To: Mr. Happy who wrote (21645 ) 11/28/1998 4:28:00 AM From: IQBAL LATIF Respond to
Emotions and markets cannot go together.. Thanks, what you like to see and what market wants to do are two absolutely different things and that is one distinction I try to make when I am working on markets, I try to keep emotions out. This market for last 36 months have only seen six months where performance have been negative, NDX was at 650 and now above 1600, at 650 for a people with certain frmae of mind it was two expensive at 1600 it is 33 times trailing earnings, one needs to see the why market have stayed at these levels for so long, once we identify the role of 'growth dynamics' in market valuations we will be able to answer the complicated question of when to enter, in my opinion it is the risk perception that makes money for an investor and one cannot overlook the fact that markets are not riskless rings, you need to first of all put your money on line, being cash is a sign of lack of courage and lack of aptitude for encountering risk, in a bull market run where we had 21 months positive returns being in cash and being short is a menu of self destruction, naturally an individual can decide for his ownself keeping his money under the pillow but the fact remains market returns belong to people who understand market sensibilities, market likes investors to be invested and market likes risk to be well understood, unfortunately we have seen that risk is not truly understood and people want to make it quick. Market opens every day keep your equity if you loose it you are no more a player, it is due to this one cannot be fixed with a certain direction long or short it has to balanced stratagies, it is for this that I bet against the trend at 1320 and never stand in front of market making new highs, those who have misunderstood the run of this market and have betted against the 36 months trend can now see that trend is your friend and don't fight the FED still holds well.. The charts are most deceptive at major turnarounds and major moves if you look charts in isolation and fail to develop a historical relationship you will find yourself taking decisions which are not in confirmity with the natural flows of the incoming money, I have seen the charts and have always believed in 20 50 200 days ma's as very integral in same category I place that any close above previous highs should not be betted against, you saw in Europe we had the finest run last 8 sessions and NDX as we closed above 1482 the previous high we never looked back-- we are now at 1616 level and the only support is 1555 we have taken out a critical level a second close above this will make that move to 1750 that much more possible, however I would for the sake of market like the test of 20 days MA on NDX as this increasing divergence would lead to a set back in next 7 sessions and I would rather be prepared for it, the run to 1750 with a test of 20 MA or even 50 MA would give great credibility to this move, for me I am planning to hedge more and more of my positions and hoping to get this right so as to be in positions to establish trading postions at lower levels.. trading ma's in between trending markets are most profitable opportunities, with RUT now above 402 I expect some distribution as RUT may move strongly and as many would see from the month end valuations, we live in interesting times some sectors as you know are long some are good for a terstr of support by being in the right position one can take advantage, like AMZN drop from 233 to 203 was a good opportunity to buy puts and cover and wait for that 175 gap to be filled but the issue is will we see 250 on AMZN before 175 gap.. a quick trader needs to be nimble and look at markets without emotion.. If GDP growth stays strong . A strong economy may bring new higher volatility but corporate profit recession becomws a story of the past hence one needs to make that fine balance and have more cautious approach as we move higher into new territory..
