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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: isopatch who wrote (287)	8/21/2001 9:32:53 AM
From: Paul Shread	Read Replies (3) \| Respond to of 36161

Great comments, Iso. I never fail to learn from you, and I appreciate the time you take to explain things. >>The very definition of a major Bull Move in a stock or sector is when it gets and stays overbought for long periods of time.<< Absolutely true, but something I haven't seen in a long time, so I must confess I wasn't looking for it. Someone here last night - I think it was Frank - mentioned that gold might suffer because the economic outcome could be different than expected. I see two possible outcomes here: inflation or deflation, and the price of gold has historically been stable or grown under such conditions. JMHO... Best, Paul

To: isopatch who wrote (287)	8/21/2001 9:59:29 AM
From: Paul Shread	Read Replies (3) \| Respond to of 36161

An interesting take on the INDU, from an exchange I had with someone last night. Posted here verbatim: "The key as to when the DJIA may fall lies with the Index Funds. Their ability to purchase the DJIA futures (force them above "fair value") and to entice arbitrage trades depends upon their flow of funds from investors (positive or negative), the current position (average cost and margin debt outstanding) of their DJIA futures, and the amount of their bank borrowings (in theory for redemptions). "Neither the SEC nor the Fed cares what the funds use their borrowings for as long as the DJIA survives. Based upon the present "near contract" on the futures, which expire on Sept. 1 or abouts, and the past "near contract," the funds should have an average cost somewhat above 10,500 for their futures contracts. Given the funds general margin positions against the futures, the main factor could be redemptions, particularly if the DJIA does not go much above 10,500 before Sept 1. These figures, flow of funds, are sometimes published by one or two organizations. If the funds sustain large losses on their futures contracts and face redemptions at the same time, the DJIA could fall at least 30% very quickly. "There were stories from some Hedge Funds that the markets were saved in March by several large purchases of futures contracts by the Bank of Japan (BOJ). True or not, it expresses some traders feelings that the game is not straight forward. However, given a week or two of substantial redemptions from the Index Funds, probably no intervention would help."

To: isopatch who wrote (287)	8/21/2001 12:45:19 PM
From: Arik T.G.	Read Replies (1) \| Respond to of 36161

isopatch, Just bot back two Dec Gold at 276.8 and 276.5 I'm back in for the ride. Correction on the trend could extend a couple days more, and maybe I'm a bit impatient here, but the good thing is I'm back in at a slightly better price from where I bailed out. ATG

To: isopatch who wrote (287)	8/21/2001 3:41:23 PM
From: E. Graphs	Respond to of 36161

Know what you're saying. HLYW is a recent example.

To: isopatch who wrote (287)	8/21/2001 4:31:33 PM
From: MetalTrader	Read Replies (1) \| Respond to of 36161

Iso, I wouldn't normally comment on your post but I think it one very valuable for those who are not short term traders and those who shouldn't be. The TREND IS KING. So many in the past few years have been "trained" completely wrongly by the investment industry. Too many e-trade ads I guess. Whether playing the ponies, black jack or the market one is often looking for the simple system. The curious irony of the market is that the "simple" approach that works in one market works completely differently in another. The availability of information has created a generation of "a little knowledge is a dangerous thing" punters. Three years ago they didn't know a stochastic from a marital aid. Now it is a mantra..."oversold" "overbought". In the lengthy bull market buying the oscillators worked. No one told them in a market trending down that is a recipe for disaster. 1. Find the trend (if there is one) Don't fight it, you will lose. It's not a fair fight. If you don't find a trend take a walk, there's one out there. 2. Once that trend is found THEN consider oscillators such as stochastics and MACD. If it's a downtrend SELL the overbought short term indicators. If it's an uptrend BUY the dips. DO NOT MIX THESE TWO UP. 3. Maintain your core (long or short) in agreement with the trend. Keep mental stops for those places so you can be wrong and survive. you might want to play trader, but you'll be telling the water cooler lurkers how smart you were, but damnit...sold too early. 4. When the trend breaks, take a portion off the table. Either this means profits in your pocket or you were late getting to the trough. Being the last to belly up isn't great, but it doesn't mean you have to be the last to leave the table either. Finding a bottom in tech or oil, or a top in housing or gold is an exercise in egotism. I think most of us here have enough to spare so the occasional small bad trade won't kill ya. But how many 75% haircuts can ya take? TREND, TREND, TREND...you might be the only guy in the world who understands the fundamentals...so what. A lot of people who aren't as smart as you would love to take your money. Wouldn't we? mt