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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: William H Huebl who wrote (25974)	9/1/1998 7:51:00 AM
From: Philipp	Read Replies (3) \| Respond to of 94695

Futures up dramatically, Japan did not crash. Will we see the mother of all bounces or at least a relief rally? Bounce of the 20 % decline line? I doubt it for the reasons below, looks like a well-crafted bull trap. But there is a fundamental difference to the morning of the 87 crash. Then, everybody expected the bottom to fall out (though few people would have expected what happened afterwards). 1. Japan up: Doesn't really matter. This market is running on its own dynamics now. It no longer needs any external factors. The trigger occurred last week. 2. Futures up: has been a good contrarian indicator recently; easy to manipulate by the PPT (but see the caveat below). 3. Most small investors and probably many big players as well are only about to start selling today. 4. No real panic, capitulation yet, despite what some people in the media/on this thread say. In 87 there was real panic, in fact I would contend that there was more panic last October. There was perhaps a bit of it in the last hour, but I suspect it was more of a buyers' strike rather than real selling (according to the WSJ, brokers actually reported more buy orders than sell orders from small investors). People were probably shell-shocked by the bomb that has been dropped on them. Also volume was high, but not excessively so. Caveat on the futures: Globex futures have been an excellent contrarian indicator most of the time during the present downturn. When the futures were up significantly early in the morning, the market would usually end down significantly in the evening (and vice versa). I observed lots of sudden changes in the future contract around 7am and/or 8am (usually in the opposite direction of the previous trend). I assume that these were big players that positioned themselves for the day after having decided on how to play the day. The directions of these changes were often good indicators for the day. This morning there was such a change after 7am, but +500 in the direction of the overnight trend. Bullish? Just something to keep in mind. If I were flat, I would not try to play the rally this morning if there is one (too many failed rallies already). I would also probably not buy any puts at the present level (premiums must be horrendous), though I would buy puts if there were a decent rally (20+ SPX points) and some premium decay. Good trading to all. Phil