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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Gersh Avery who wrote (30186)	10/17/1999 1:12:00 PM
From: Lee Lichterman III	Read Replies (1) \| Respond to of 99985

Well I mulled around yesterday and got nothing accomplished at all. I have no idea where we are headed short term. I did find something interesting though. I looked for time periods where rates were rising like now but the economy was still OK overall. The closest I found was 1994. Now when you look at a chart of the SPX around that time frame it was basically flat. A year long trading range that ended in the higher than normal accelerated rise that last till this spring. I just don't see a crash here unless there is a spark of some sort such as a fund blowing up over gold hedges, bond spreads or China devalueing etc. We could bounce around for a long time between where ever we find support during this down cycle and the mid 10K area for a looong time. I talked to a few people this weekend and most are either planning on buying calls a few months out to "give them time" for the bounce, the others are playing spreads to take advantage of large swings. A long term trading range would kill these unless they are quick on their respective triggers. Too early to say for sure but if this scenario does play out, the best strategies are going to be selling options near the peaks and valleys or else being content to trade the swings both ways settling for a lot less in returns. The sector rotation game could continue for a long time. Good Luck, Lee PS - You must have really liked that book. I remember you talking about it last year.