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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Chris who wrote (7201)	3/21/1998 9:05:00 PM
From: Robert Graham	Read Replies (2) \| Respond to of 42787

Here are some stray thoughts on the market: This market has a few of the more popular technicians baffled, doesn't it? When time comes to pass with no results on their predictions, then they go in explanatory mode and also hedge what they have to say. This is a natural response to a market that is not as comprehensible to them as it once was. The market has changed and will continue to change. This can be assured. This is one important missing element in the understanding of the market by technicians that are struggling to adapt to the changing market, those who have no experience outside of the bull market they have based their learning experience on. I am talking about some technicians here that are good at what they do in the parameters their experience has defined for them but who are still learning as the market takes them with their TA to different places. Much shows up technically, but as some have observed here, it does not provide the complete picture at any give time. Much of the understanding of the market can be filled in by an understanding of other areas like market sentiment, the money flow from the movement of big money (institutions), and so forth. Now a good technician and tape reader can still play a good game as a short term trader. But IMO understanding the other elements of the picture can help significantly to help generate more reliable returns in the market and help the trader maintain perspective. This includes the various fundamental forces in the market which is earnings based and sentiment based and large money based. TA and tape reading can be used to bring supporting evidence and detail to the larger picture. Take what Judy does for instance. While most intelligent market players play the trend, she has discovered ways to be in front of the developing price momentum demonstrated by sectors that have the money moving in, which is an innovative approach to the markets if successfully pulled off. But this approach requires more than just TA. It also requires tape reading skills, analysis of the economics of sectors for the likelihood as a group of positive earnings growth and momentum which attracts the money, and market sentiment, from what I have seen. I hope she will correct me here if I am wrong about her approach. So her approach allows her to maintain the perspective that the bigger picture can afford her while she is pursuing the trading of individual stocks. Also being able to see corrections before they happen is part TA and part having a feel for the market and specific stocks in the market, including the groups of stocks you as a trader follow. Tape reading can facilitate this along with monitoring the changes in market sentiment. As it is, if you go by the TA knowledge that in particular has been aquired in a strong bull market, you as a technician will find the current market really a learning experience. The tehnicians can continue with their system until the peformance calls into question their system. Sometimes along the way I think it may be beneficial just to take some time off, sit back, and work on gaining a broader perspective of what is occuring in the market. Think about what is different in this market and some ideas on why this may be so. Continue to look for further evidence of what you think your TA is telling you. Market breadth in the form of the A/D may be helpful here and a look at key sectors that have been performing well in recent market history. What is the big money doing? What is the current market sentiment? What types of companies and industries are your TA scans bringing up? What stocks are the speculators playing? What stocks are the institutions and the professionals playing? And so forth. Unfortunately it is when the technician is unplugged from their system through no choice of their own do they start thinking about the bigger picture Define the picture more comprehensively. Then define the problem in terms of what you see going on in the market. The answer at this point may become much more obvious when you can ask more intelligent questions based on your observations of the market that is not restricted by what you currently are able to see with TA. This can provide you with a framework that can be used to evaluate future events in the marketplace. TA can be a part of this by being used not only as a tool to determine where the money is being played in the market, but also used to support or invalidate the evidence you see in the disposition of the market arrived at through the other approaches mentioned above. The potential pitfall here is to allow what you think you see in the bigger picture to filter and distort what your TA is there to tell you. A discaplined approach to TA can keep this from happening. What also may help is put youself in the other person's shoes. If I was an institution that had allot of money to place, what would I do? Would I buy the same stocks that have already seen greate market appreciation, or would I move into stocks more appropriately valued? Would I buy when everyone else is buying, or would I buy when there is supply of shares like on the periodic selling patterns of the market? How much would the underlying economics be in my decision making? In other words, would I be concerned about the growing issue of slower growth in the market? Or is it more important for me to find a place for all of this money as long as now that the market has bottomed out and has been in its uptrend that there is little liklihood of a major maket correction? How would I deal with this possibility of slower earnings growth effectively? Where would I go as a speculator in this market now that many of the high tech industries are doing poorly? What will attract me as a speculator to an industry to specific stocks in this market? What kind of stocks are the analysts hyping? Many speculators follow analyst recommendations. This does not mean the analyst prediction will be true. But by throwing light on companies and industries, interest by the speculator can be generated, particularly if good price rises are being demonstrated by that which receives this limelight through the press. Just some thoughts. Any comments or ideas? Bob Graham