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Strategies & Market Trends : P&S and STO Death Blow's -- Ignore unavailable to you. Want to Upgrade?

To: John Carson who wrote (7675)	9/23/2002 2:35:51 AM
From: augieboo	Respond to of 30712

John C., that's a question which has perplexed me for quite some time as well, but most folks around here just say, "Who cares? Shut up and trade the mugger-flugger!" <g> But, being the incurably curious type, I have nonetheless spent a great deal of time pondering the question. The best explanation I can come up with is so mundane it's almost ridiculous, i.e., plain old, garden variety, basic-as-basic-can-be, Technical Analysis: [1.a] What was support (in one direction) becomes resistance in the other; [1.b] What was resistance (in the first case) becomes support in the latter case; [2] Rule 1 applies with extra force to "important" numbers, i.e., those ending in two or three zeros, those which represent important historical pivot points, etc. [3] It takes less time for a bubble to deflate than it took it to inflate for a reason described by another very old, very basic, rule of technical analysis, (very slightly restated). The rule to which I refer is the one which says that a market needs volume to rise, but can fall of its own weight. Restated slightly to be used in this context, (but still just as valid, IMHO), the rule would say, "A market needs enthusiasm to rise, but can fall of its own weight." For the sake of comparison, think of a rock being pushed up one side of a hill and then down the other -- I think we can agree that, regardless of how bumpy the terrain is, the trip down should be quite a bit quicker than was the trip up. Anyhoo, that's the best I've come up with. If anybody else has a more sophisticated explanation, I'd love to hear it. (: augieboo