MDA - Market Direction Analysis Message Board

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Strategies & Market Trends : MDA - Market Direction Analysis

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Dec 9 4:00 PM EST

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To: KM who wrote (24140)	8/30/1999 12:40:00 PM
From: HairBall	Read Replies (1) of 99985

KM: Well first she says this... Long-term investors tend to rely on signals such as the break of an important low or support level to sell, but so does everybody else. Selling when things look bad is instinctive to humans. It takes no skill or experience. It is a gut reaction to puke at the low when the market looks its worst. And if everybody sells on the break and there is no follow through, the market makes the bottom right there. This phenomenon is why so many investors, who wish to time the market on a long-term basis, find themselves selling at the panic low and then the market miraculously recovers and they find themselves out of a position. And then she say this... If last week's low is broken on the S&P 500 index, we will sell all remaining stock positions and go to 100% cash. As traders, we will initiate short positions in anticipation of a much more serious turn to the downside. Hmmm, what is the difference. She is still using a support area to determine an investment action. No difference...just a lot of posturing! After the fact analysis is helpful as it helps us recognize future patterns, but before the fact analysis separates the wheat from the chaff. Regards, LG

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