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

To: shamsaee who wrote (60827)	10/18/2000 8:11:52 AM
From: Michael Watkins	Read Replies (2) \| Respond to of 99985

I realize that everyone has to make up their own mind about the market and risk, but thought I would comment on some aspects of your post in the hopes its constructive for anyone. If you are looking to make your cash back,buy the gap down today and go long if we do get one. Where is your stop if wrong? I.e. when does one give up and decide the plan is wrong? Sometimes gaps, up or down, are continuation moves rather than exhaustion moves. I reckon a lot of this is options related That's a supposition or educated guess. Myself, I don't speculate on motives behind moves, I have not found a way to reliably "game" such things, so price and volume continue to be my guide. One exception with options, a strong VIX reversal will always have me closing out a trend trade I was in and search for a trade in the opposite direction. A VIX reversal after the sell off kept me from shorting anything; at this point the bounce, until proven otherwise, has terminated and VIX supports that view as well. I read the same doom and gloom last october on different boards including this one<vbg>. Actually, since the posting volume on this thread is way down, its a BIG indication that the bottom is not yet in. Grin! For a while we were actually charting the post volume and in fact maximum posts often did coincide roughly with major swings. While I personally feel that the situation today is much different, the only thing I can factor into a trade is price and volume... ...But speaking of price and volume, prior to last October we did not have the massive liquidity fueled speculative run up that the market experienced from October 99 onwards to spring 2000. So many stocks went parabolic. If you look at many dozens or hundreds of charts that go parabolic - doesn't matter if its the tech craze of 99/00 ; the biotech craze of years past; Japanese market; BreX etc, you will note that the largest percentages of such charts die ugly deaths. Those that come back to live again generally do so only after long periods of basing, consolidation and many false starts. So its my opinion, mostly based on price and volume studies on many charts, that this is different. Bullish divergence on MACD and RSI on the NAS.* Frankly I don't see what you are seeing, at least not on my charts. First off, it depends entirely on the parameters you use for such indicators. Secondly, and unfortunately, in the event of a prolonged down move, its entirely possible to see "bullish" divergences in MACD, simply because when price moves rapidly and then moves up/consolidates sideways, the moving averages will in fact converge and the next down move that sets a lower swing low will not always drag the indicator down further thanks to the consolidation period, at least not right away. The real problem is that in a prolonged down move, short lived rallies and consolidation periods happen all the time. I'm an advocate of waiting for the market to prove it wants to go up and buying above retracements on the way up, rather than buying it as it drops in the assumption it will go up. I am 94% invested Well I'm about 95% uninvested, in Tbills and cash, and sufficient trading capital in my futures account to exploit short and long stuff intraday. But my durn short key is wearing out. Call me crazy <vbg> :)