Longer-Term Market Trends Message Board

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Strategies & Market Trends : Longer-Term Market Trends

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To: AllansAlias who wrote (1480)	7/25/2008 5:19:04 PM
From: Perspective	of 3209

Something else I wanted to add. You may be right here to be looking to buy into another leg up, and I think that's the odds bet. However, I would also examine risk/reward. I know we're all religious about stops, but until you get a deep enough retrace that the stop is nearby, your risk is to new lows, and your potential reward may be (may) nothing more than the recent highs. Just to keep things in perspective: the trend is down, so you're trying to play the second upleg inside a correction. And my experience with these short-covering rallies is that most price progress is made in the first leg, with subsequent legs substantially weaker as the fuel is quickly exhausted. Sure, there is room for potential progress in SPX/DJIA, but can we actually expect much more of $RUT in the context of a global bear market for equities? It's down barely 15%. I guess I would advocate that the focus should be on determining which high is the next sellable high, as a third wave down may be on tap then. Seasonality would certainly favor weakness in the August-October time frame. `BC

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