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Strategies & Market Trends : Stock Attack II - A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Chris who wrote (16807)	8/26/2001 7:03:41 AM
From: AllansAlias	Read Replies (2) \| Respond to of 52237

Chris, I would be much more nervous timing the market with what you call Direct (price indicators) than your Indirect (breadth and sentiment). I think you need a category 0) there that is the basis of TA: support, resistance, volume, and patterns.

To: Chris who wrote (16807)	8/26/2001 10:37:26 AM
From: dvdw©	Respond to of 52237

Chris; thanks for pointing this out; Example of Indirect TA: 1) looking at breadth, new hi/lo's, COT #'s, VIX/VXN, etc. IMO this market is about rotation, hence the above mentioned indicators can not be trusted. Rotation after a bubble means that capital is finding new homes or on sidelines all together waiting for emerging trends to become clear. Indirect TA indicators are rightfully struggling with the identification phase of the market. This all important phase takes significant time to reveal intent. It's easy to spot sector rotations where money may be allocated for short periods of time, but more difficult to measure the capital flows actual committment to where it is placed in the present. IMO money flow that sticks, is the all important arbiter predicting which stocks future prices, will be higher or lower. Volume leads price, but actual Accumulation / Distribution characteristics are ways volume disguises itself as to it's intent. Capital rotation phases are really about the application of money to where future value is predicted by present buying and selling. These are facts of the market and the Indirect indexes are anachronistic, in that during Capital rotation phases, uncertainty rules, and as uncertainty rules, misallocation of funds is part of the process. The Herd has to figure out where capital has flowed, and to what degree it has stuck.

To: Chris who wrote (16807)	8/26/2001 11:51:27 AM
From: James F. Hopkins	Respond to of 52237

RE >> Example of Direct TA: 1) application of macd, moving avg, stochastics, etc. on the indices themselves. < While it is useful it also can be "very" missleading..unless you get inside the index and see if "non-liquid or The Liquid stocks" are moving the index you don't know if the dog is wagging the tail or the tail wagging the dog. In other words Direct TA on an index is unreliable and you need conformation from other sources of any thing it indicates. ---------------- Big Picture The rotation into "safe sectors" is an illusion , when money rotates there is expense , and a lot of rotation just adds to the over all Bear , as it drains liquidity, when some sectors go up at the expense of others going down it defeats diversity and in time pension funds still wind up having to raise cash to pay retirement. A bottom can't be found until at least 80% of the sectors are moving up, very often the pundits will point at some sector has take off, but if you look at it good you find that very little of the over all market cap is in that sector , well that don't help the majority of the pension funds. We are trying to base but may not make it, as too many pension funds are in deep do do.. Until they get to where the market moves up enough to raise the cash they need to pay retirees rotation may look good but is a losing game. ---------- Jim PS raise cash and wait for broader move , don't worry about missing the bottom, after broad move starts up find a beat up sector no one likes any more , ( but was once a darling ) as the broad move gains strength the laggards start up and then they can move up ( later ) much faster than what actually lead the broad move up as they got beat down so bad..( but it can't happen while rotation is still going on ). The only time to play rotation is when almost every sector been moving up for a month.