Even if a sa Iesperson teI ephoned a potential cI ient and ex plained that just as mu ch money cou ld

be made on the way down and often in a shorter time period because markets tend to fall faster
than they go up , the cI ient's response would be, "Call me when it gets to the bottom and then 1'11
bu y it." The public has a definite tendency to avoid a bear market! The technical rarnifications are su
ch that a fu tu res analyst is pleased if open interest is at least remaining ftat du ring a bear market.
In this situation, the losers are being replaced and the fuel is at least remaining constant. A more
likely bear market scenario is finding open interest declining. DecI ining price and declining open
interest are cI assic characteristics of a liqu idating market. This situ ation pu ts the prevailing price
trend in a weak technicaI condition. The bottom line is this: iftraders wait to short afutures market
only if open interest is expanding, they will not be on the short side very often. This is especially true
of fu tu res contracts that the pu blic likes to trade from the long side. These incIude the traditionaI
agricu lturaI commodities (grains and livestock) and the metals. Figure 3-7 contains a theoretical
graph of the normal interaction of price and open interest in a liqu idating market. The rou gh rice
chart in Figure 3-8 is a real-world example of wh at technicians norrnally see on the bottom of a fu tu
res chart following a large bu ll move in price. Traders mu st think about idiosyncrasies peculiar to
the specific markets they trade. A price top on a spot dollar-mark chart in interbank dealing would
look like