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<font size=3>Realtraders,<br>
<br>
I am 'sort of' in agreement as to what Earl wrote. Recent
early morning rallies are giving way to late afternoon selling.
Typically, you need to get a <b><u>climatic</b></u> early morning selloff
(200, 300 even 400 points in todays market (Dow)) followed by an
afternoon rally before a strong bottom can form. <br>
<br>
Currently the S&P Cash is trading at 1390.90 (3:41 et) and is
testing the lows of January 5th. Additional Fibonacci support also
rests in this area but some of my other indicators and oscillators are
suggesting that this low will NOT hold. As such, I am expecting a
continued quick down move to the 1350 - 1358 on the Cash over the next
few days. Further, there is some great symmetrical support at the
1300 level in this index. Thus any climatic selling should subside
in a 'worst case scenario' at that 1300 level +/- 37 points from that
mark.<br>
<br>
Just some thought,<br>
John Boggio<br>
<br>
At 09:06 AM 1/27/2000 -0700, Earl Adamy wrote:<br>
<blockquote type=cite cite>Interesting patterns, however differences in
breadth patterns coupled with my current wave counts (all sessions)
suggest a little rally falling short of 1448 followed by one more leg
down which should take out the 05Jan low, probably no lower than 1368.
I'm looking for this to happen before 08Feb and if the breadth models
turn up, I will be looking for a very nice rally. A close above 1448
would suggest to me that the correction is over and that a major rally
should follow.<br>
<br>
Earl<br>
<blockquote type=cite cite>----- Original Message ----- <br>
<b>From:</b> Steve Karnish
<br>
<b>To:</b> realtraders@xxxxxxxxxxxxxxxxxxxxxxxx@metastock.com <br>
<b>Sent:</b> Thursday, January 27, 2000 8:17 AM<br>
<b>Subject:</b> [RT] deja vu all over again?<br>
<br>
</font><font face="arial" size=2>List,</font><br>
<font size=3> <br>
</font><font face="arial" size=2>The patterns "begged" for comparison. This was my post to my site last night.</font><br>
<font size=3> <br>
</font><font face="arial" size=2>Steve Karnish<br>
Cedar Creek Trading<br>
http://www.cedarcreektrading.com</font></blockquote></blockquote><br>
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</x-html>From ???@??? Thu Jan 27 17:36:36 2000
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From: "Gary Fritz" <fritz@xxxxxxxx>
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Date: Thu, 27 Jan 2000 13:46:51 -0700
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Subject: [RT] Overnight disaster insurance?
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Status:
I have a really basic position-management question...
How well do overnight stops *really* work to prevent disaster?
I'm primarily interested in the SP and ND. I trade my (mechanical)
systems with fairly high leverage. I've studied the systems'
characteristics very closely, and I'm comfortable with my degree of
risk for normal situations. My aggressive leverage point is still
only about 1/5 the "optimal f" value for the systems, which is pretty
darn safe.
However, the systems holds overnight. Since I use only RTH bars, the
systems essentially ignores nighttime market action. In normal
market conditions that works just fine, and I'm happy with it.
But I'm concerned about what could happen in a meltdown scenario.
I'm not too terribly worried about a meltUP, but an overnight crash
could ruin me. The "old and wise" traders always say that young
traders get over-confident and trade too large, which works just fine
until one of those 4-sigma events happens, and then they're bankrupt.
I want to avoid that.
I've looked at option-protection strategies with no luck. Everything
I can find says that any option strategy that would protect you from
an adverse overnight move would effectively erase any overnight
profits, so you might as well go flat at the end of the day. But
doing that wrecks my system.
I'm wondering how it would work to place a disaster stop in Globex
overnight. In particular, how would stops work in the SP or the ND
in an overnight crash situation? Would all the bids disappear and I
wouldn't get filled until the bottom (if any)?
Is there any kind of stop or option strategy that can protect you
against huge losses in an overnight move, without costing so much
that it eats any overnight profits?
If I can't find a suitable insurance policy, I'll just have to lower
my leverage. But even then I'm not quite sure how much I should
allow for to cover a disaster. If China lobbed a nuke on Taiwan, or
something like that, how much might the markets drop overnight? 100
S&P points? 300? 500??? If the S&P or ND100 dropped 25% overnight,
that would represent $80-90k per contract. That's great if you're
already short, but if you're long...
How can you lower your leverage enough to avoid getting flattened in
a big crash, without completely trashing your returns in normal
markets?
Gary
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