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Strategies & Market Trends : Intraday Updates, Analysis & Strategies for Daytraders -- Ignore unavailable to you. Want to Upgrade?

To: John NY who wrote (247)	3/14/2001 1:17:31 PM
From: Jenna	Read Replies (2) \| Respond to of 589

P/E aside we have to be really careful here about RALLIES. This is crucial. Even the highest P/E stocks if they are 'favored' by institutions, or even traders as high range daytrades, they will move in a rally. High p/e stocks will rally if they are favored and have earnings. DPMI although I closed the puts already this morning I will reshort this one but not just yet. I could have gone long the rally, but we opted for cheaper stocks. ULTIMATELY they will be down but along the way, there will be bear flag rallies. Some of them will be steep. The way I do play them is usually I don't go long the rallies unless they are cheap stocks, but I wait for the spike high and short that on a down day. Conversely on an up day I DON'T SHORT THE SPIKE HIGH AUTOMATICALLY. I have a rule of thumb that isnt etched in stone: It is, I rarely short a strong stock in an up day during a rally, even if it pulls back. I rarely go long a weak stock that has been negative much of the day on just a "bear flag" rally, even if it pulls up, I rather wait to reshort. The best thing is to trade in the a) direction of the stock that day b) the direction of the dominant trend of the market internals. Trading on the REVERSALS of that trend.. is like running up a down escalator, sure you can do it if you run very fast, expend a ton of energy but you won't get as far as the other guy, who is casually walking up the up escalator, leisurely but at a steady gait, and he is not huffing and puffing at the top.