Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: Steve Lee who wrote (15170)	12/1/2002 6:20:28 PM
From: GraceZ	Read Replies (1) \| Respond to of 19219

Trading support and resistance in the last 3 or 4 months only works for a few stocks. It doesn't seem to be working well for indices at the moment. I'm sorry I thought your premise was that the PPT always showed up at critical support levels to goose the indices? So are you saying they showed up but they weren't very successful or that they sometimes show and sometimes don't? You're making my argument by pointing out just how impossible it is to manipulate the index. Look at how the US futures trade in relation to the UK futures at 3.30AM. PPT arrives at a desk in london and pumps. Same thing happens about 7.50am to juice the premarket. Like "they" choose to manipulate the market using the penny trash on the Naz? If you look at what moves premarket it is predominantly these issues which have been heavily sold down below a buck..... which coincidentally happen to have a high short interest. If the movement in the futures was indicative of the next day's action we'd all be rich watching the futures and trading accordingly. If there is a direct correlation there maybe you've found something that isn't apparent to anyone else. It's been my experience that the futures are wrong as frequently as they are right which makes them about as reliable a predictor as a coin flip. Meanwhile, the cumulative money flow into the markets in the last year has been at historic highs after being negative from 1998 and all through the blow off top and a year into the decline. Of course, unless you track money flow like I do you wouldn't believe this because it's counterintuitive to think that money flow can be hugely positive while price declines. The inverse was true on the upside, the money flow was hugely negative all the while price moved to a blow off high. Now I bet you can believe that because it fits with your prejudice....yet you're having a difficult time seeing the inverse is true. I'm not talking about money flow into the big stocks that account for a huge weighting of the indices (some were positive while others were decidedly negative) but the market as a whole and lots of small relatively unknown issues. Some of that money flow was completely involuntary, not by speculating longs but made by shorts covering into a situation where the stock was completely sold out, a case of too many people trying to fit through too small an execution window. If you want to know who the PPT was in this latest rally look no further than the traders playing on the short side and those who think that it's a given that the market makes new lows, continually putting on new short positions having their buy stops triggered. Trading is a minority game, the majority loses while a small minority wins. As a particular winning tactic becomes well known and losing players are converted to the winning tactic it becomes more and more difficult to win using that tactic. Once the majority is converted you have to switch to a new strategy in order to continue winning. Once a majority of traders are making money on the short side the short side becomes increasingly less profitable. This was true two- three months ago. I know this because I track short portfolios containing a wide range of issues as well as long. The short portfolios stopped returning superior returns months ago even while the indices were making new lows, meanwhile the long ports I track were sneaking up under a mountain of negative sentiment. I'm sure if you only had your eyes on the indices it looked like it was just a massive case of intervention back in October, but considering the way it came in from the wider market it makes that explanation specious.