Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : NetCurrents NTCS -- Ignore unavailable to you. Want to Upgrade?

To: Jerry Olson who wrote (5365)	1/15/2001 12:39:47 PM
From: rocklobster	Read Replies (1) \| Respond to of 8925

Hey Jerry, I don't know if you follow the Rande Is thread, but he has a concept he has been working on called the 4DML which is the four(4) Day Margin Liquidation. It also works on the short side as a S4DML or Short four(4) Day Margin Liquidation. I have found it to be one of the most usefull concepts I have learned over the last four months. The setup on the long side, which would be a Short Liquidation, is a gap down and then a close at the high on the first day. followed by the fourth day in the afternoon being the high point of the setup. This setup causes the most pain for shorts by forcing them to liquidate their short positions on the fourth day, which is the settlement date for stocks. The setup on the short side, which would be a Long Liquidation, is a gap up and then a close at the low on the first day. Followed by the fourth day in the afternoon being the low point of the setup. This setup causes the most pain for longs by forcing them to liquidate their long positions on the fourth day, which is the settlement date for stocks. I am bringing this up because if you look at the Nasdaq, there was a gap down on Wednesday, followed by a close around the high of the day. the pattern carried through on Thursday, with another gap down and a close near the high of the day. It is common in this setup for a flat or slight reversal day on the second or third day, and friday's slight down day would fit the pattern as well. If this setup plays out, it would forcast a high near the end of the day on Tuesday, since tuesday is the fourth trading day from start of the initial setup gap down on Wednesday. There are variations on this theme, like a 5DML, where the liquidation continues in the same direction on the fifth day, or a compounded 4DML where the liquidation gaps on the fourth day and then continues in the same direction for four more days. However, I feel the most usefull part of this setup to understand, is the concept of the Brokerages using this type of setup in an organized fasion, to force the greatest number of Margin Liquidations. Knowing that the fourth day is settlement date, and an extended four day move will force liquidation in a highly margined account. Now, if you prefer to just focus on four up days, or four days off a low, then maybe we have already gotton it, as Monday afternoon was the low. This concept seems to have amazing reliability. Look at the big run up when the fed cut intraday. That could be considered the gap up first day, even though it was an intraday move, it ran two hundred points in an hour so not many people had a chance to take advantage. But, true to form, the market moved down for three days after that big move,, down thursday, friday, and most of Monday. The Low after 2:00 Monday would have forced liquidation of longs on people who bought the big rally on Wednesday afternoon. As most brokerages can start involuntary liquidation in the afternoon after settlement. Just trying to provide some usefull information, and I am looking forward to joining the room tomorrow. rok