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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures

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To: Arik T.G. who wrote (3721)	9/10/1998 9:12:00 AM
From: Tom Trader	Read Replies (3) of 44573

Arik--thanks for your analysis I know that you follow the wave theory as part of your analysis. I think that the psychological component that you outlined is also significant. My sense is that at this point the public at large have chosen to deal with the decline by avoiding making additional investments in the market. The turning point--panic point-- will come when a sense develops that the hard earned gains of the past several years that they have seen in their equity is about to go negative. Now this point must obviously vary for different indivduals--but there probably is a level in the SPX that represents the median--and when that level is/is about to be breached, one could see substantial liquidation occurring, IMO. A year ago, I read that level was around 5500--since then with the new money that has been going in to the market, the level will have changed. I don't know what it is now. But most people when confronted with liquidating portfolios will tend to view the break -even level as a key number--at which one calls it quits--especially if the scenario calls for further weakness. The interesting and significant thing that I heard yesterday was a senior person at MER--I think the CEO -- saying that rallies should be sold. Now that is a remarkable statement for a brokerage company's senior executive to make. BTW, do you include cycle analysis in your work--and if so, what are the key dates in terms of a bottom in the market?? I went short the futures yesterday at 1012--and watching the market's inability to muster any strength, decided to hold the position overnight. This is not a system based position--I am flat the system and looking to go short.

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