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Strategies & Market Trends : Trader J's Inner Circle -- Ignore unavailable to you. Want to Upgrade?

To: Canuck Dave who wrote (44449)	6/25/2001 4:10:37 AM
From: LTK007	Read Replies (2) \| Respond to of 56535

good keep it simple teaching from ST this weekend << Security Trader - Weekly Commentary for June 24, 2001 5 weeks ago we suggested that all the short term point & figure indicators were at their highest levels in at least 3 years and that when everyone has bought........there just ain't too many people left to buy, unless the people that were fearful of the y2k computer crisis ran out of canned food and came out of their bomb shelters. Last week the OTC Bullish Percent (longer term indicator for tech stocks) turned to a sell signal and this week the NYSE Bullish Percent (longer term indicator for the OLD Economy stocks) turned over and is now on a SELL signal as well. This is not rocket science stuff here, its pure and simple supply and demand. When demand exceeds supply for a specific item, prices go up........when supply exceeds demand, prices go down. Don't make it more complicated than that. Its similar to trading stocks using charts......if your stock has rallied to a resistance level and starts putting in lower highs and then penetrates the support between the lower highs....what's it mean ? It means that the supply is starting to exceed the demand. If the stock you own has penetrated support......think about it, that support was previously established by buyers at that level OR by shorts that bought there thinking that they had made enough profits. IF that support fails...well logically, the buyers that were there before are gone.....and the shorts that had previously taken profits at that level gain a little more confidence and hang around a little longer and even short more stock. Think of the market as buyers and sellers.....not as INTEL, CISCO or Microsoft. The market has been and likely will continue to be a traders market for quite some time....there is no reason to get emotionally attached to a stock. With this in mind, think HARD about supports and resistance, think of them as emotional thresholds......if a stock has bounced around support 2 or 3 times and then finally penetrates that support......what's it mean LITERALLY ? It means that there were people that had simply been accustomed to buying a stock at a certain level and when it reaches that level, they buy again. If this support is broken......its a RED FLAG to them and they 1) quit buying at that level and 2) might even start unloading or taking some of their position off the table and 3) penetration of a support level gets the attention of short sellers which adds gas to the fire. So, I guess i am saying....do not think of the market only from the BUY side.....think of it from the SELL side as well. When a stock is taking, don't think of it as...oh, those longs must really be hurting.......think of it as, is there enough downside possibility for me to take a short ? OR, where is the next support level where there have been buyers before AND where those who are short are likely to take profits.>> with this in mind i need check IPOs coming out now--heard there be a lot,if so,that means supply side will be getting too high.max