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.

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

To: Jenna who wrote (19696)	8/31/1998 5:17:00 PM
From: Jerry Olson	Read Replies (1) \| Respond to of 50167

Jenna Heck YOU can daytrade anyday<ggggggg>>>>..:>} Last Oct 97, IMO was a major buying opportunity...THIS time i'm NOT so sure...WHY??? because things have changed.... I think the forward looking market players see major chinks in the armour of the bulls...there are so many factors in the equation it's mindboggling, but Jenna, i think market sentiment has changed... It's very difficult to predict the direction of the markets after something like this....Actually Interest rates are stable to lower, inflation is tame for the moment, USA productivity is still good...so WE here in the good ole' USA have the SAFE Haven in the World... The problem is we are NOT an Island...we do business with the rest of the world...and Jenna it ain't so good out there... so without going over & over what I've been posting to IKE and others, i feel caution is required here, esp. thru earnings...warnings and blindsides will be out there...and the forward looking guidence from these companies might not be so good like they have been...so alot more selling could be coming... i feel the next 6-12 months will be very very tough for Corp's to maintain past profits...not going to happen...lot's of lowered estimates... Now as for puts, they are NO different than calls...we can buy all we want on any stock in any strike price and at each month they trade...they are liquid and of course being traded at breakneck speed....go to the CBOE site and type in your stock symbol and then "all options for this stock" and you'll see the entire option spread from today/this month, all the way to when ever...both puts & calls & LEAPS.... I wouldn't short the DOW now!!! would let things settle for awhile...let's see what earnings look like and how the corps guide us for the future... Jenna I will think about the stocks I like and will submit a list to TRADE ONLY.....No one should look to bottom fish here till we see the true direction of the market... Jenna this was a major BLOODBATH, nothing survived, nothing...I don't think we're done...my downside target would be 7400 a 20% correction... let's keep the dialougue open for any and all info we can absorb... everyone watch your BUTTs........

To: Jenna who wrote (19696)	8/31/1998 5:56:00 PM
From: Tom Trader	Respond to of 50167

>>So, Jerry, I was not in the '87 crash.. in fact I was never in a crash at all except for Oct.'97. << Sheesh Jenna, you make me feel old--especially when I get compared, by inference, with OJ--since I was around and an active trader when the 87 crash occurred--but I also had other employment--and was actually teaching at a seminar in San Francisco that day. Needless to say my ability to stay focused on the subject at hand was rather hampered -- the people listening to me must have wondered what was going on -- my co-instructor who was an attorney and not into trading, knew that I was active in the markets and so switched the schedule a bit so that I could follow the market in the final hour of trading. However, to keep things in context, the crash of 87 was a whole lot worse than what happened today -- for a start the DOW was down 21%. There were stocks that had no bids on them and the carnage was beyond belief--today was NOTHING compared to that day. Now the day prior to the crash in 87 seemed to resemble today--not to say that we will crash tomorrow. The day after the crash the futures gapped up by a huge amount but within a relatively short period of time the selling began and before long it had made a new low and then there was buying that came in and the market closed well above the lows of the day. It has never re-visited those lows since then to this day. The bond futures closed limit up and was limit up the next day as well, the treasury bills moved almost limit up. Gold and silver moved limit up--gold was up $25 in a day and silver 50c--the day after the crash--flight to quality into the bonds, bills, gold and silver. Stocks continued to move down--many of them --even after the indices had made their lows -- corporations announced massive buy-backs -- some feel that this was what saved the markets--and Greenspan who had just been appointed Fed chairman issued an innocuous statement that basically said that the Fed would provide the liquidity necessary for the efficient functioning of the markets. Now this was in part because several brokerage firms were in financial trouble--as a result of the decline. This statement by the Fed was the other thing that was believed to have saved the day. The lessons for tomorrow, irrespective of whether today was the low, is that unless the totally unexpected happens, we will see lower lows especially in individual stocks. The enviroment then was different -- we had high interest rates but no global crisis like we do today. IMO, there should be no urgency to buy stocks as an investment--there will be plenty of time over the next three months--and that is whether or not we have seen the lows. Wait until the market assumes some level of equilibrium and then start to nibble. If 87 is any guide, one will be able to buy stocks at some great bargain prices. It is certainly what I intend to do. When we have the kind of decline that we had over the past week, investor psychology is severely impacted and it takes a while for things to assume normalcy. Quite frankly, except for the really resolute, rallies will be sold into--especially for those who have profits up to this point despite the decline. Re insider buying--Norman Fosback --who operates from your neck of the woods--I think Fort Lauderdale -- used to have a newletter that outlined insider trades. He had a ratio of insider buys to sells at market bottoms and it was a very skewed ratio--it works very well when it comes to identifying bottoms -- not that well when it comes to tops. I looked for the literature regarding what the ratio is and could not find it. This ratio is not industry/sector specific--it is market wide --- and becomes very pronounced. It has identified bottoms in several major bear market/other sell-offs. In 1974, it was the most skewed that it ever has been before or since.Happened in 87. Even the 90 and 94 bottoms showed this skewed ratio--it is typically a little early and what I would do is to gradually move into the market buying quality stocks when this begins to show signs of occuring. If I find the ratio, I'll post it--though I think that I junked it. Congrats on your DELL puts--I wanted to do the same--mind was willing but the flesh was weak:) Good luck