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Strategies & Market Trends : Technical analysis for shorts & longs

SPY 683.47

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Nov 28 4:00 PM EST

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To: Lachesis Atropos who wrote (16066)	5/17/1998 8:43:00 PM
From: j g cordes	Read Replies (2) of 68432

Lachesis.. So what do we do with this data? OK, you've taken on half the problem and solved it.. the second half of the question is what do we want to do with the data. Stocks can make us money as they accelerate their rate of change up or down. Given that, we need to identify either sector changes over time relative to their own norms and play the acceleration of change up or down.. OR we need to identify the fastest moving sectors in their direction of trend, picking the most agressive candidates within the sectors. What we want to exclude, or put in a watch-for breakout pool, are dead positions... again breaking them down as having topped or bottomed. Some of these, when they break may do so most forcefully so this group is worth watching also. In summary, this is original because it will not assume the standard sector rotation model like Stovall does for example, but lets the data speak for itself. I've observed over the last ten years an accelerated adjustment cycle for surprizes and trend. The move is the same but the time frame is shorter. For example HWP nearly readjusted 14% on its earnings warning... all in a matter of hours, which in the past may have taken weeks to a month. If we are looking for an overall market correction (as some are) then what does HWP do.. go down another 15%? Instead of an overall market swing, the market seems to have devastating episodes by sector with money quickly finding another home that maintains the overall averages. Until gross capital inflows subside sector work will be more valuable. Hope this offers a direction. What are you running your simulations with? Jim

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