youve come in now to scramble brains now have you?--diverge the conversation -- ERG trade data forum

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Date Posted: 00:28:10 03/10/03 Mon
Author: no thankyou.--seeing you don't do fundamentals you won't be interested in ERG's nta with the sale of Proton will you?
Subject: youve come in now to scramble brains now have you?--diverge the conversation

Name: Brumby
Location: Sydney, NSW Australia
Date: Monday, March 10, 2003 at 4:25:00 PM
Subject: Re capitulation
Comments:
I used the expression scary to make a point as I have a healthy respect of the market. Although people are talking about capitulation I fear its impications is not fully understood. A good measure is to ask ourself whether we are still adopting the same market strategy as a year ago. Having a view and not positioning yourself is no different from not having a view.

It is more than just taking in the chin as there are a number of strategies we can adopt, including :
a)Reducing your market exposure
b)Over weight on defensives
b)Hedging your core portfolio using derivatives
c)Having a mix of short and long positions

Tactical changes can include switching from positional to swing trades or having tighter exit and entry methods as trend failures become the norm. I do not think bottom picking is a strategy one should go for if indeed it is a valid strategy.

Finally, I would caution that stochastics like other momemtum oscillators are best for ranging markets. Their strongest point is in highltighting divergence, but not so good with timing. Also do not assume that the XAO will outperform the SP500 this year. There is a danger that it may infact underperform as we are beginning to see since the beginning of this year. There may be a number of reasons incuding exchange (this has already impacted RMD and NCP) and the effect of the drought.

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