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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: dennis michael patterson who wrote (20265)	4/1/1999 3:17:00 PM
From: Robert Graham	Read Replies (1) \| Respond to of 42787

I definitely am impressed by some of the trades you have made. So please to not misunderstand my intentions. I just want to help where I can. I do enjoy sounding the alert when I see something very important. Sometimes a bit late, but still I try. I was talking to my father yesterday and telling him how I think there may be gap up opening on stocks to facilitate a bottom that was in the process of forming at the close yesterday. If the gap up did not happen, I expected an attempt at a rally. But some of those gaps were awfully large, too large for the sentiment of the market. So that is why they sold off. But the gaps did facilitate a market bottom which was their purpose. I am now seeing periodically signs of MMs and other interest attempting defensive actions in the market. They do not do this when the market is well and ready to move up. Significant market interests are attempting to forestall a sell off in the market. Yesterday's apparent sentiment and actual market price action did not support a gap up. Watch what happens to price when it moves into support. Look at the price action that follows, and the volume. Watch the cascade effect between indices and individual stocks. Look at the price action after a bottom has been formed. Note which stocks are breaking down and importantly what stocks are holding up. Under negative sentiment and price action, bottoms take time to form. The NASDAQ lead the sell off this time with YHOO apparently one of the first notable stocks to break down. The DJIA did not bounce when other indices and stocks bounced. It ended up in congestion to then resume its sell off. I think the selling started on the heels of the positive FOMC announcement. Strong CPI also wa to blame for this perverse market response. The truth is the market was looking for a reason to sell of given its unsuccessful attempts at 10,000 which I think at times was the only thing driving the market upwards. The short term market sentiment turned negative and remains this way. The DJIA caught this first which then has moved over to the NASDAQ. AOL and AMZN held well. But then when the NASDAQ bounced and failed to but in a bottom, AOL started to show signs of breaking down. This is also when we saw the proxy for the broader market SPY to break down too. I next looked at S&P 500 to see that had been breaking down. AMZN still held in well and even went countertrend but under decreasing volume. All gap ups and intraday attempts at a market rally I think could of been shorted. Large price bars can behave like price gaps. This is also true on the open. Price gaps tend to get filled more often than not, even when there will be a later continuation of price action in the direction of the gap. Add to this the apparent negative sentiment. Look at the price action on the DJIA for strong evidence of this. Then look at how YHOO was the first to buckle under which also caused AOL to begin to break down, the bellweather of the tech leadership. It continues to show strength, but I am surprised it was AMZN that showed better strength. I think it may pay to keep an eye on YHOO in the near term as a leading indicator of market activity. The traders in this leadership stock are nervous and appear to be the first to sell or buy in. This highlights a very odd element of the psychology of the public day trader that I have discovered . Their nervousness which I think is the result of fear in denial helps them to jump into a potentially negative situation. Thinking may go something like: "I got to make more profits while I can before the storm comes in". Another example of perverse market psychology. Many traders yesterday were hit hard. But they continue to come back for more. I think fear is what may be motivating their participation in the market right now, not enthusiasm. Under the right circumstances, this fear can turn quickly into a form of exuberance. These are just thoughts of mine. Shortly we will see the market make its next move. Right now we appear to be in a trading range. Bob Graham

To: dennis michael patterson who wrote (20265)	4/1/1999 3:38:00 PM
From: Robert Graham	Respond to of 42787

Oh yes, by the way, the two books by Ross are excellent. His day trading book is very well written, better than his book on position trading. All of his books, particularly his position trading book, assumes market experience. He does attempt to show a descretionary methodoligies which are in part based on intuition. He gives basic rules, many examples that are narrated, and some pointers and hints. Only experience in the market can help a person really understand what he is showing well enough to implement in their own approach to the markets. Both books do provide some good information, tips, and market insights. His approach to trading is strictly based on price action with support from short price patterns. He uses technical indicators such as offset MAs and oscillators and even Fib retracements more as guidelines and alerts that he tends to set up on the fly than as hard and fast signals to enter and exit a trade. I have not seen this approach to trading documented anywhere else. I am surprised he has actually attempted to describe this type of approach to the market. Both books are a good source for ideas. Picking up a few good ideas with some pointers and insights from the book is what I would consider a success. Helping form a frame of mind that can lend itself to this type of trading would be icing on the cake. We shall see what happens by the time I finish both books. No answer found here in his books. Just good supporting material that an experienced trader can use. But if your approach is the systematic use of technical indicators, than his books are not for you. Bob Graham PS: YHOO is showing a possible attempt at a breakout. We shall see.

To: dennis michael patterson who wrote (20265)	4/1/1999 4:06:00 PM
From: Robert Graham	Respond to of 42787

It looks like the market is attempting an upside breakout, but it is too late in the day to matter much. Friday can be more revealing of what may or may not has begun to happen today. YHOO started to show signs that it was ready to break out, then wide price bars testing the bottom of the trading range indicated to me a move may be coming up shortly. Sure enough it started to break out. A look at NASDAQ indicated the same thing. The S&P 500 has been the first one to break out and retest former resistance which is now support. The SPY is also showing a breakout, but volume is not validating. The DJIA is in congestion right at its breakout. Other Internet notables are showing some buying. It looks like the market has put in an interim bottom as early as this morning. We shall see what happens from here. I would be quick to take profits in this market. Remember, the funds have stock to sell. Bob Graham PS: It looks like the heavy down day projected by Donald Sew was one day early.