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<BLOCKQUOTE
style="BORDER-LEFT: #000000 2px solid; MARGIN-LEFT: 5px; MARGIN-RIGHT: 0px; PADDING-LEFT: 5px; PADDING-RIGHT: 0px">
You can tell he has never read a statistics
book.
Hmmm, must be a sociology major, or music.
any other hints..
don
This verbose and on again off again trader has been asked
to elaborate on this recent quote. The questioner won't be identified to
protect him from the potential humiliation such a question might elicit.
THE QUESTION:
"The bottom is a blown up part of the top"
----------------------------
THE ANSWER:
The question does not explicitly refer to markets, but given
that this yahoogroup is a trading group an answer will be framed within that
context of price behavior. Such as it is then, the picturesque words
"blown up" imply not just any bottom, but a significant bottom that traders
lust after for the potential rewards that come from playing it hard on the
long side. For surely a market that has treated a trader badly on the
downside certainly deserves its come upance on the upside with a max margin
play. Bottoms of this nature only come along once or twice in a lifetime
and their presence leaves graphic evidence on historical charts and
unforgettable memories that many dream of, few participate
in, and many remain frozen until the next top. One requirement to
participate i and reap the rewards of latter conversation is that your age be
sufficient to live long enough to tell your grandchildren how it was in the
crash of 2001. Before a bottom can be defined, a top must be defined for
day one of trading history cannot truly be defined as a bottom or top but in
essence, the big bang that started it all in an ever expanding proliferation
of inked paper certificates. And therein lies part of the problem, paper
representing value, substance is replaced by I.O.U promises and questionable
valuations whose basis is generated from psychological factors of greed
battling fear. In addition to the greed and fear determinant of the
distance from top to bottom there is the governmental force that
derives parasitic revenue from seeing that the tops keep rising
intermittantly between periods of forced withdrawals. For if the tops
kept dropping, the masses would not be lulled into playing the game with
disposable, or even nondisposable income and liquidity for corporation
founding would suffer. Thus we have the somewhat variable cycle of tops
and bottoms such that it isn't obvious who or what is in control of the
scheme. Perhaps no one is at any one time and trends are random
fractals in different time frames. The tops are identified by massive
numbers of IPO's, extravagant valuations, sky high PE ratios, and the belief
that markets only move upward. Each top has its new genertion of suckers
and a smaller number of those who have learned to hang on to their wealth and
trade right. Thus, we have the intial big bang that has now become
an outlet for keeping hands out of the idle state and into the motion of
buying and selling. The addiction of making money from a simple strike
of the keyboard is a hard one to break. It increases and increases until
the highway patrolman says stop. Then come the aftershocks of the
initial big bang. PE's are blown out of unreality and put back on a
course to reality, sometimes with blinding speed, i.e. faster than a
keystroke, faster than an utterance of Sell into a jammed broadband
network. Layoffs accelerate. Earnings fall, prices fall, price
charts now manifest the ski slope architecture. Certificates are
used as confetti for the parade of men to the White House who influence
the levels of tops and bottoms. Forever after the periods of
euphoria and depression are here to stay as it is guaranteed in to be in the
trading realm. So we must have a begining, rising expectations,then a
top, followed by a bottom which may be higher or lower than the beginning
price. The bottom is a part of a blownup top because not all
sectors of the blowup traverse the path to the bottom. Some remain at
the top and others rise to the top while the majority head for bookvalue, as
the growthrate premium has been stripped from the valuation. The
irrational behaviour that typically biases traditional asset pricing and
valuation models in normal times is reduced to a minimum at bottoms. Now
when the momentum of tons of paper hit the sidewalks of WallStreet there is an
earthquake felt round the globe. Such shocks and aftershocks are
measureable like price hitting support and bouncing in a cascading price/time
series of Gann, Elliot and Fibonacci concepualizations. A more recent
creation for this monitoring might be the Danton Shockwave, although few speak
of it. Thus ends the answer to the question.To
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