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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: Tom Trader who wrote (18216)	5/1/1998 3:45:00 AM
From: IQBAL LATIF	Read Replies (1) \| Respond to of 50167

Tom-- On models- I just came across this post- thought you may like it ( Washington Post article) Please read the full article in the Post itself. '------there is a small cottage industry armed with powerful computers and doctorates in mathematics trying to figure out whether there is a predictable pattern to the irrational behavior of traders. After all, if you could come up with a formula that could predict at what point the bubble usually bursts, then the "correct" trading strategy would be to continue trading in the market even after prices rise above the fundamental value. But the problem of such exercises is that once other people figure out the same formula -- or at least figure out that you have one and begin to copy your behavior -- then the formula quickly loses its magic. If everyone knows the precise point at which to become a seller, then who will be a buyer? In the end, it is this dynamic quality to markets -- the fact that I can adjust my behavior in anticipation of your behavior, but you could then adjust yours in anticipation of mine -- that makes it impossible for anyone to say when it is time to sell out of a bull market. And that's true even when you feel certain that stocks are trading at speculative levels. The broader lesson from these experiments seems to be that traders aren't as perfectly logical as economic models would predict. But neither are they stupid. They learn from past experience and are constantly adjusting their strategies to incorporate that new knowledge. ' Tom On 1130 call on SPM it was just looking at the trading range and the consolidation range I could see the coiled spring and whichever direction it move either up or down once we have a break - extension of that range gave us this number. Last year we were able to detremine 990 as a ritical resistance very early on soon after a break of 770 also I wrote many a articles and posts on comnsequences of break above 1000 SPM and I compared this break to break of DOW 1000 back in early eighties. So for me it is like an unfolding dtory. One can know the top or bottom with quite good accuracy-- with benefit of hindsight the level 1130 looks good call but I think it was just like I said Wednesday short below 1085 or long above 1105 or FTSE will test 5800 DAX CAC levels were reached in my couple of weeks back post when Sonki asked me if it was time to go long Europe or telling Bri post one very bearish report to buy Puts only if 1110 is taken out we saw 1134--- on retreat and failure of 1130 I wrote that SPM puts is in order so couple of days back I used 1110 as a support for the trade but once my objective on top was reached I reversed as I saw failure of 1130 however by then I was looking at ECI number affect on the market and strated trying to figure week ahead a response to panic and uncertainity. I gave 1118 my intermediate level and wrote that short 2 to 1 and go for a ride to 50 days MA-- but to call a short to cover is some thing else at 1085 I covered and reversed my opinion. I try to create a picture of markets in my head I try to relate global movements and inter sector movements- macro economic news and corporate profits on to charts of SPM-- I use SOX Composite to determine action in SPM suppose if I see HSI at a critical support and and Japan at a critical resistance I will try to find out direction of SPM through composite taking into account if HSI pops up or Japan turns around. I also watch some levels of composite and keep shifting my emphasis to where I think the dam is expected to break. I hope, I can find some of my posts which will help you exactly how I determine these levels but my 'Bumbo' thingie is simple and based on what, why, how, and if, convulated complex scenerio building process. It is extension of my thinking how I view the world markets-- in some cases it is good but in a market like Nikkei the model does defies my logic but I stay long even if I have temporary failures I know the directional trade out of model is right over period of time. I have vey little to share on details and intricacies of my approach it is quite inadequate and far from anything does not take any help of mathematical computations. I keep it simple it works for me and I think since it gives view from a different persepective help my friends on this thread also. Tom-- I have tried my level best to be clear and help you take thru my process of thinking- I think it is important but if the post is still not helpful please overlook my inability. Thanks and best regards- Ike