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What months are you using in calculating the spread?
Earl
----- Original Message -----
From: "Gitanshu Buch" <OnWingsOfEagles@xxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Sunday, April 16, 2000 2:39 PM
Subject: [RT] GEN: Parabolic patterns, Bear Markets 1
> Hello everybody
>
> Before you start seeing the scary chart patterns in the following few
> emails, I "implore" you to read this <g> if not for provoking some
thought,
> then for some entertainment:
>
> The one thing I learned from trading the markets these past years is
this:
>
> Bear markets anticipate bad news, and bull markets anticipate the good
news.
> In that, the market is a proactive mechanism, not a reactive
mechanism.
>
> Bear markets seldom react to bad news. Bull markets seldom react to
the good
> news.
>
> If it seems that markets are reacting to the news, then the market is
not
> what it is made out to be: An anticipating mechanism.
>
> For someone to come out and say that yesterday or last week was caused
by
> fears of rising inflation... well, consider some recent history:
>
> On May 14, 1999, also a Friday, a bad CPI number printed and the Dow
sold
> off some 140 points.
> In mid-June, 1999 the Fed raised interest rates, but the market took
off on
> June 24 to all time highs in 4 short weeks.
>
> If the market's reaction is not as one would expect (eg a stock not
going up
> on great earnings) then the market has a message in that price action.
If
> the market does indeed go down on bad news, it is
> - either a surprise to the market (which happens, but is rare)
> - or coincidental to the market's overall structure - and thus
irrelevant.
>
> Consider the two charts attached here.
>
> The crude oil market "knew" at $10/bbl that low prices were soon to be
> history.
> The Compaq market "knew" that management was mis-interpreting the
upcoming
> quarter.
>
> I say this to preface the following emails, which deal with parabolic
> patterns and my observations on the equity market we find ourselves in
going
> into what many feel will be a scary week.
>
> Last week - in my opinion - was a buyer's strike coupled with some
> institutional distribution, which is different from a bear market.
>
> A bear market, the way I understand it, is where buyers become sellers
and
> sellers remain sellers.
>
> At issue today is the art of figuring out whether we are in something
> secular (long term bear market) or something cyclical (cash raising
from
> margin calls, tax payments, buyers' strike etc).
>
> If the market is falling because of the latter reason, well, one can
call it
> what one wants, but one would - on balance - be better off being net
long.
>
> As always, I will trade what I see and not what I think.
>
> Buy stuff moving higher, sell stuff moving lower.
>
> Thus while my eyes see more charts breaking down than breaking upside,
my
> feel for the market says that this is just another one of those crazy
times
> when nobody wants to buy.
>
> Gitanshu
>
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