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Both James and Normans comments point out how different styles of trading may
be suited to different styles of markets...I found yesterdays' "whipsaw"
action to be very orderly and wonderful to trade using technical
analysis....many of the retracements that James and Norman charachterized as"
whipsaw" were approximately .618% of the previous move....if you want to see
an even better example of how beautiful the flow was...put up a 5min. chart of
the S&P futures with a 5min. stochastic below it....the stochastic called
every turn(this is unusual, generally the 5 min.stoch will stay over bought or
oversold for longer periods of time than was the case yesterday)...the bottom
line is...find a style of trading that works for you, just because someone
else doesn't make money using a particular style of trading, doesn't mean that
you won't or can't.......and vice versa
Tom Stein comfut@xxxxxxx
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From: owner-realtraders@xxxxxxxxxxxxxxxxxxx on behalf of nwinski
Sent: Thursday, June 26, 1997 10:58 PM
To: RealTraders Discussion Group
Subject: Re: stocks: Friday
James Charles wrote:
>
> Ladies and Gentlemen:
>
> Today the market whipsawed and day trading the indexes would have been
> rather difficult for anyone not on the floor, at least in my humble
> opinion.
NW: James, why do you make exception for the floor traders? They can
lose money just as fast or faster than you can. Believe me, I have been
there.
I felt the market wanted to go lower but could not sustain a
> big down change for the day. Many traders took short positions lately,
> and for good reasons. Some already made a nice profit. These shorts
> will be nervous about their positions, and their stops will be tight. I
> wonder if this is a setup where the institutions come in Friday and hit
> the stops, forcing a short covering rally. I think in the short term we
> may see some action to the upside.
>
NW: I call what you describe a non-trending corrective or noise pattern.
Typically when the market goes into this mode, it has many false
breakouts and whipsaws. The market is teaching those who just made money
by technical analysis and trend following that what they do no longer
works. The market is also trying to reclaim the profits of these
traders.
In a theoretically perfect free market, all players must eventually be
returned to an economic zero profit. The market will do what it has
to do to see that as many as possible make as little as possible.
Economically,
Norman
> Money does not buy happiness, but I would rather be unhappy with a few
> dollars in my pocket than unhappy and poor. Let's be careful to make
> some money out there tomorrow.
>
> Best wishes,
>
> James
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