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Phil wrote:
"Nobody know the Fed would move"
Actually, I can't help but think that some people did know -- at least a
couple days in front. Traders like Soros, and some large institutional
traders who established large S+P positions a couple days earlier. There
was a post by someone on this list stating that the squwak box reported
several large traders taking positions around 940-960. He went on to say
that at least 1 of these large traders did not have "a worried look on his
face."
To think that this kind of information stays inside the circle of policy
makers is nieve. How could when so much money is at stake? A leak here a
leak there and a kick back is all it would take. Since when are policy
makers immune from the temptation to make large sums of easy money?
How coincidental.
For the record, whoever wrote this thanks. I read this and promptly bought
MSFT calls. This is a great list!
Brian.
-----Original Message-----
From: Phil Lane [mailto:logical@xxxxxxxxxxxxx]
Sent: Saturday, October 17, 1998 9:44 AM
To: omega-list@xxxxxxxxxx
Subject: Re: FED cut forewarning
>Date: Sat, 17 Oct 1998 00:01:13 -0700
>From: mr_bond@xxxxxx
>To: omega-list@xxxxxxxxxx
>Subject: Re: FED cut forewarning
>Message-ID: <362840B9.5EE7B4D6@xxxxxx>
>Content-Type: text/plain; charset=us-ascii
>Content-Transfer-Encoding: 7bit
>
>What I don't get is why the fed would intentionally wreak havoc with the
>financial markets like that. I have a rule that I never have a trade on
>in front of an important Fed announcement, but there is just no way to
>prepare for that kind of carnage. Greenspan had to know that this would
>cause some serious margin calls, perhaps bankruptcies, for potentially
>50% of the traders with positions in the futures markets. I hope he has
>a clear concience about that.
I've never seen it pay to worry about the reasons why things happen. Nobody
know the Fed would move, but there was ample evidence that the market could
rally. The market predicts it's own future!
In the book "How to Make Money in Stocks" by William O'Neil, on page 59, it
describes how the market will "follow-through" to the upside after making a
low (if it's really going to go up that is). It's extremely specific,
easily computerized. As an added bonus, it really works. The real key is
the volume action. It works best on the Nasdaq. And it happened on 10/14,
the day before the blowout.
Any trader should know that the market can move suddenly and powerfully,
who cares why. People should expect the unexpected, and protect themselves
accordingly. If the shorts had some kind of protective stops on the books
they could have survived.
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