An excerpt from an email from Arnie to the LinnSoft Yahoo Group on 01/20/02

Some observations on this thread:

1. Pivot Points were developed by floor traders decades ago as a way to determine basic support and resistance levels in line with current volatility. They are useful because they are self-fulfilling prophesies. In the old days they were pretty much the only numbers that the traders would take into the pits with them. These days, however, I'm sure most traders are looking at many other numbers also. The most followed pivot points were based on the HLC/3, usually, not the OHLC/4.
2. Opening above or below the previous close. This observation has made more money for me than all my other trades combined: It is not that important whether the market opens higher or lower, but whether it CONTINUES in that direction. A higher opening which then closes the gap signifies nothing (at least to me), but a higher open which continues higher on the next leg, is the basis for all my trading decisions for the rest of the day.
3. Time of Day: Time of day, is for me, the most significant factor in determining whether I will do a trade, and what type of trade I will do. Trend days that open high and have a second leg that continues higher will often have significant retracements between noon and 1, and often again between 2 &3 and will then continue their initial trending direction after 3. This is because that is when the biggest speculators, who are the true determiners of market direction, will enter the market. I often hear people say that they resist trading the first and last hour, while I have always found these the most profitable trading periods. It is also why many trades that are fabulous money makers during those times, lose money if traded midday.  Breakouts are often a disaster if traded during midday, while fading breakouts, for example, can be a fabulous trade. The opposite is usually true during the first and last hour.
4. Day of Week: I have to credit Larry Williams for drawing my attention to this variable. There are many trades that are very profitable on Monday, that lose big time on Thurs.
5. Finally, never forget that markets are made up of people, not numbers. Volatility will change the behavior of people. Never forget that on every trade you make, there is someone on the other side of it who believes they are right. Let them be the idiot. Let them sell to you in a panic at the very bottom of a chaotic, volatile session. Someone's gonna be right and someone's gonna be wrong. You be right.

Well, that's my story, and I'm sticking to it.

Arnie