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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: donald sew who wrote (32889)	10/13/2000 1:27:43 PM
From: horsegirl48	Read Replies (1) \| Respond to of 42787

So unless we sell off a great deal from here and retest the lows we will be in a trading range? HG48

To: donald sew who wrote (32889)	10/13/2000 2:37:30 PM
From: Robert Graham	Read Replies (3) \| Respond to of 42787

Here are some thoughts: It may not be considered a retest for the purposes of a bottom, but IMO it may still be considered a revalidation of support. But price must continue to rally from here for this to be relevant to the market. So far I do not see evidence of this, for the behavior of the market has changed. And until this pattern of selling changes, I will anticipate further selling. I think the weekly chart is the one to look at right now. Here the chart shows the market at a juncture that can have longer term consequences. The Stochs on that chart have bottomed out, supporting this observation. And look at how price has accelerated its selling since the previous juncture, which would be about 1418 for the SPOO and about 3584 for the COMPX, just from a quick look at the charts. No surprise for a bounce here. But IMO what is more important is what happens after this initial bounce. The important question is "will a bottom form here"? Lets place this in perspective. The COMPX has sold off 40% over a period of 10 months. Now how long does it take for market player to stop anticipating "dead cat" bounces to play, which tends to happen in more bullish markets? When will I stop hearing the talk of a "value" play. Both plays can end up as siren calls for the day trader. We have two factors here. One is fundamental which is a slowing economy. This is being proven out by VERY predictable earnings shortfalls. As a consequence, the market has sold off. This took no rocket scientist to figure out. I think some need this emblazoned on their forehead. But since day traders are playing the minute gyrations of the market, many were still looking for that "pop" to play, since many still only can play the upside. A "pop" is all they should expect in this market, but many were still talking "rally". I see a myopic perception on their part has contaminated their perspective where they are now looking for that "bounce", or better yet, that "great value play" to make, being the first one in on a significant rally that is "overdue". This is the talk I heard at SI a week ago, that the market will go "up", so it would be a good time to "jump on board" for the anticipated rally that they thought can possibly reach previous heights, or so went the implicit thinking. Look at what has resulted, an additional drop by the COMPX of about 400 points, which represents another 10% loss, inside of one week. When day traders start thinking like longer term position players, they inevitably have the rug pulled out from under them. Only in markets with very positive sentiment would this approach work, for the money they will definitely end up losing would be more than offset by the profits they made earlier using this approach. But this market has not demonstrated this kind of euphoria for quite some time now. We are talking about a good part of a YEAR. But I find the same people making this same mistake. So some never learn. This is one reason I find long term position holding and day trading in the longer run simply does not work well together for many. It is difficult for those traders to keep these mentalities separated in these very distinctly different approaches to the market, particularly when their greed and fear enter the picture. Some want to combine them together, not only ride a good rally through, but as a day trader, also be there at the beginning. This is simply not necessary to make good money in the market. Over the long run it is futile, and since it is not necessary, it is also foolish. But i am sure it feels good...when it works. So I recommend to some to do yourselves a favor. Play what the market is telling you, what it is indicating right now and very importantly also confirming through price action. This requires at times almost super-human focus and discipline for the day trader. Do not let your "upside" predisposition in your trading contaminate your ability to see what is actually happening in the market. For not only is one important sign of a professional the ability to play both sides of the market, to make money when the market is going up and down, but also this orientation helps the trader to keep their balance and perspective. For their is no "need" on their part for the market to go in any "perferred" direction. And by all means leave your feelings out of this. There is a big difference between a "gut" feeling and perception through one's intuition. Just some thoughts for all to consider. :-) Bob Graham PS: Life has been a bit crazy recently. I do thank you all for your support during this terrible time in my life. Please do not take the above post in a negative way. It is an opportunity I have not had in a while to blow off a little steam. I do hope all of you still find some value in what I have said. :-) PPS: There is a type of top on the weekly charts of the COMPX and SPX indices. The COMPX is more interesting in the blowoff style spike that then is followed by a type of continuation top. Will these tops as they stand resolve? The COMPX does set up for one interesting case of a tower top, where there can be one last strong rally to the previous high before the elevator goes down just as quickly. Are there market indications for such an event? I wonder. Just thinking out loud here. Nothing here to take seriously for trading purposes, but an interesting thought nevertheless. PPPS: Please keep up the good work, Donald. Always enjoy reading what you have to say about the market. :-)