- USA TRADERS THREAD -

It is vital to remember that nobody but nobody knows what the future will be in the markets. The market consists of millions of people who have to decide where to invest - equities, bonds, commodities, gold ...etc. Or just leave their money in a safe deposit account. There is of course a mass psychology that operates and Eliott Wave, Gann or other methods attempt to unravel the complexity of the moves at every level. One book I strongly recommend reading perhaps over the holidays is "Reminiscences of a Stock Operator", which tells the story of Jesse Livermore. The thing about it, is that Jesse Livermore both made and lost money, which makes his story all the more compelling as he describes how he could never make the best moves all the time.

It is an observation that often the past is used to predict the future in a very simplistic way "Look the market has risen, it's time to invest and make money as the trend continues". However what you learn with experience is that markets always get too high and too low. I'm not sure any amount of experience will help you to tell with certainty when the market is at a major top or bottom. All we can do is watch and perhaps open a small position, as some are now doing with shorts, they may be rewarded beyond their expectations or may get out with a small loss. I personally am looking for the kind of move we saw in the late spring of 2002, being heavily short at the start of a 2,500 point down move on the Dow is everyone's dream, maybe it will happen in 2006 or maybe not - nobody knows. I would expect at least an 800 point move in the next 3 months.