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At 10:04 PM 3/24/98 -0800, Tom Cathey wrote:
>I agree, Bob -
>
>To add more....
>
>When people engage in trading and get into a market, they are kinda
>"stuck" in a position until something happens, good or bad. How they act
>when things are quiet or normal is probably somewhat random based on
>impatience, greed, opinions, fundamentals, news, etc. What IS very
>predictable are the ways most traders react to panics when they occur
>against their positions.
>
>I can garantee you that I and most everyone on this list who is long Gold
>will panic out if it drops sharply $50 in a day. And if short, a $50 spike
>up will cause most to be stopped out or panic out...."involuntarily".
>
>I personally feel most markets cannot make a meaningful advance until they
>have a panic sell-off first.
>(and vice versa) The magnitude depends on the time frame we are looking
>at.
>
>So....what I feel IS predictable is what happens AFTER a panic up or down.
>If it is INVOLUNTARY liquidation, there is usually a high probability of a
>rebound. The bigger the time frame of the panic, the bigger time frame of
>the rebound. ( a top or bottom of significance) I'm not talking about
>predicting a panic, just what usually happens after one.
>
>Most of my personal trading methods and forecasting are based upon this
>assumption.
>
>Oh, just to show how effective panics are.....try this primative
>test....though greatly biased 'cuz of the bull market: In the S&P 500:
>BUY the breakout of the 20 day LOW...that's it! Use a $5,000 stop and
>liquidate at a $10,000 profit. Ass kicking! And against conventional
>wisdom, of course. Like any system, this will get creamed when the market
>changes, but the point is that we really do get paid for putting our hands
>in the fire....(from Market Wizards)
>
>
>
>Tom Cathey
>
>
>
>
>
>> Also, prices do tend to react at various support and resistance levels,
>> perhaps because people think they should, so take actions that are
>> self-fulfilling.
>>
>> > If enough people are told that prices will bounce off of a
>> support level, they will buy at those levels and prices will
>> rise.
>>
>> > If enough people think that the price will rise after it
>> breaks to new highs, they will buy at those levels and
>> prices will rise.
>>
>> We are dealing with both the fundamental forces that cause a price to
>move
>> and with the psychology of what people think will happen as prices reach
>> various levels.
>>
>> Bob Fulks
>>
>>
>>Yep greed and fear July silver felled to 554 Thursday then stopped and
went back to 647 Tuesday nonstop and nothing changed in the real world
concerning silver.
Robert
>
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