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With the Dow and the Nasdaq down with a vengeance today and then
stabilizing, it feels a little like 1987. The strange difference is
that a 500 point drop in the Dow on Monday wouldn't even challenge the
9600 low in place. With the new safe guard circuit breaker of a 5% drop
in the S&P to stop trading would mean a 60 point drop in that index.
That would be between 400 and 500 points on the Dow. What would the
effect be on the Nasdaq? There is about a 3/1 ratio there also. That
would mean between 130 and 170 point drop in the Nasdaq. This would
not challenge the 1600 low last April. So no matter how bad or good
Monday is, it won't be the end of the world as we know it. It has been
relatively easy to cover shorts at projected targets which leads me to
believe that after a little support at these targets, things could go
lower. But even lower might not take out the current lows. So, as
usual, I am looking at what numbers I need for the next move up as well
as what numbers I need to continue this down move. I always look both
ways before entering a market. Ira.
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