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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Lachesis Atropos who wrote (17681)	8/29/1998 2:48:00 AM
From: Gerald Walls	Read Replies (1) \| Respond to of 69124

Whatever, I am seriously considering pulling my investments out of an S&P index fund on Monday. I little late but may salvage a few points, then put it back in when the market is a little more stable. Much late. If we get a 20% correction/bear then we're closer to the bottom than the top. If you were wrong about the top what makes you think that you'll be right about the bottom? Almost no one can call tops and bottoms consistently. Most of those who say they do are liars. I sold a couple of positions Thursday I should have ditched much earlier and bought more of a company leading its industry on Friday. Look for those companies that are holding steady or declining only slightly during this market fart. They're the ones that'll explode when the market eventually turns back up. Its never not turned up before and if we are bad enough off economically (ha) that the market will never increase again then which stocks we hold will be the least of our worries. My faith in gold as a hedge has been rattled by the reaction of the "precious" metals during this Russian crisis. All my silver and gold holdings have been hammered.

To: Lachesis Atropos who wrote (17681)	8/29/1998 5:05:00 PM
From: Johnny Canuck	Read Replies (5) \| Respond to of 69124

Hi Lachesis, Wow, I go away for a few days and the market falls apart. Looking at the volume there was a lot of panic out there. A few points to keep in mind: 1) Jim has some statistics on market moves. It was post somewhere on the Tech Options thread early this year or late last year. Most moves last typically 3 to 5 days. 3 days down or up is normal. 5 days down or up in a row has happened but this situation is rare and indicates an extra ordinary event. You can think of the markets as an underdamped system. A major disturbance will overshot and oscillate till it finds an equilibrium point. The strength of any rallies in first three days of next week will tell you the extent of the pyschological damage done. We should retrace 30 or 50 percent of this drop depending on the amount of damage to investor confidence. It should allow for tradable rallys. The intermediate trend will be down for the time being. 2) It has been widely reported that some gurus are expecting 7400 as the bottom. As such, a lot of people are psychological prepared for that level. If we do reach that level is will be in a series of step functions. 3) A 900 point day is possible with the new circuit breakers. Looking at the trading though, most of the computerized trading is still using the 300 point levels to trigger their buys. So intra-day we could see a opeing gap of 900 points, but it more likely we will see 300 point steps. If we do get a 900 point day gap it will most likely re-trace 30 , or 50 percent of the move depending on the strength of the market. Again the direction will be down till the uncertainty in Russian and Japan clears and their effect on other markets become more clear. 4) Gold did nothing on Thursday and a Friday. The psychological link of gold as a safe haven has been broken. It is now just another commodity. So the trading of gold futures may not be a hint of interest rate direction as in the past. 5) If you believe in window dressing we potentially have not seen the real damge yet. Most fund managers are away on vaction. We won't see their hand till after labour day. September is a month for end of quarter window dressing so that will effect their moves next month. If they decide it is time to get out of the market altogether we will see a massive drop. They might just re-position into defensive blue chip stocks and biotechs. It will be hard to tell their mood. 6) The blue chip high flyer like LU, CSCO, DELL final broke on Friday. They have a long way to go down till they reach the level value investors would consider as fair. Money also came out the internet stocks and story stocks like RMBS too. On the plus side some stocks like PMCS actually rose on no news. This indicates not all investors/traders are headed for the exits. 7) Greenspan is under a lot of pressure to lower rates in order to maintain stability in the foriegn currency markets. They have tried to help by buying foreign currency, but they can only keep that up so long before they exhaust their reserves. Printing more money will create inflation and a devaluation of the US dollar. I don't think anyone is using that policy in the new economy of the 90's. Some countries have tried to defend their currency by raising rates, but in reality their economies can not stand it. Without lower rates from the US, a world wide recession is possible. Norway gave up last week after raising rates 7 time this year. The fundamentals of their economy do not justify higher rates. They will let their currency float and their cheaper exports should make them more competive due to their lower currency. Domestically they will dry up consumption though. So a recession is possible. 8) We should expect more shocks as the stories in Japan and China play out. China tried to reverse the market slide last week by intervening in the Hong Kong market with only modest success. They can't keep that up. Japan still needs to look at their bank related liabilities. 9) Pre-warnings for earning season will start soon adding to the down side possibilities.. Monday's/Tuesday's trading will tell you a lot about the mood of traders/investors. The strength or lack of it in the rallies will show you the trend. On your S&P mutual fund, it depends on the amount of risk you can tolerate, the diversity of your investments and the amount of money we are talking about. I can only tell you what I would do. If you have profits on your S&P mutual funds you might consider taking some of it off the table. I would look for a rally first though. No one went broke taking a profit. You will notice Jim went long realizing the we are technical grossly oversold. He is just looking for a short term rally though, I believe, as the intermediate trend is down in my opinion. We broke the support level of 8158 that I had with relative ease. The reward may be better on individual stocks or groups of stocks as opposed to indices for the next little while.. Personally I have some investment that I stay fully invested in whether the market goes up or down (Canadian utilities fall in this a category). I then have a trading account which I will try position depending on the market conditions. I also rarely use margin and when I do I usually can cover it from my cash reserves. I also find that turning off your TV set helps your trading in times like these. The sense of panic can be contagious. Seeing it in print removes the emotional effect. I am just putting forward one view. Weigh it in the context of other people's opinions. It's your money and you know your tolerance for risk the best. I still need to look at the charts for the last few days. SI is becoming almost unusable for me. Are you getting connection errors too?