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

To: AlienTech who wrote (8227)	2/10/1999 12:19:00 PM
From: LastShadow	Read Replies (1) \| Respond to of 43080

LCOS and Bear Fund Switching LCOS - smaller orders - no big positions going on. I would expect an upturn around 2 or so and then a retrench before close. I have posted the following and the associated screenshot at home.earthlink.net The inverted screenshot of the ProFund's Ultra Bear Fund (urpix.jpg) requires some explanation. The Blue line is the S&P 500 (SPX) index, scaled on the left side. The gold line is the Ultra Bear Fund performance, scaled on the right side. The horizontal lines represent the upper and lower resistance levels each time the Fund and SPX moved horizontally. These roughly coincide with Fibonacci retracement levels for any of the seriously technically addicted out there. The two diagonal lines map the rising trend line of the SPX (blue line) up to the first horizontal movement (mid-November to mid-December) and the present horizontal correction (last week in December through today). It is important to note that they cross the upper and lower horizontal support and resistance levels. This math/graphic is how the 1215 lower resistance level was established as the downturn threshold. The gold line mapping the bear fund is provided as a test of the funds ability to inversely track the SPX. Given these levels, a 5% correction from the present resistance level would put the SPX at about 1186, and a 10% correction would put it at 1154 - both within reasonable proximity to the horizontal lines drawn at prior support and resistance levels. Given that, on a percentage basis, the URPIX fund returns twice the change of the SPX (i.e., a 5% change in the SPX correlates to a 10% change in the fund NAV). So given that a 1% redemption fee is charged for moving funds held less than a year, the SPX only has to move down ½% to break even. And the likelihood that a 5% correction will occur is high since overvaluation, lack of earnings or positive news, large-eats-small mergers, and currency instability in Asia/China, Central and South America are all pressuring caution until valuations return to an acceptable level. Additionally, given the comments made by the fund managers at the last two Institutional Investors conferences (see my recent postings on SI), they are looking for better prices as well. Corrections generally occur faster than upturns though, and I would expect if one comes, it will have run its course by Mid March-April. The other reason for believing that is that the $10 billion in IRA/401k funds that arriving weekly to the institutions will need to be invested somewhere. Which is why I also expect the analysts to start downgrading more of the overvalued stocks in the near future - to help realign those stocks prices with some meaningful valuation. lastshadow