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Strategies & Market Trends : The Dead Cat Bounce Theory

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To: Joe Copia who wrote (318)3/29/1997 10:08:00 PM
From: SE   of 1836
 
Joe,

I know you should have held INTS and maybe DLGC will work out as a week or so hold, however, until I see more proof on paper that a longer holding period is solid I would advise caution. Some have rightfully mentioned the possibility that this method could put you in a major downtrend on a stock, such as COMS lately. Without going back to check, I believe you could have grabbed a point or two out of COMS while it was dropping, but you had to be in quick and out. A week or so holding period and you could get your assets handed to you. For my liking, I prefer the one day or less holding period. Grab 3/4 to 1 point and be gone. If you only make 5% average per trade and only trade a couple to three times per week...wow. Run the numbers. Cash is king. Exposure to the market, especially dead cats, could be just that...deadly.

Still formulating my theory on these dead cats and offering what I see along the way.

MO.

Scott
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