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Strategies & Market Trends : Classic TA Workplace -- Ignore unavailable to you. Want to Upgrade?

To: Moominoid who wrote (31431)	2/17/2002 1:55:53 PM
From: At_The_Ask	Read Replies (1) \| Respond to of 209892

It's difficult to determine causation but I'd say the chart is pretty accurate as far as the mechanics of declines and rallies. This is sort of my mental map of a sell off and how I think about sentiment. Stocks are rising but those in the know are selling in to the rise, smart longs are taking profits. Stocks drop somewhat and some shorts get on, probably out numbered by dip buyers in dollar terms, their selling has no effect. Stocks go down further, more shorts jump in. They go down more as many longs are also geting out. Even more shorts arrive, call them late to the party or trend followers whatever. Shorts who have been in from the beginning cover, slowing the decline, smart longs are building positions. By this time most of the longs who were inclined to sell have done so. The market starts to look better, and then less savvy shorts rush for the exit while new longs jump in. Bada bing you got a rally. By this time the rydex arktos would be back to normal levels. Lather rinse repeat. I don't know if anyone else thinks this way, but I try to imagine the people behind the bars and wiggles on the charts. I always try to think about who is buying and who is already in. Not who they are as individuals but when they bought in terms of price. Stages I guess. I try to imagine if there will be profit taking at any given level. Is there an overhang of old longs who have profits to protect? Or would a person who bought at $xx be inclined to let it ride? I try to imagine are the specialists and MM's likely to have developed a large long or short position? I generally think about large traders and mom and pop types. I don't generally think what the degenerates and day traders like we have here on SI (myself included) are doing because for moves of larger than a day they don't really have an effect. If they are any good anyway they will shadow the house and not really have an effect anyway. Anyway some weird thoughts, all FWIW.