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Strategies & Market Trends : LastShadow's Position Trading -- Ignore unavailable to you. Want to Upgrade?

To: TobaccoMan who wrote (7113)	1/25/1999 7:46:00 PM
From: LastShadow	Respond to of 43080

Bull and Bear traps There isn't an indicator or preferencing chart pattern for these (although some volume theorists will say there is, its mighty interpretive if you ask me and so I send them over to talk to the Elliot Wave gang). A bull or bear trap can only be defined after it occurred, although I have noticed that Alien Tech called a bull trap at least three times in the last year while it was happening. Which is sort of like drowning and having someone on shore yell at you, "The water is real deep right where you are!" Basically its a false rally or false drawdown (tanking). The market starts up, in the Bull Trap, and traders start placing orders and then all of a sudden there are a few large sell/short orders placed on sector leaders and everything reverses. In the really bad traps the market makers have this huge order in front of them and they have to lower the ask substantially to either trigger programmed selling or stops to get enough shares to cover the short sell. This generally occurs as a down gap from a level chart intraday. Bear traps we are pretty much seeing all the time for the last quarter, and Dave Shares was caught in one last week with EGRP in the third of his successive shorts (just a guess on my part here, Dave). The up gaps occuring intraday during major short squeezes are the Bear Trap as well. The 'trap' occurs because the revesal point buys (in a bear trap) are large enough to cause a change in local sentiment. If you are a dozen funds finishing up a meeting with say AAPL, where they tell you all sorts of really good forward looking things, you go out, wait for a local low and then place your humongous orders to buy when there are enough sellers out there. I have seen subsidiary financial instituitons sell a few large blocks, only to have their parent fund come in and buy everyting up a few hours later after the selling is in full force. Then they post an upgrade through your analyst... lastshadow