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

To: Joseph G. who wrote (15213)	8/31/1998 11:24:00 AM
From: Robert Graham	Read Replies (2) \| Respond to of 42787

It looks like the stocks that have helped to support the market like YHOO, AMZN, and even DELL have been caving in which is helping to bring the market down below 8000 due to their impact on market sentiment. Also DELL continues to go down while the DJIA bounce up from being over 100 down. If this market closes below 8000, the sell off is likely to continue. The pop expected today was in the morning for about 50 points and quickly evaporated. This is like those bull days in reverse earlier this year where the market would run up and then pull back only 35 to 50 points before running up again. Notice how much sentiment can control a market. IMO we are in a bear market. You know the saying: "If it looks like a duck and quacks like a duck, it is a duck". In this case a bear that can rip into your money in large pieces if you play long positions. The smart traders have been staying off to the side or fading rallies, not anticipating them. The question is how long this one will last and more importantly how low the market will go. DELL is down at least 6 points right now. If you wen long last Thursday or early Friday, you should of been stopped out by now. If you went long later in the day on Friday, you may be still in or out right now depending how liberal your sell stop is. This is for position traders. For day traders who decided to get in "early" Friday, which is a bad practice, particularly in this market, then you should of been out first thing in the morning. It is quite amusing at times to see some still play this market as though it is a bull market. Must be trading on emotion and not on the reality of the market. One really interesting example is some traders playing bounces off of a stock's 52-week low which is already below their 200 day MA. I see trader's do this recently even when the stock has been in a well-established downtrend preceding this market sell off. This is a sure sign of desperation in a trader given the trading environment this market has been providing us. This is worse than the silly practice of bottom fishing in this market. Perhaps a bull market is the only type of market this type of trader has known. Lack of experience in different types of markets can be very costly. Being overconfident compared with ones experience level by not responding to changes in the market can lead to disaster. Reminds me of the mouse in the maze. Guess what the difference is between a mouse and a human being? Once the food is removed, the mouse will eventually figure out food is not to be found there and start to look elsewhere. The human being would continue to go back to that same spot looking for that food. I suggest to all those traders out there that in this market it may be better to think like a mouse than to think like superman or superwoman. Believe me, you do not have any "supernatural" powers or insight into the market you must think you have. Move out of the way of the freight train. Be aware of and open to change. At least then you will have a chance in surviving this market sell off. Even as a day trader, being on the wrong side of this market is suicide. The solution is to objectively evaluate the market and know how to play both the long and short side. A position trader still can do well using this approach and will not have to resort to learning how to day trade which is an entirely different game with a significant learning curve and is much more risky compared with position trading. But instead of being able to see the forest for the trees and intelligently manage risk, many position traders have been resortng to day trading and scalping to slice off profits from long positions to later find their positions moving against them which they then keep into a position trade, a breaking of the number one rule of trading. Look at the "Market Gems" thread as an excellent example of this turn to day trading. Even LastShadow has removed himself from that group. It is interesting to note that LastShadow is one of the few on that thread that apparently knows how to short the market, and is also one of the more experienced traders in the group. Enough said. Looks like the DJIA is pulling back from its sell off. DELL looks to be coming off its intraday low too. Note that the NASDAQ has not followed and remains a significant 50 points down. For a moment I thought I pulled up a chart on the DJIA. IMO this is not a start of a new trend in the market. The selling can continue by the afternoon. So I recommend to pay attention to the market and be careful. I suggest to take those sun glasses off and see what you are dealing with by not treating this market like the previous bull market earlier this year. Just my opinions of course. Bob Graham