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Strategies & Market Trends : Waiting for the big Kahuna
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To: Monty Lenard who wrote (21800)7/18/1998 9:59:00 AM
From: James F. Hopkins  Read Replies (2) of 94695
 
Monty; Yes the MDY does the mid cap, SPY for the S&P, & DIA for
the DOW. You pay the commission and get stuck with a
small spread. I've followed the SPY the most & I notice a small premium most of the time , also they tend to skew as much as
a 1/2pt just before any sizable change in the index.

Like if the floor is getting buys fast the ASK on the SPY will
go to a premium, If it's getting Sell orders the BID will drop
to a discount, you can easy get took 1/2 pt both ways getting
in and out, and that makes them hard to short term trade.
With the SPY you almost need a 10PT move in the index to cover
the way they skew it, at least 5pts then you have commissions.
I've played these things so unless you going in for a 20pt index
move it's tough to win much even when you got the direction right.
It's looking like the DIA now offers the best moves with the less
skew.

As longer term plays they are ok, and at least you can put in
stop orders ( not to close or they can rip you off ) but
say a melt down did come one day you could get out faster and
better than if you were in a Fund.
If you don't see a melt down there are No Load No Fee funds,
index funds while you have to take the close of the day ,
if you are 1 day ahead of the curve what you save on expense
is a good deal.
Jim
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