft. Nowhere are there long lines at the unemployment offices. The Fed is issuing unfilled order reports that just don't match the expected downturn. Unfilled orders and backlogs continue to climb. How can this be?

And look at the Fed's "hours worked" report. What is happening here? Well, the chart's line continues to climb straight up. And look at the recently approved military budget. There is a simply huge increase in activity to build new and replacement military equipment and parts, simply huge! The business and personal income this defense budget will generate for U.S. companies and workers will be staggering! And even the Fed's report on commercial and industrial loan activity continues to rise at a rapid rate.

What is going on here? To me, it can only be one thing. The general public may believe we are falling into a recession or even worse, a depression, but the rest of the economy is whizzing right by them.

Now, don't get me wrong, here. I suspect that there may be a mild pause in things going on right now, but let me tell you straight out, all these Fed numbers make even me believe that my Super Chart has been, for the second time since 1965, duped by current events. How is not important. Just the fact that the numbers support this conclusion is what counts.

As I told you last week, if the S&P cash index moves above the Keyline on a Friday close (it is a weekly chart), all bearish mode stances I have so far advised are to be forgotten until the Keyline either resumes its signal (six consecutive weeks of closes below the Keyline) or we get a new Buy signal (six consecutive weeks of closes above the Keyline).

[Editor's Note: Our Options Plays Are Up 60%-1593%. Don`t Miss Out. Go here now.]

But for those of you a bit more adventurous than others, to me, this might just be a time to do a bit of "advance reconnaissance." For, as I see it right now, if the economic numbers continue to move in the directions they are currently going, a new Super Chart Buy signal will clearly be the outcome, and sooner rather than later.

Of course, only time will really tell us how to proceed. But, what might you more adventurous folks do with my "just not right" feeling in the meantime? Well, here are a few suggestions you could find helpful. First, I would buy some far out in time and price LEAPS call options — just a little insurance if I am wrong and a big payoff if I am right.

Second, I would examine my portfolio carefully and see if the stocks remaining in it are presenting any good buy scenarios. Remember, I earlier advised that you sell any holdings with a loss that you have owned for less than 12-15 months — only the surviving stocks, your "good guys" should be there by now.

And what is a good buy scenario? Well, first, look for P/E ratios under 11-12 or so, stocks with low debt-to-equity ratios (even cash-rich, debt-free companies), and good dividend payers. Next, look to the consumer type and defense producer stocks, especially, as the first to get some of your investment money. If you don't own any, I would get at least a few now, but no big-time additions.

Third, don't use any more than one-half your current cash position to do any buying. We are still in a Super Chart bear mode and until we are otherwise, we don't want to use all our ammunition.

Lastly, stay close to this weekly column. The next four to five months will be very important to your investment future. If my "something just isn't right" conclusion does turn out to be right, time will prove this period to have been an unusually unique and profitable one to have established stock positions. I will keep you up to date.

So, that's it for this week. But, just before I go, here is one piece of parting advice. Go look at the charts yourself. Get a feel of what the numbers are telling you. Don't listen to anyone who is too bullish or too bearish just now. One of them is clearly wrong. Look at the numbers for yourself! You be the judge. So long as you trust yourself to read the numbers, then you will do just fine.

For those of you who want me to do all the work for you—hey I can't blame you one bit—and want my latest, buy/sell recommendations on the best high yield income investments from around the world, I recommend you sign up for my brand new newsletter called Max Whitmore's High Yield Income Investing. For a special offer exclusively for readers of this column, Go here now.

Do hope your coming investing week is a good one. In the meantime, you keep in touch. I do! See you next week.

Editor's note:
Special: A Bubble on the Verge of Bursting. Act Now.
Our Options Plays Are Up 60%-1593%. Don`t Miss Out. Go here now.
Why the Fed Interest Rate Cuts Won`t Work