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Strategies & Market Trends : DAYTRADING/SWINGTRADING STOCKS with INTRADAY INVESTMENTS -- Ignore unavailable to you. Want to Upgrade?

To: Cormac who wrote (6)	5/16/2001 8:09:43 AM
From: deronw	Respond to of 565

Cormac, First of all, I can indeed assure you that I am real, for I remember the photo session taking a very long time to complete, ha ha! Regarding your thoughts on DEPTH OF CONFIRMATION, I feel that you are pretty much correct with your assessment. We have found that most retail investors and traders are conditioned to going only long (not selling short), and therefore only require more depth of confirmation as the market increases its rate of decline. During the height of the bull market in the Winter of 2000, the amount of depth of confirmation required by a typical retail investor was quite minimal. In fact, they jumped on the bandwagon at every possible opportunity, all without really a need for confirmation at all! However, from the height of the bull run until now, the level of depth of confirmation has been increasing. I would say it is only within the past one month that the depth of confirmation levels have once again started to decline, as traders start to feel the "pleasures" of positive market sentiment and a recovering market. The ironic thing is that, even though depth of confirmation increases as the market is selling off, very few retail investors and traders ever see an increased depth of confirmation level as the market is RALLYING. This is due to their lack of short selling. If retail investors traded equally on both the long AND short side of the markets, then we would see an increased depth of confirmation level as the market sells-off AND rallies, but this is not the case. I do agree with you that it becomes profitable to capitalize on traders' increased depth of confirmation levels by keeping one's own level static, while others' levels are increasing. This often allows better entry prices and less missed opportunities. However, I do believe that it is important to have some other mechanism in place to compensate for keeping one's level static, such as tighter stop losses and quicker profit taking. The market conditions do, as you mention, affect these things. I hope this helps. Thanks, DeronW General Partner www.intradayinvestments.com