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Politics : Idea Of The Day

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To: Nancy who wrote (13937)	11/11/1997 8:34:00 PM
From: Tom Trader	Read Replies (1) of 50167

Hi Nancy re >>I dont like how brokerage stocks behave today, particularly MER which back to its sell-off low<< What I see is many stocks--not just brokerages--retracing towards their sell-off lows and in come cases breaking those lows and yet the indices are still well above their recent lows. As is apparent the decline in some individual stocks/sectors far exceeds the decline in the averages and this masks the extent of the sell-off that has occurred. From the stand-point of the individual investor who is more concerned with the performance of stocks as opposed to the indices, the fact that the market is well above the low set during the sell-off is no consolation. This has manifested itself in the distress that some have posted regarding the loss in the value of their portfolios--especially those on margin. I personally have seen some damage despite the fact that I was fully hedged with OEX puts--again because indvidual issues are down much more than the averages--although the number of puts that I bought took into account the beta of the stocks that I was long. So perhaps this process of stocks retesting/breaking lows while the indices hold up is the way this whole thing is likely to play-out. What I am trying to say is that even if do not see the lows that the indices made during the decline, from a practical stand-point individual stocks are retracing all the way down to the lows that they made and in some instances breaking through them. I think the odds still favor a decline to the 900 level on the SPX before the uptrend resumes. BTW, a system that I use for intermediate trades generated a buy signal today -- however the short-term system that I use for trading the S&P futures is still on a sell. I have decided to buy some OEX calls when I get a buy signal on my futures trading system. Take care

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