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

To: Mike M who wrote (76547)	5/5/2001 10:21:55 AM
From: Temple Williams	Read Replies (2) \| Respond to of 99985

Mike ... I suggested a few weeks ago that any sideways move from the Greenspan rate-cut bar ... what I call a stretchmark ... would indicate that the commercial "sellers" were lightening their load. They were caught with their shorts down by the interim rate cut. Now 8 trading days have passed, and the market has made no really serious attempt to revisit the lows of the year. To me, this suggests the lows for the year are in. The volatility and the extent of the stretchmark have surprised me. Swing traders had their pockets picked, or suffered through huge drawdowns, on both sides of the fence. They could put a 20-handle Spoos stop on their trades when they got that far ahead, and they were still stopped out. Targeted trades have worked, but not well. Scalpers win in a traders' market (versus the investors market we had up to 1997, followed by the gamblers' market we had from then to March 2000). Traders' markets send serious investors into "safe" instruments that generate income. They grow weary of the crap shoot. They know a casino when they see one. They'll visit the tables. But they won't hang around and make a habit of it. They are smart enough to realize how that ends. So we are stuck with a traders' market for a few years here. The pros will make it. Most won't. But it also means that some of the pros will have their walking cards handed to them. I think the pink slips are about to go out to some hedge funds that remain convinced that we will revisit the lows of the year. The commercials are about to get squeezed. Right now I think that (despite another sickening lurch or two to the downside) we will be a lot higher in September than we are, or were. I believe the market is about to rocket on a spectacular short squeeze. We will not, however, reach any all-time highs (except maybe in the DOW, which will not be "confirmed"). Because all those folks (investors, not traders) will recognize a "Second Chance" and get out. Plunging the market back into the Valley of Shorts. We are in for some very interesting years, spectacular events (not always pleasant) ... and in the end the temporary redistribution of wealth spawned by the dot.bombs will be back in the hands of the financial elite. As it always has been, so it shall be. I think :o)

To: Mike M who wrote (76547)	5/5/2001 12:20:38 PM
From: Temple Williams	Read Replies (2) \| Respond to of 99985

Mike, I forgot to include some numbers in the previous post. The latest COT report, released Friday (and measuring the week ending at Tuesday's close), shows the large commercials have cut their S&P 500 short holding 8.25% (compared to the previous week). Their S&P 400 short positions dropped 14.33%. Their E-mini short positions (fast money) dropped 22.89%. Let the short squeeze begin? Perhaps "continue" would be more accurate.