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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: newfoundland1 who wrote (27706)	2/9/2003 12:32:57 PM
From: SliderOnTheBlack	Respond to of 36161

newfoundland re: Oil/Gold & OSX/HUI parallels newf' Here's how I define the 2 prior OSX cycles. 1st Cycle: Jan/Feb 1997 to May 1998. - The OSX took off from OSX 67ish in Jan/Feb 1997 and ran strong & hard thru OSX 140 as a daily closing high, the week of Oct 6 1997. A nice sector DOUBLE in 8 months. * 1st TOP @ OSX 140 was 1st week of Oct 1997 (this was the High Reward-Low Risk, Big & Easy Money portion of the 1st OSX Cycle). - OSX then saw a 30%+ish correction; falling to OSX 88 as a daily closing low the week of Jan 12 1998. - OSX then based again and ran from 88 to OSX 122(+40%) the 1st week of May 1998 (failing to run to new highs) - establishing the 2nd/Double-Top...and Exit to the 1st Cycle xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 2nd Cycle: Jan/Feb 1999 to Sept 2000 OSX traded a basing bottom band of OSX 45 to 60 from late 1998 finally basing in Jan/Feb 1999 on the final bottom bounce off of OSX 48ish and moved to OSX 131 as the daily closing high, the week of May 15 2000 (in retro-spect; THIS was the High Reward-Low Risk/Big & Easy Money/Early Cycle, Sweet Spot portion of the 2nd OSX cycle) - then pulled back a bit to OSX 112ish in July 2000 and then ran hard to the actual 1st TOP of OSX 142 as the daily closing high the week of Sept 18 2000. OSX pulled back 30%+ish to OSX 94 as a daily closing low the week of Nov 27 2000 and moved onto the 2nd/DOUBLE TOP of OSX 136ish that ended in May of 2001 - with the now infamous JUNE SWOON of 2001 that fell to OSX 80 by Mid July 2001. To be Short,Sweet & Simple...Buying OSX 45-65 and selling OSX 120-140 remains the game; untill proven otherwise. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Tying Sentiment to the Cycles; SI SD Sentiment has proven to be the single most accurate indicator of these interim and final Double Tops imho. That 2nd/3rd Wave of Investors arrives AFTER the sector starts to garner the Business Magazine Covers & News Headlines...and when the Sector's speciality Funds start to lead the Mututal Fund/Sector Winners List....this usually occurs approx 20% below the eventual Cyclical Top...and the final 20% to the Double-Top has continually been the arrival point of this Late Wave of Investors, as well as the "Thread Wars" that breakout between those seeing this mature cycle Sentiment/Investor Change as an Exit Signal; vs the liftoff into a "this time it's different & we're in a New Paradigm" - potential run to new highs. All of the "this time it's different", "we're entering a new paradigm", "this is going to be a multi-year Up Cycle" , or "we're going to new alltime High's" - Talk always arive's at this same sentiment level as well....it did in the Oilpatch & did here again in Gold of late. Cyclical Commodity Stocks move up, or down most purely - not on Earnings, not on Economic, Geopolitical News, not on the underlying commodity prices....they move most purely and PREDICTABLY on the supply and demand of the sectors stock...and sector SENTIMENT is what drives sector suppy & demand. Sentiment has a Rhythm that creates cyclicality (sector share - supply/demand swings)...and accurately guaging, picking up on/Anticipating a sector's Sentiment Rhythm...is more important AND PROFITABLE..... than accurately guaging, picking up on/Anticipating a change in the Sector's earnings, or the price movement in the underlying commodity....and it's EASIER to do as well. "Trade the Traders" - is NOT a simplistic euphemism; it's actually the single most important pre-requisite for successfully & profitably trading Cyclicals - because accurately guaging the sentiment RHYTHM of the Sector is what CYCLICALS are ALL about...period. We've just seen Gold Funds atop all the Winners Lists of Managed Funds, Gold is in the Headlines, has been on the Covers of all the Business Mags and we've had both the "late" arrival of that 2nd/3rd Wave of Sector Investors - as well as the "pre-requisite" Thread-Wars break out between the differing camps... And we've "banked" (some of us have anyway...) a Sector Index 3.5 Bagger (HUI 35 to 150) run ! How many times does Mr. Market give us a sector 3.5 bagger directly into implosion of the rest of the market ? How many times in ones trading lifetime, will one EVER get to look 3.5 Bagger, Gift Horse Trading opp in the mouth...let alone, EVER ride one significantly higher ? I ask what more could one possibly ask for as an "Exit/Profit Taking Signal" than the above (VBG) ?