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To: donald sew who wrote (52404)	9/12/1998 10:04:00 PM
From: MonsieurGonzo	Read Replies (1) \| Respond to of 58727

Donald; RE:" Buying a Stairway, to Heaven " >an excellent analysis... ...well pat yourself on the back, Donald - because all I'm doing is re-stating your tea-leaves in a different language. >we could runup hard on Monday... >no follow-thru... on Monday... will also be a big negative Monday is difficult because Friday's action was so atypical of the recent pattern we have come to expect, where people have chosen to not hold (apparent long) positions over the week-end, and so sell off into the close: many good traders were surprised. Indeed, Thursday was where/how I expected us to end the week - and I am inclined to aggregate TUE-WED-THU as my "weekly candlestick", (a bullish Harami Cross) and FRI as "Monday's daily 'stick" {grin} Well... we were at the bottom of that little wave on Thursday, ahead of schedule; perhaps so because of Brazil and Bubba -? Although Friday was obviously amplified by short-covering, there was some buying going on. Interesting to see the BTK.X - BioTech Sector action recently, for example. Perhaps we could say that, because Thursday was Friday, people chose not to hold short positions over the week-end, this week ;-) Still, it's yet another little up-wave on all our charts, so we search for extent. I hate it when we are at the bottom of those waves, man - because you and I both know that the downside is a wholly new trading-range channel "level" (my wordz) or "stair-step" (your wordz). OTOH, any rally from that position is likely to be rather explosive, being amplified by short-covering. Note that Ike usually takes a Bullish Ratio BackSpread at that position of the "wave" (typically 2:1 = long:short). If the market plunges, to a wholly new "stair-step", he makes some money (the net proceeds of his delta-neutral spread taken in). If the market takes off up, his profit potential is unlimited on the explosive upside bounce. Ike has a bullish bias and a joie de vivre, as most of us know, and some disparage ( hey, we both live in Paris, and Ike throws a great party ;-) But his ratio-backspread tactic is really somewhat conservative, IMHO - and very pro-trader style. In effect, when we are tip-toe-ing on the tight-rope at the bottom of the apparent trading range channel, looking at "bounce" or "plunge" from the perceived support line... a delta-neutral long-straddle can not lose money, folks: a bullish or bearish "ratio backspread" makes even more money if you guess the bias (bounce UP or plunge DOWN) right. As Tom pointed out to me (Friday morning) in response to my call for a "long-straddle" tactic (at the bottom of the wave-channel, etc) the VIX.X - Volatility Index and, as lisa points out - the Chi-Town boyz penchant for "stripping" PREMs off our index options - make our task of engineering synthetic delta-neutral spreads very difficult. However, I submit that your "stair-step" is a tradeable phenomena, Donald - that can be synthesized with manageable risk, by using option spreads on indices or sympathetic component stocks. -Steve

To: donald sew who wrote (52404)	9/13/1998 9:41:00 AM
From: Arik T.G.	Read Replies (1) \| Respond to of 58727

Donald, 1. Stair Steps Actually, these are corrections of the weaker kind. The only weaker kind are the corrections with the second leg of correction unable to reach the levels of the first leg. In Elliotte wave theory (which I'm not an expert on, although I use its principles and quote it a lot) these are the classic abc corrections. Many inconclusive arguments among the E wave followers are about the magnitude of waves (such was the disagreement between David Plonk and myself). Can you tell if the recent stair step is in your opinion a closer match to the first or the second stair step? If it looks more like the first, then you favor my count, and if it looks like the second, then you favor David Plonk's count. 2. Japan The Nikkei tanked over 5% with huge volume. Doesn't look like a double bottom to me. The Nikkei's bottom from July '95 was revisited in January, June and August, and finally broken on 8/28. The feeble attempt to lift it back over 15000 (pension funds buying under orders from the high windows) was unsuccessful and two trading days after the first close below 15000 we see the Nikkei back at the low. It could be a double bottom if we bounce again, but until then it is not. You said look at the intraday move, well, I looked, and the Nikkei had traded under 14000 during almost all of the second session, and rebounded up from the daily low in the last 15 minutes of trade. The Nikkei chart looks bad to me. IMO it may try to rise some, but is going to make new lows soon. ATG