Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures -- Ignore unavailable to you. Want to Upgrade?

To: Arik T.G. who wrote (2285)	8/24/1998 11:52:00 AM
From: Tom Trader	Read Replies (1) \| Respond to of 44573

Arik--will respond to this post when I have more time since you have raised several interesting points.

To: Arik T.G. who wrote (2285)	8/30/1998 10:23:00 PM
From: Tom Trader	Read Replies (1) \| Respond to of 44573

Hi Arik--a belated response to your post I wanted a chance to put some time into the response as to your outlook for the market. Let me start by saying that for the first time since we began chatting we are in closer agreement regarding the outlook for the market than we have ever been. I know that you believe that we are already in a bear market and you may be right. My gut feeling is that you are right--now we may differ on how bad it is going to get and how low we are going to go before it is over--but that is not important. In some respects, I must say that it feels that we are at a major bottom--and I would believe this to be the case if it were not for certain things that are bothersome to me--different than previous sell offs. Just to list some of these: We are below the 200 dma on every index--in previous sell-offs we were not. The market internals are dreadful Several of the averages are clearly in bear markets--it just the major indexes which for a variety of reasons have not totally broken down. We are getting into a period of seasonal weakness--ironically, although the month of October is feared because the two crashes that we have had this century occured in October, it is my understanding that historically, September has been one of the worst months for the market. We are into earnings season--and the expectation is that there will be disappointments. The Asian contagion, weakness in Latin America and may be even Canada I could go on -- but you get the point. The conventional wisdom is that we will rally next week--and given the oversold market, that would seem reasonable. In fact, I would not be surprised if we saw a major rally in view of the extreme bearish sentiment readings and the oversold nature of the market. Unless some thing happens to convince me otherwise, I intend to use the next rally to establish some significant short positions -- a combination of some of the high-fliers, stocks that have technically broken down and multi-nationals that have significant exposure in their overseas operations. If the indexes end up closing over their 200 dma - a couple of days in succession--I would have to revisit this -- and will probably close out the shorts-- and take a loss. I will add to the short positions, if the market after rallying breaks below the lows that it establishes before the rally commences. The above is how I intend to play this--for the most part I have not been short this market through these several years. When I have felt uncomfortable with the market, I have gone into cash or the safety of Treasury bills. The one thing that you could help me with is this: given that you believe that we are already in a bear market, what would it take to convince you that we are not--and that this was merely a correction. I have a vague recollection that some time last year when you thought that we were about to commence a significant decline that got aborted, you changed your forecast to a major rally into mid 98 and thereafter a significant decline would commence. If my recollection is correct, you certainly called it right and I congratulate you on the call. Regards