Re: [RT] Fw: Limit Down Bounce

["dbisny" <dbisny@xxxxxxxxxxxxx>]

I try to take  a long limit down trade in the 
e-minis SP like this:  first you should have the fair value PREM; if you do 
not have this, just bring up an intra day chart of prem and eyeball the average. 
Then, while futures are limit down, observe the underlying cash, SPX in this 
case, and the TICK. If the TICK and SPX keeps going down, please do not try to 
buy when limit collar comes off, because the futures will drop to be in sync 
with the average premium. If SPX is going up while futures are locked 
limit,  then you may establish a fair value of the futures contract and 
decide whether you want a quick scalp.  There was a good long scalp at 1325 
last week; at a recent lock limit down, at 1421 (??), the futures did a 
nice head fake up and then went down to 1412. However, it is best to 
BE ON THE FLOOR if you want to execute these trades!  and not with 
rent money.
<BLOCKQUOTE 
style="BORDER-LEFT: #000000 2px solid; MARGIN-LEFT: 5px; MARGIN-RIGHT: 0px; PADDING-LEFT: 5px; PADDING-RIGHT: 0px">
  ----- Original Message ----- 
  <DIV 
  style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From: 
  Timothy 
  Morge 
  To: <A 
  href="mailto:realtraders@xxxxxxxxxxx"; 
  title=realtraders@xxxxxxxxxxx>realtraders@xxxxxxxxxxx 
  Sent: Thursday, October 26, 2000 11:50 
  AM
  Subject: Re: [RT] Fw: Limit Down 
  Bounce
  Randall:I seldom trade against the trend. And when 
  I do, I usually regret it.That being said, I see the same thing 
  happening time and again when the marketapproaches the limit 
  collars--especially in the Nasdaq 100 futures [perhapsbecause limit down 
  is a common occurrence in the Nasdaqs]. I usually take a bitof profit as 
  prices approach the collars and then if there is a bounce, I canalways 
  sell that portion back out once I see price returning to the daily 
  trend.I guess that's taking advantage of the bounce, but in the 
  direction of thetrend.Best,Tim MorgeJames Alvis 
  wrote:> > You might want to consider the risk of buying at limit 
  down in volatile> > markets, anticipating a bounce.  Even if it 
  works nine times out of ten,> the> > tenth time can bury 
  you.> >> > By the end of the day in  the Crash of 
  1987, many locals who stubbornly> held> > to their habit of 
  buying breaks, had to sell not only their Porsches but> > also their 
  CME seats.  Will it happen again?  Without doubt.  Will 
  most> > traders see it coming or even recognize the danger as it 
  unfolds?  The> > markets have a nasty habit of regularly 
  surprising the majority, including> > some traders that are 
  supposedly the most knowledgeable and sophisticated.> >> > 
  Consider the risk/reward.  Preserve capital.  Trade against a strong 
  trend> > only with great care.  The markets will always be open 
  tomorrow for those> > with the means to participate.> 
  >> > Regards,> > Jim Alvis> >> > 
  ----- Original Message -----> > From: "Randall Kurzon" 
  <rkurzon@xxxxxxxxxxxxxx>> > To: "Omega-list" 
  <omega-list@xxxxxxxxxx>> > Sent: Thursday, October 26, 2000 
  10:38 AM> > Subject: Limit Down Bounce> >> 
  >> > > I have noticed that almost every time the SP or the ND 
  are halted at> limit> > > down it is followed by a bounce. 
  I've been watching that for the last 5> > > years and as far as I 
  can remember there have been very, very few times> it> > > 
  does not bounce. Any comments as to the reliability of entering a> 
  position> > > right after the market starts trading again from 
  limit down?> > >> > > Randall> > 
  >> > >> >>>> 







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