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Strategies & Market Trends : Shorting SPY for fun and profit. -- Ignore unavailable to you. Want to Upgrade?

To: Bonnie Bear who wrote (17)	11/3/1997 12:30:00 AM
From: studdog	Respond to of 346

Bonnie You are absolutely correct about that as I learned last week. limit orders have worked just fine though. Thanks again Karl

To: Bonnie Bear who wrote (17)	11/3/1997 12:38:00 AM
From: studdog	Respond to of 346

Bonnie's link with the Fed model really helped to quantify for me what I have had as a gut feeling for the last few months. I posted a quick take on my "epiphany" on the Big Kahuna thread and I copy it below: <<<< Folks waiting for the Big Kahuna, I'm looking for a bit smaller dude, and a much less dire scenario, but a drop nonetheless. Fed model as per Yardeni estimates "fair value" for S&P 500 to be 802 as of September. The market has consistently corrected to the appropriate level which is determined by inverse ratio of 10 year treasuries and earnings. Anyway, what has transpired so far does not constitute an adequate correction. If in the short term we do get down to 810 or so then I believe it sets the stage for more of the same bull market. A "healthy correction"(I never could understand what that meant until now). If on the other hand we do as Ike expects, and go on up, we are getting set up for a major drop. This is what I think Greenspan absolutely does not want. That's what his jawboning about irrational exuberance is all about. What I would like to see: something of a rebound rally to 930, 940 or so, (so I can short more SPY's) but no higher, then a fairly stately drop to mid to low 80's. If this occurs than we are still in a bull and can run to Abbey Cohen's 1050 in safety. It would also be Ok if we just drop from here, I just wouldn't get to short more. If on the other hand we just go up and blow through the highs we will be dead meat. The market will be too overvalued, many of the Japanese sins will surface and we will be in a real bear market. That bear will then hurt the economy and it will begin a downward spiral. I suppose that's the Big Kahuna. I do not want it to happen and neither does Alan Greenspan. So I'm rooting for a fairly nearterm drop to the mid to low 800's. If the market goes way up I am hasta la vista.Might even go net short. Now I am just covering my portfolio of long term holds with SPY's ( not yet fully covered). Thanks, Bonnie, for the Yardeni link >>> Karl