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

To: Susan Saline who wrote (8351)	2/11/1999 2:47:00 PM
From: BarbaraT	Read Replies (1) \| Respond to of 43080

I thought the markets were closed this weekend.

To: Susan Saline who wrote (8351)	2/11/1999 3:00:00 PM
From: LastShadow	Read Replies (2) \| Respond to of 43080

Nope - everything is either in cash/money market (80%) or bear fund (20%). The important thing is this: Most of the funds follow the SPX, not tech stocks or any other sector. If one looks at the few sectors we follow here, it is misleading. It's basic risk management. If the market is overvalued and ready for a 5-10% correction, and it DOESN'T happen, then all I have done is missed some profit and will reenter. If it does happen, then I have no loss for the most, and some gain for the bear play. The SPX is up over 30% since Oct 8, and if one read that Institutional Investor post, it is understandable that the funds are not entering the market until the valuations come down. Up until the 4th week of January, Funds were putting 10-13 billion in the market. Beginning the last week of Jan, they started taking out 4 billion a week. If we look at only the volatility of the market, we gloss over the fact that 80% of the volume is from funds, and the trading, while noticeable on some stocks (particularly the nets) is not going to make a hill of beans differnce when funds start offloading. This appears to be a good day fom the rise in sector stocks, but when you look at the nubers and see that the SPX is only up 1.8%, DOW up 1.25 and NAS Composite up 3.15%, you have to realize that we are not in an index rally, but rather an intraday sector rally. And there is a huge difference. We are still in a horizontal correction - wandering on the SPX between 1273 and 1215. Todays present 1241 is still below the 26 day moving average. This kind of movement is great for short term stock plays - even up to a few days, depending on the stock. I think when others speak to a rally or jump, that tends to confuse the issue -I am talking about Indices and Mutual Funds, not sectors or daily swings. Even at today's number, the SPX is still off its high of Jan 29 by over 3%, and yesterday's low was off by almost 6%. I'd rather protect the 95% of my money I don't trade with. And I certainly don't consider a 1.8% rise on light volume to be indicative of strength in the market. I will look to reenter when the SPX is at or above 1273 if it never goes below 1213. If it does correct, I will move funds back in on the day of the deepest decline. ls