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Strategies & Market Trends : Technical analysis for shorts & longs

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To: Johnny Canuck who wrote (37795)	7/25/2002 2:18:25 AM
From: Johnny Canuck	Read Replies (1) of 67872

July 25, 2002 On Wednesday, the Nasdaq gapped lower but quickly found its low. It then rallied nicely throughout the morning. Then, after some mid-day drifting, it accelerated in its rally. The S&P (and the Dow) also had the mother-of-all reversals. Based on the above, the fear of mutual fund redemption (funds sell late in the day if they have to raise cash) did not come true. I would guess that this (lack of selling) is what helped lead the indices into the close. The VIX also had the mother-of-all reversals. This action puts it back within the 10% "stretched" parameter (see recent commentaries for more details on this). However, it still looks like it has a ways to go based on relative highs. So what do we do? Well, if this is the "real deal"* we should have PLENTY enough time to get long. For now, I'm in the wait and see camp. In other words, I will be the last person to call a bottom (and if you are a momentum player, then so should you). If the market shows signs of stalling, then we will have numerous shorts setting up. If the market continues to rally sharply, then we will see transistional setups (First Thursts, Bow Ties etc..) on the first pullback. No setups tonight due to the severe reversal in the market. Wait to see how things will play out. Best of luck with your trading on Thursday!

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