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

To: bcrafty who wrote (59548)	11/15/2002 12:02:24 AM
From: Perspective	Read Replies (3) \| Respond to of 209892

This is for people that hold positions for 3-12 month time frames, not wiggle trades. Risk is for up next 5-20 trading days, while I believe downside is limited over the duration. Asymmetry in the risk profile - bear rallies have a sharp attack but a slow decay. I'm not looking at indicators. I am just saying that the history of bear market rallies shows mostly sharp corrections, especially in this bear. The post 9/11 rally had no corrections that met even 38% retracements, and I recall distinctly that most on this thread were trying to capture corrections all the way up. It just built a series of bases upon bases, with each leg ratcheting up another 5% or so. Every step was corrected with a simple retest of the previous breakout. This continued for over 50 trading sessions. Then it was still possible to get very close to the high another 50 sessions later. This is actually very similar to the burst off the 1932 low in the Dow - no pullbacks at all. Sharp attack, slow decay. To review last year's rally, see 9/1/01 to 2/1/02: bigcharts.marketwatch.com I think everyone should be prepared for a similar grind higher. We are only at day 26 of this rally, and it could do much more upside damage until the necessary short-covering is finished. The asymmetry of risk is the key point here, though. If you're short early, you lose 10% very quickly. If you're short late, you only miss out on a few %. BC