. . . . . I SMELL A BEAR TRAP. . . . . . . .
A bear trap is when bulls plan on regaining control, but rather than stampeding in, they stand there and snort and rub their hoof in the dirt and posture. . . and give their prey time to get away. . .before they plow them into the ground. This is why I keep saying that selling shares in October can be hazardous to your portfolio.
Now, I already know the answer to this. . .because I can see it in the quotes. . . .but here is a fun way to tell whether or not we are in a massive bear trap. . .
Take a blank sheet of paper. Draw a line vertically down the middle. On the left side write down 15 large cap stocks that you would be most interested in owning from now until the end of the year 2000. . . . [aggressive, but no longshots. . .just the ones you admire most]
Now on the right side, write down 15 large cap stocks that are extremely popular solid companies, but you have no particular interest in . . . good large companies, but not necessarily aggressive in earnings growth.
Now, calculate the move up or down in the past 5 days and for today. . . and write those two numbers in next to the symbol on both sides. Add up the columns. . . the gains or losses for both sides for 5 days and today. . .you should have 4 totals. Now divide each of them by 15 [or the number of stocks you listed to get an average] The answer is the average gain or loss over the past 5 days and for today.
Then report to the thread the 5 day and today's average gain or loss for "your favorites" and for "generics" . . . . if the loss for the very best stocks is considerably more than for the generics, for each of us, then we can safely conclude that the stocks we all want are being manipulated downward. . . .and one must ask why are the very best getting slammed so hard.
The answer can be found by analyzing the historicals going back to October 98. Look at EBAY, AMZN, ATHM, RNWK, EXDS, VRSN, DCLK, CMGI, AOL, YHOO. . . . .how much were they devalued in October 98 compared to XON, FD, BAC, IBM, VO, CAT, SLB, AMR, GM, PFE??
My point is that we saw a similar bear trap in October 98. . .regardless of Asia, etc. . . so the "hot stocks" took a bigger beating than the generic blue chips!. . . then looking at the one year chart, of course the hot stocks were like rockets where as the generics looked like gliders. . .
I haven't looked, but I will guess that today, while the above list of hot stocks is considerably lower . . the generic list is probably unusually higher.
Some call it rotation. . . that makes it sound "natural". . . . I call it a manipulated bear trap. . . .which should eventually help us long termers. . . .but it sure causes anxiety as we watch our babies get slammed.
The important thing about this post is this. . . . we do not buy or sell any of our stocks without knowing WHY they are moving in whichever direction. . . and fully understanding the situation. . . .then if you decide to buy or sell. . . it is based on a particular play, which is part of the larger plan.
Suggest avoiding any impulse buying or selling based on the wild volatility. . . too easy to make mistakes, when trading on impulse.
I am now looking for one day this week, where buying volume hits the market like no time since April. . . FORCING a short-covering rally to aid it along. So once again, I am in a totally bullish stance.
Am I alone?
Rande Is
PS> I like that, Kevin: Home thread=talk radio. |
