Tom Dorsey Q&A Message Board

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Strategies & Market Trends : Tom Dorsey Q&A

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To: Jorj X Mckie who wrote (99)	8/9/1998 12:16:00 PM
From: Ms. X	Read Replies (1) of 102

And the last for today :-) Ok Jan, on the last question does it even matter "blowing through support levels". Support is simply a level in a stock price or index level that found sponsorship. Why the sponsorship was there in the first place and if it will be there again is mere conjecture. Support and resistance levels are ok as guides but should not play any role in how you play the game. Even if the SPX comes down to the supposed support level, and the defensive team is still clearly on the field, does it suggest you take positions in the SPX? Answer is no. No matter how strong support the first consideration if whether you have the ball and if so what plays you should run considering the prevailing risk. So the important thing is whether offense or defense is the order of the day. IF offense is the play and the SPX comes down to a support level, you might consider taking a pilot position in the index at that level or wait for the first buy signal off that level. If the defensive team is on the field, taking a position anything other than for trading purposes will generally turn out to be an illfated decision. Sometimes its best to leave the casino and go catch a show. There is always another train leaving the station. If you miss the bottom or the support level, who cares? This is not a popularity contest, you are in this to build wealth. When on defense play defense. When on offense, play offense. Support and resitance levels play only a secondary role however it makes good media coverage. What I find interesting is the market pundits that crack the Champagne bottles of late when the Dow and SpX and the NYSE went to new highs as if they were clarvoiant (sp) all the while the investors they advise were losing their rear ends. What a game!

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