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Strategies & Market Trends : REITS - Buying 1 - 2 weeks before going ex-dividend
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To: James Kibler who wrote (2309)7/23/2002 2:34:17 PM
From: Richard Barron  Read Replies (1) of 2561
 
Jim,
I'll share some insights that I learned about through the years regarding blowoff highs and capitulations.
Usually the increase or decrease accelerated towards the peak.
When I could draw the 3rd trendline in the peaking stage, a 1/3rd retracement would occur towards the original peak.With the ^RMS:
July 1 - July 9 was the first trend line peaking near 469.
July 9 - July 16 was the second trend line (with a retracement from 421 to 441 on the 15th and 16th.)
July 17 - July 22 is the third trend line. I would go to the intraday chart at this point. (This 2nd trendline isn't much of an acceleration, so it is possible that there will be another acceleration)
400 is the breakout of the trendline, so it is too far to play with, since the ^RMS is near 390.

I heard a momentum play give great advice 5 years ago.
He said each morning to start off by comparing the current price of the Nasdaq to its 200 day moving average. If the Nasdaq was trading above the moving average, go ahead with your routine. If the Nasdaq was trading below the moving average, quietly and softly shut the paper and go back to sleep for the day.
The Nasdaq has traded below it's 200 day moving average on and off from April-Nov of 2000, all of 2001 until Dec 2001- Jan 2002 and from Feb 2002 on except for a few days.
So, around July last year I went to 70 percent cash, expecting REITs to follow the market at some point. The ^RMS was around 402 then.
If you catch falling knives, working with tight stops will minimize your losses and keep you from taking long positions that were meant to be trades.
Richard
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