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To: Proud Deplorable who wrote (52909)	11/14/2007 12:15:45 PM
From: tyc:>	Read Replies (2) \| Respond to of 78417

OK ! So long as you recognise that wishing for something to happen is different from predicting that it will happen.

To: Proud Deplorable who wrote (52909)	11/14/2007 12:29:24 PM
From: tyc:>	Read Replies (2) \| Respond to of 78417

>>"the trend is your friend until proven otherwise" BTW, Is the trend your friend even when it goes against your wishes ? If a miracle should happen and the US$ were to trend UP (against the CAD), could it be your friend ? And what if US stocks AND the USD were to trend up ? Could both be your friend ? Would other people be "stupid" if they considered them so ?

To: Proud Deplorable who wrote (52909)	11/14/2007 6:23:41 PM
From: heinz44	Respond to of 78417

The Real Reason for Yesterday's Rally ..As we have the best and most analytical minds here who are always searching to find the truth and are not easily duped,I'm sure you all knew this. Funny thing on Friday I watched CNBC on the net and this chick said"well I know one thing,within the next 4 days we will have a 300+ point up move." Reason she gave was options expiry on friday. The rally we saw yesterday was a phenomenon of high option prices As TV announced the end to all economic problems with the stock market rally yesterday, I caution Minyans to stay tuned The rally in stocks yesterday was technical in nature, just like thecrash of 1987. The rally we saw yesterday was a phenomenon of highoption prices. Prof. Succo has explained this to me before and it makesperfect sense. Options with high prices have a lower gamma<http://minyanville.com/library/dictionary.htm> , requiring traders who are short options (like ones that sold put options to money managers whopaid high prices to protect their portfolios) to dynamically hedge theirpositions less. As we learned from the 1987 crash, dynamic hedgingcauses traders to sell more into a declining market and buy more into arising one. When traders buy or sell less, volatility drops, takingoptions prices down with it. So when volatility drops - like it didyesterday - money managers who panicked and paid high prices for putsget nervous that their puts will erode in value. If their puts expireworthless it will cost 5% in returns they cannot afford to lose so theystart selling their puts. This causes the market to rally and optionprices to go down. As option prices go down the gamma goes back up andthe whole thing begins again and over in fits and starts This is not just a shallow profits correction; it is a credit crunch caused by years, if not decades, of easy credit created from banks with the Fed at the helm. The US'international trading partners learned the same trick and have beendoing it too. With so much debt in the system and too little real incometo support it, the only way out is for that debt to be destroyed. That is what banks are doing when they announce "write-offs" -- they aredestroying debt. So far these write offs are being characterized as "onetime" by the banks and insurance companies that own that debt. This isdelusional. Are you going to believe the same institutions that tried toconvince everyone that there was no problem in the first place? What if I told you that trillions of dollars would eventually be writtenoff? Well, unfortunately it is a real possibility given the magnitude ofdebt in the system. This does not mean go out and short stocks. As you can see fromyesterday, stocks are driven by emotion in the short run and anythingcan happen. If you are going to short stocks, you have to do it withinthe context of controlling risk. Not many people can do that well. It does mean be prepared for worsening conditions. It means beconservative with your money and stay out of debt.