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Strategies & Market Trends : Stock Attack -- A Complete Analysis

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To: Lee Lichterman III who wrote (22570)	4/1/2000 9:24:00 AM
From: Robert Graham	Read Replies (5) of 42787

I also have some comments to make regarding this statement from a previous post: many stocks are making tons of money There has been two back-to-back 10% corrections followed by two more back-to-back corrections, both in six months. I am looking at the NDX for this information. I guess it depends on your time frame. Over the longer term, "tons of money" could of been made. The question is how to capitalize on it in the trader's respective time frame. I do believe as we move forward in time, the market will become more volatile. Long term traders do not like volatility. This benefits the short term traders who are quick. And there is definitely opportunity here for the day trader. There has been signs of distribution ever since the first back-to-back corrections. Actually, this pattern has been occurring for quite a while with some reprieves. In one case, I believe the same money that left the market a while back came back into the market when the U.S. stock market began to outperform foreign markets. For I do think the selling in the past was in a larger part foreign interests. Is this the same money selling again? Would they be willing to take their very impressive profits at this time when momentum is on their side to move money back inito their own markets that are doing well now? After all, they would be selling very large amounts of holdings which is best done into strength. I think this is a definite possibility. The difference from the past is that after a significant reprieve of selling, the selling has returned and now is more aggressive. Also I find it is best not to underestimate the impact of public sentiment on how this can propel prices upward, and even catch prices as a "falling knife" to significant support. For this is who the big money is selling to. And given the nature of the public trader who has and will continue to become more of the dominant force in the market, I am anticipating a continued increase volatility. Then add to this component the hedge fund influence on the markets and their use of derivatives. These guys during the initial part of a correction can buy significantly "out of the money" options as hedges. Then when the market after selling off for a period of time (way oversold) is very near to making these options "in the money", the hedge funds very aggressively jump into the market. This is because they now have a floor underneath their buying efforts. This causes the "surprise" rockets of price back up from an extended period of selling. Just some thoughts. Bob Graham PS: I would appreciate a view of the foreign markets by someone who tracks them to see if my thought that the foreign markets over time have bene showing buying interest.

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