Anything can happen...

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Old Jul 9, 2003, 3:13pm   #1
Joined Dec 2002
Anything can happen...

For those fortunate individuals amongst you who havent been reading my "DJ Pivot Point" posting, I have just come across a quite funny story which is relevant to support and resistance. This is taken from Mark Doulglas' book, "Trading in the Zone" : hence its not my words and I hope it doesnt offend anyone by my putting it on the site.

So, anyway, the story goes :

A successful market analyst starts a new job as technical analyst with a substantial brokerage/clearing house in Chicago. The semi-reitred CEO had traded on the floor for 40yrs, but didnt know about TA, so enlisted the help of the new analyst to teach him about it.

The analyst was using a method called "point and line", which can accurately define S&R. One day, as the two of them are sitting there watching the soybean market, the analyst has projected the support and resistance levels for the day, stating emphatically that when the price gets to support, it will bounce off and turn - likewise when it gets to resistance, the same will happen.

So they sit there, and when the market gets to what the analyst has determined will be support, the CEO turns to him and says ""This is where the market will stop and turn higher, right?" "Absolutely," says the analyst, "you've got it in one."
"That's bull****," retorts the CEO. "Watch this," and he picks up the phone to a clerk in one of the soybean pits. "Sell two million beans (bushels) at the market," he says to the clerk.

Within 30 seconds of placing the order, the soybean market had dropped 10c a bushel. Calmly, the CEO turns to look at the horrified expression on the analysts face, and says "Now, where did you say the price was going to stop? If I can do that, anyone can."

Just made me think for a minute, and I thought I'd like to share that thought with you all.

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Old Jul 9, 2003, 3:22pm   #2
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Joined Dec 2002
Good story, cetainly makes you think! Thank you for posting it.

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Old Jul 9, 2003, 4:47pm   #3
Joined May 2003
As it happens I also posted something yesterday in the same vein

I have just found a quote in an article dated March 1995.

"Our market strategy includes taking advantage of the fact that local traders
have litle capital and can be squeezed into selling loss making positions
at a disadvantage."

Who ? Barings.
Come fill the cup that clears
today of past regrets and future fears
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