# Neilson Smart Money Analyser: POTENTIAL price action



## moses (17 February 2007)

This thread is intended to identify stocks with the potential to rise or fall purely on the basis of the Neilson Smart Money Analyser, available to subscribers of the Inside Trader ($550 pa), found here:-

http://www.theinsidetrader.com.au.

I'm creating a separate thread so that we don't have to debate whether or not a potential price movement satisfies the rules of a "breakout" thread. And by insisting on a standard indicator we can protect the thread from ramping.

Caveat Lector! Reader beware!

The charts are only an INDICATOR of POTENTIAL price direction. They are only useful in conjuction with your own other research.

How does the analyser work?

The indicators are based on an end of day scan taken from the depth queue after the market has closed each day. They compare the buying pressure of the shares (the supply demand indicator, blue line) to the pressure of the individual buyers (smart money indicator, black line) which we can see in the depth queue. Simply, when the black line increases, it means that the buyers (on average) are prepared to buy more shares than the sellers are prepared to sell. When the black line goes down, it means that the sellers (on average) want to sell more shares than people are prepared to buy.

When the ratio is one, it means that the buyers and sellers are wanting to trade the same average size parcel.

The "smart money" bit assumes that some of these high volume buyers or sellers know something you don't. If used in conjunction with your other research, this can be a useful clue as to the future price action - especially in the small to mid cap stocks. But used in isolation it can be misleading, and it does not work with big cap stocks.

The above is a brief summary only. For more comprehensive information, including warnings, check out the tutorial (which may require purchase unless available for a free trial):-

http://www.theinsidetrader.com.au/index.php?action=page&page=smartmoneytutorial.html


My interest: I like to use the indicator before I make a decision to trade, especially when trading overnight. It helps me to time my trades and adds confidence to decisions. I don't use it alone. I have no interest or relationship with the Inside Trader, and start this thread from the point of view of making a potentially useful contribution to the ASF in return for the benefits the ASF gives me. I hope it encourages others to buy and use the analyser and contribute to this thread because there is NO WAY I can afford the time to do much more than post the occasional chart I find interesting. On that note I won't be acting as a de-facto Inside Trader Service by scanning every stock people want to see.

Following this post will be some examples.


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## moses (17 February 2007)

First example is BLR whose price fell 7% on Friday. On Thursday night I had run BLR through the SMA and decided to sell on open. I was right.

Below is Friday's chart; it suggests that unless something changes over the weekend it isn't looking good for BLR on Monday.


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## moses (17 February 2007)

The 2nd example is HLX. The HLX thread is very enthusiastic about HLX's potential for a rise in SP, and the smart money indicator strongly implies that we aren't alone.


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## moses (17 February 2007)

OTOH, no sooner had I selected ELL for the stockpick comp than it suffered a reversal. Why? Fundamentally I haven't a clue, but there is no way I'm buying back into ELL while the SMA chart looks like this!


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## moses (17 February 2007)

BYR is interesting because the SMA suggests that right now profit taking small time scumbag speculators like us are selling out, while underneath the action serious buyers are soaking the stock up.


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## moses (17 February 2007)

One from history to illustrate the SMA at its best. Anyone running GSE through the SMA in November or December should have realised someone knew something good was going to happen. The buying pressure was strong and persistent until the rocket was launched. Two weeks ago they took their profits and ran...


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## moses (17 February 2007)

Finally, at risk of ramping, a non-mining stock that is showing positive signals for a price rise in the near future. 

See the BLG thread and DYOR (assume I am biased because I own this stock), but were I picking a stock for 2007 it would be BLG because (a) it seems pretty unknown atm and (b) the potential of its technology is enormous.


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## moses (17 February 2007)

One word of warning; always look at the actual volume (which unfortunately is NOT displayed on the SMA chart) before giving weight to information on the chart.


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## hitmanlam (17 February 2007)

Thankyou moses for your insight.  Glad to see someone is backing up their words with some TA.  

Great thread.


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## nomore4s (17 February 2007)

G'day Moses,

This is very interesting. Would you be able to/like to post a chart with EKM (I don't hold) as I'm interested to see what the chart looks like before the recent break out and there seems to be speculation this stock has further to run.

Thanks


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## moses (17 February 2007)

nomore4s said:
			
		

> This is very interesting. Would you be able to/like to post a chart with EKM (I don't hold) as I'm interested to see what the chart looks like before the recent break out and there seems to be speculation this stock has further to run.



thanks for pointing out EKM; if only I had seen it before. The pressure on the SP has been wholly positive for at least 4 months, both from volume per buyer v seller and the number of shares bid v offered. This is a strong signal for a rerating. So from my reading of the SMA alone it seems that EKA is *extremely bullish* for blue sky soon with the caveat that Friday's spike may fall back a little before this stock really takes off. Compare with earlier post on GSE to see what I mean.

Note earlier comments emphasising need for other research.


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## tech/a (17 February 2007)

Not going to post all the charts but BLR was signalled for sale well before on VSA.


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## Freeballinginawetsuit (17 February 2007)

Hey Moses,

Does your smart money indicator update overnight or tick intraday....in short how much does it lag.

In your BLR chart it seemed to miss the last spike......despite the indicators down trend.....considering the rise of BLR wouldnt it just be indicating the bleeding obvious potential of profit takers.

Cheers


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## moses (18 February 2007)

The indicators are based on an end of day scan taken from the depth queue after the market has closed each day.


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## YOUNG_TRADER (18 February 2007)

Moses,

All I can say is reading your analysis on this thread makes me so glad I am a member of ASF, thank you so much, I have always said that my technical analysis is weak especially in comparison to my fundamental anlysis, this Smart Money stuff looks really crucial in having an overall or fully rounded view of a stock,

Looks like I've got some reading up to do!

Thanks again Moses


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## moses (19 February 2007)

YOUNG_TRADER said:
			
		

> Moses,
> 
> All I can say is reading your analysis on this thread makes me so glad I am a member of ASF, thank you so much, I have always said that my technical analysis is weak especially in comparison to my fundamental anlysis, this Smart Money stuff looks really crucial in having an overall or fully rounded view of a stock,
> 
> ...



Coming from the most prolific and reliable source of fundamental tips on the ASF, I'll take that as high praise indeed. Not that I deserve the credit.

What is powerful about the SMA is that it factors in the opinions of all the fundys, techs, and insiders together; all those investors who for whatever reason believe in a stock strongly enough to soak up on the dips (or conversly sell on the highs). And because it only looks at the end of day queue you could argue that it senses the mood of the calm deliberate investor who knows what he is doing and bides his time, waiting for the noise to come to him.

I've been scanning through all the stocks from this month's comp looking for goodies. I'll post of few of the more significant signals up as the week goes by.


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## moses (19 February 2007)

As an ethical investor I won't touch MST. However the SMA chart below is very bullish for MST. 

Note the black line is (a) positive, (b) increasing, and (c) stronger than the blue line. 

Then look at what happens when the blue line rises through the black line and work out for yourself what is likely to happen before too long.


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## moses (19 February 2007)

DYL was the first stock I bought on the first day I was allowed to trade. Having decided Uranium was all the go, I chose DYL because I liked the name. Within 5 minutes I had made 20% profit; so I sold it. Easy! With such stunning success opening up my career as a born trader, naturally I doubled my stake and tried again. Oops.   

So where is DYL heading today?

Hmmm...not good. Rather bearish actually. The smart money is pulling out...


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## moses (19 February 2007)

FWIW, AEX is almost a carbon copy of DYL.

Maybe this isn't a reflection of the stocks themselves so much as market sentiment toward familiar uranium specs?


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## moses (19 February 2007)

Does the EXT pattern look familiar?

Could EXT be telling us where DYL and AEX are headed?

I don't know, but I don't like the look of it. DYOR.


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## moses (19 February 2007)

Not all bearish signals are bears, which is why it is important to DYOR. When I first saw the ASX chart I almost freaked; but I soon found that that the ASX is rumoured to be take over target by Mac and NYSE. The strong smart money selling pressure is not so much indicating a likely fall in SP but a good time for all investors to take a profit.

(Note the date says Monday, but the last data is Friday evening.)


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## moses (19 February 2007)

Not sure whether this is one for the watchlist, or get in quick now for the next sharp jump. My guess is the latter. Smart buying pressure is positive and rising, and small profit takers are evaporating. Check the depth for more detail.


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## moses (19 February 2007)

MCC might not look good from the SP, but the SMA tells a different story. DYOR and make up your own mind which way this will go. I'm curious.


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## moses (19 February 2007)

NTU, the one that got away twice. Both of these insider smart buying pressure points preceded a sharp rise in SP and would have given us opportunity to buy in and profit handsomely had we been using the SMA.


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## petervan (19 February 2007)

Moses this is a great thread for someone like me who hasnt traded for years and just getting back into it. I used to use the SMART trading system by Joe Salmon (think thats his name)and had some success with it. I dont know whether to get it again because of the fantastic infomation you and other users of this site provide. Keep up the great work. Could you also chart up IDL tonight as I see large volume of buyers after chinese mining deals.


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## Sean K (19 February 2007)

Moses,

Have you paper traded this yet, or back tested it to find a probability of whether it works or not??

Kennas


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## YOUNG_TRADER (19 February 2007)

Hey Moses,

If you have the time could you post up HLX's SMA index as at close of today, I reckon the HLX thread is the best place to post it,

Also has BYR's flattened out? Consolidating at 30c for now


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## ric371 (19 February 2007)

High Moses
Thanks for the thread, I have taken the trial for a spin and like what I see.
A stock that I have made some cash out of BLT when I look at the smart money advisor and run a buy sell on the cross overs I would be up a fair bit more than I am but when I run it on some other stocks the benefit is not so obvious.
Do you think it is more predictable on stocks like BLT that have been quite volitile rather than more blue chip type stocks? 
Have you found any correlation on stock type and its effectiveness?

PS what are you using to pull the graphics that you are posting?


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## moses (19 February 2007)

petervan said:
			
		

> Moses this is a great thread for someone like me who hasnt traded for years and just getting back into it. I used to use the SMART trading system by Joe Salmon (think thats his name)and had some success with it. I dont know whether to get it again because of the fantastic infomation you and other users of this site provide. Keep up the great work. Could you also chart up IDL tonight as I see large volume of buyers after chinese mining deals.



Hi Petervan,

attached is IDL's chart tonight, but please don't assume I can continue to post at this rate; I have a slightly unreal week atm where I am working a long night shift with almost else nothing to do. This won't continue. Also this service is not expensive; it paid for itself with my first trade, plus it is on free trial atm.


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## mrWoodo (19 February 2007)

Thanks Moses! Very interesting, I haven't come across an indicator that uses market depth before. As they say in their tutorial link - dummy bids, illiquid stocks, big blue chips and undisclosed bids will skew the results. 

Mind you, if I had invented something like this, I'd have kept it to myself


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## moses (19 February 2007)

kennas said:
			
		

> Moses,
> 
> Have you paper traded this yet, or back tested it to find a probability of whether it works or not??
> 
> Kennas



Its not a magic bullet, its just another clue. The probability of it working without further research is sufficiently low to ensure that you will lose money. Its usefulness for decision making is limited; the individual *must* interpret the data in a wider context if he is to make money from this tool.


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## moses (20 February 2007)

ric371 said:
			
		

> Do you think it is more predictable on stocks like BLT that have been quite volitile rather than more blue chip type stocks?
> Have you found any correlation on stock type and its effectiveness?



Its not effective for blue chips, and its dangerous on very thinly traded stocks.

In theory the sweet spot should be the sorts of stocks where a few people in the know will accumulate for weeks confident that something good will soon happen; ie, new miners, new tech stocks, biotechs etc. Just what we want.



> PS what are you using to pull the graphics that you are posting?




The Gimp. A screen/window dump then crop and save. A real nuisance.


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## moses (20 February 2007)

TRF went up again, by 19% today. Again it shows all the classic signs of long time smart money accumulation; the back line has been firmly >1 until tonight.

What next?

a) Another jump?

b) Consolidation?

c) Correction?

The chart alone suggests b or c, but...DYOR.


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## moses (20 February 2007)

See SLM thread here for weekend analysis here , followed by potential breakout thread today here for a very promising outcome.


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## moses (20 February 2007)

CMO is not only very bullish on the SMA, but a closer look at the depth chart shows that the best quality support is very close to the SP; VERY nice.


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## moses (20 February 2007)

CCS is looking great on the SMA, but a closer look at the depth shows appearances can be deceiving. Most of the smart money is still back in the 55c-66c area. The SMA does not tell you where the smart money is, so its important to check it out yourself (thats the DYOR bit).

This may be a great stock, it may keep rising, but the SMA bull signal isn't as strong as it first appears.


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## Freeballinginawetsuit (20 February 2007)

Moses,

How is AVO and URA looking on youre Indicator, if youre not too busy that is  

Cheers.


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## moses (20 February 2007)

it may be early days, but with a sudden rise like this in the SMA, LOD has surely got to be worth a closer look. 

Let me know what you find.


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## moses (20 February 2007)

Freeballinginawetsuit said:
			
		

> Moses,
> 
> How is AVO and URA looking on youre Indicator, if youre not too busy that is



here 'tis


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## Freeballinginawetsuit (20 February 2007)

Thanks Moses.


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## moses (20 February 2007)

SRK ain't lookin' too bad either.


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## moses (20 February 2007)

Back to my favourite, BLG.

Seller are drying up, but look at the smart money...why is it dropping?

Check the depth (rule no. 1). 

Because a smart seller is hoping for a spike to pick up a quick 70c?

That looks bullish to me, but you be the judge...

a) smart money buying pressure has been positive for several days. 

b) sellers are disappearing

c) the smart selling pressure is right at highest price 

d) volume is up

e) price was up 9% on Monday

f) SP is testing old highs, ie, about to break out


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## mhtrieu (20 February 2007)

Hey Moses,

Can i please get a SMA chart for AXO, TFE, EBT, ALD and INL


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## coyotte (20 February 2007)

If the "Smart Money" was that smart would they be advertising the fact?

Thought we had been down this road before in other threads.

Besides you can buy and own for life TraderGuide for $AU1200 -- which is 2 years sub to this mob.


Cheers


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## moses (20 February 2007)

mhtrieu said:
			
		

> Hey Moses,
> 
> Can i please get a SMA chart for AXO, TFE, EBT, ALD and INL



I like INL (see INL thread) and TFE, but the rest look pretty crap!


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## moses (21 February 2007)

On the 18th I posted this on the FDL thread here along with a SMA chart.


> Something has changed at FDL. Somebody appears to be soaking up shares and holding the SP at .015-.014c.
> 
> Why? What do they know?
> 
> ...




Since then the SP has moved up by 21% from 0.014c to 0.017c. DYOR because there is some hard feelings expressed about this stock, but with the volume up like this it may just be worth a closer look.


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## Bobby (21 February 2007)

coyotte said:
			
		

> If the "Smart Money" was that smart would they be advertising the fact?




Yep Its more like the dum money or follow me you d''''heads.

Depth lists below the top 2 or 3 at max are just an allusion.

Want to see magic? Watch a big number disappear as it gets close to the top.

Have fun
Bob.


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## moses (21 February 2007)

Bobby said:
			
		

> coyotte said:
> 
> 
> 
> ...




Surely there is smart and smart?

Agreed, the really smart traders hide their hand; but we all know that the easiest way to buy on dips is to have an order sitting there waiting. Sure, all the SMA does is give a value weighting to the orders sitting on hand to indicate which way the buying pressure is blowing, but surely that is useful information, even if only as a first pass?

So long as we don't imagine that these indicators are a magic black box trading system then its gotta be a lot of fun!


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## moses (21 February 2007)

coyotte said:
			
		

> Besides you can buy and own for life TraderGuide for $AU1200 -- which is 2 years sub to this mob.



Tell me more...I can't find it on Google.


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## tech/a (21 February 2007)

coyotte said:
			
		

> If the "Smart Money" was that smart would they be advertising the fact?
> 
> Thought we had been down this road before in other threads.
> 
> ...




Absolutely coyotte.
For anyone to think that a $15,000 bid or ask sitting in a que is "Smart money" (The new buzz word) is not that smart.

Smart money comes from Insto's and Syndicates. When they buy/sell they will do it at a level and in a VERY liquid stock and it WONT be in one block but MANY and it will be indecernable to those watching depth.

Moses.
Have a look at those that DONT COME OFF.

Bet you'll find those that do generally are more liquid stocks.

Tradeguider shows BLG as a normal stock in a normal up trend.

*As an aside.*
Kris my son who is a Physist specialising in Photonics and Lasers tells me Blueglass technology is THE next generation in hardware technology and when implemented will be like going from prop to jet!!
Kris and I have help BLG since 35c and will hold and hold and hold,I'm backing the Physist for my smart money!!---on THIS one.


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## coyotte (21 February 2007)

Moses:

Sorry put the "r" in the wrong spot.
This is the Vol Analyst Program that Nick & Tech/A are going on about.

http://www.tradeguider.com/


Cheers


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## moses (21 February 2007)

coyotte said:
			
		

> Moses:
> 
> Sorry put the "r" in the wrong spot.
> This is the Vol Analyst Program that Nick & Tech/A are going on about .
> ...



Thanks, I'll chase it up.


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## Nick Radge (21 February 2007)

If I understand the Neilson indicator correctly, its based on market depth? (please correct me if I'm wrong). Market Depth however can be manipulated (consciously or not) with relative ease which would then put into question the validity of the indicator itself. IMHO the only true indicator of sentiment is committed volume or actual traded volume. Anything else is a misnomer.

Regards


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## moses (21 February 2007)

tech/a said:
			
		

> Absolutely coyotte.
> For anyone to think that a $15,000 bid or ask sitting in a que is "Smart money" (The new buzz word) is not that smart.
> 
> Smart money comes from Insto's and Syndicates. When they buy/sell they will do it at a level and in a VERY liquid stock and it WONT be in one block but MANY and it will be indecernable to those watching depth.




...meaning you object to the use of "smart" to describe whatever signal it is that the SMA is picking up from the end of day depth, because the really smart guys aren't there. Fair enough (it wasn't my idea anyway), but what would you prefer to describe it as? Can we pick a better buzzword that won't irritate people?



> Moses.
> Have a look at those that DONT COME OFF.
> 
> Bet you'll find those that do generally are more liquid stocks.



Of course. Like blue chips; thats in the guide.


> Tradeguider shows BLG as a normal stock in a normal up trend.
> 
> *As an aside.*
> Kris my son who is a Physist specialising in Photonics and Lasers tells me Blueglass technology is THE next generation in hardware technology and when implemented will be like going from prop to jet!!
> Kris and I have help BLG since 35c and will hold and hold and hold,I'm backing the Physist for my smart money!!---on THIS one.



Several of my colleagues are astro-physicists, and two from Macquarie; one put me on to BLG and I immediately saw the potential. So I've held BLG since 38c, and even traded it profitably once or twice (just briefly when I needed the cash and thought I could get away with it). But you're right; this is one to hold for the ride and not let go.


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## moses (21 February 2007)

Nick Radge said:
			
		

> If I understand the Neilson indicator correctly, its based on market depth? (please correct me if I'm wrong). Market Depth however can be manipulated (consciously or not) with relative ease which would then put into question the validity of the indicator itself. IMHO the only true indicator of sentiment is committed volume or actual traded volume. Anything else is a misnomer.
> 
> Regards



Hi Nick,

Yes it is based on market depth at the end of the day. 

However, to your argument, you would surely agree that the validity of *every* indicator must be called into question. Its been pointed out, and there is more information in the "traps for beginners" guide, that there are several things that can distort the signal, and will, so it is important to understand why the signal exists to determine its significance.

And so far as indicators for sentiment are concerned...as important as we all know actual traded volume is for a signal, its big weakness is that it is *history*, whereas we want to know the future.


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## coyotte (21 February 2007)

...meaning you object to the use of "smart" to describe whatever signal it is that the SMA is picking up from the end of day depth, because the really smart guys aren't there. Fair enough (it wasn't my idea anyway), but what would you prefer to describe it as? Can we pick a better buzzword that won't irritate people?


It's not irritating Moses, it's misleading  --- like the saying "Dumb Money Opens and Smart Money Closes" is also misleading.


Cheers


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## moses (21 February 2007)

coyotte said:
			
		

> It's not irritating Moses, it's misleading  --- like the saying "Dumb Money Opens and Smart Money Closes" is also misleading.



Fair enough.


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## moses (22 February 2007)

fwiw, and ignoring the possibility of a brief reversal (buying opportunity?), the SMA is making nice noises about OGD potential in the medium term. DYOR


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## moses (22 February 2007)

for swerve5000


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## ric371 (22 February 2007)

Is it just me or Is the SMA slow to update todays numbers??


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## moses (22 February 2007)

Its not working for me either tonight.


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## ric371 (23 February 2007)

Response to my email asking when it will be fixed follows

Response 1
We seem to have had a technical glitch with our price data.
It will be rectified as soon as possible
Sorry for any inconvenience.
Regards,

Asked when = response 2

Not looking good for today – sorry.
Our tech has now gone home sick. It may happen but not likely. Probably fixed on the weekend.

Sorry for any inconvenience


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## tech/a (23 February 2007)

> as important as we all know actual traded volume is for a signal, its big weakness is that it is *history*, whereas we want to know the future.




Moses.
You would do well to study Wycoff on volume analysis,you may well change some of your bias


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## ric371 (24 February 2007)

tech/a said:
			
		

> Moses.
> You would do well to study Wycoff on volume analysis,you may well change some of your bias




That comment is about as helpful as a brick to a window.
Who is Wycoff and what makes you think that Wycoff knows more than Inside trader?
If Wycoff is so good what about posting some information and links to the data?


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## tech/a (24 February 2007)

What Moses/you arent capable of looking into it.

Your money has been spent and your pretty excited.
Its just another tool.
Volume analysis has been around as long as markets have been trading.

Your delusional if you think looking at market depth on both sides of the market is purportrating "Smart Money".

"Smart Money" will be buying and or selling all day at a point or points AT market with little effect on price movement.

So go do your own research and find out who Richard Wykoff is.
If your a serious analyst it'll help you too (change in pig attitude wouldnt hurt either).


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## tech/a (24 February 2007)

BLR--- slightly up
HLX---hmmm
GSE---hmmm
BLG---Up
MST---hmmm
DYL---hmmm
AEX---hmmm
EXT---up

Less than 50/50 cant see an edge here?


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## tech/a (24 February 2007)

ASX---up
AZZ---hmmm
MCC---hmmm
NTU---Slightly up
IDL---UP
TRF---hmmm
CMO---up
CCS---hmmm
LOD---hmmm
SRK---hmmm
TFE---hmmm

From those posted and looked at from the first 2 pages on this thread.

7 up 12----well.

Volume analysis can be very powerful---but I cant see any genius here.
Mind you Inside Trader are doing very well out of it it seems.
I get an email a day!!
If it was that good people would be running to sign up purely on performance.

If traders are happy with this sort of performance then go for it!


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## Kauri (24 February 2007)

The Smart Money is sitting back reaping $550 pa x (No. of subscribers).



> *The indicators are based on an end of day scan taken from the depth queue after the market has closed each day*. They compare the buying pressure of the shares (the supply demand indicator, blue line) to the pressure of the individual buyers (smart money indicator, black line) which we can see in the depth queue. Simply, when the black line increases, it means that the buyers (on average) are prepared to buy more shares than the sellers are prepared to sell. When the black line goes down, it means that the sellers (on average) want to sell more shares than people are prepared to buy.




   mmmm.. might slip in a bid for 500,000 shares in one of these penny stocks after close, and pull it during the AM auction.... or would that be cheating???


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## reece55 (24 February 2007)

That about sums it up Kauri

For anyone who has access to a full market depth screen, you will quickly learn that volume can and does get manipulated. Further more, the lower the turnover, the easier it is to do so....... You would be better off spending the $500 on a good book or real time market data IMO.....

Cheers


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## ric371 (24 February 2007)

tech/a said:
			
		

> What Moses/you arent capable of looking into it.
> 
> Your money has been spent and your pretty excited.
> Its just another tool.
> ...





So who has the attitude problem? all we are doing is trying to learn more about this complex industry and asking honest and serious questions and bouncing idears around, if you can't offer a positive suggestion then I would prefer not to have to read your posts.

I have been in the business of investing for a long time, long enough to know there is no one answer for if there were we would all do the same thing at the same time.

Perhaps your blinkers need to come off and open your mind to some possibilities, instead of geting hung up on the term "smart money"

It would also help you you were able to spell the name correctly it is "Wyckoff" and he did his thing 100 years ago, who knows if he had access to computer power of today he may have developed his own smart money analyser?


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## tech/a (24 February 2007)

> if you can't offer a positive suggestion then I would prefer not to have to read your posts.




Stick me on ignore,works a treat.



> he may have developed his own smart money analyser?



He and others who have carried on his works have and way more advanced than this crude tool---but you'll have to find that yourself---as you asked so nicely.



> "Smart Money" will be buying and or selling all day at a point or points AT market with little effect on price movement.




Obviously cant recognise a positive suggestion if you fell over it.

Just so you understand look for bars of narrow range and high volume at bottoms and tops of moves---Thats "Smart Money" moving in and out.

Now if you just "duck" (sorry about the pun!) over to here you'll see Ive been holding this for a little while myself.

http://lightning.he.net/cgi-bin/suid/~reefcap/ultimatebb.cgi?ubb=get_topic;f=74;t=000029;p=5

Seems there are others who have been in the business of investing a long time.


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## ric371 (24 February 2007)

I am here to learn, not to throw sticks and sarcastic comments so I will take your one logical suggestion and stick you on ignore


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## Bobby (24 February 2007)

ric371 said:
			
		

> So who has the attitude problem? all we are doing is trying to learn more about this complex industry and asking honest and serious questions and bouncing idears around, if you can't offer a positive suggestion then I would prefer not to have to read your posts.
> 
> I have been in the business of investing for a long time, long enough to know there is no one answer for if there were we would all do the same thing at the same time.
> 
> ...



ric371,

Back off Tech/a now.
Hope you understand !!

Bob.


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## tech/a (24 February 2007)

> not to throw sticks and sarcastic comments --------That comment is about as helpful as a brick to a window.




*Hahahaha
Nor did I!!*


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## CanOz (24 February 2007)

ric371 said:
			
		

> So who has the attitude problem? all we are doing is trying to learn more about this complex industry and asking honest and serious questions and bouncing idears around, if you can't offer a positive suggestion then I would prefer not to have to read your posts.
> 
> I have been in the business of investing for a long time, long enough to know there is no one answer for if there were we would all do the same thing at the same time.
> 
> ...




Hi Ric, if you could see past T/As sarcasm and look through some previous post and threads you'll see that he is a well respected member of the forum and known through out Australian trading circles as a sucessful trader and mentor to many.

If their was truly something of value in the Nielson SMA he and the rest of us would have been very supportive of the theory I'm sure.

In fact we count on the T/As, the Kenna's, the Wayne's, etc., to keep us up to date on valid analysis techniques.

I'm sure Moses understands and accepts T/As posts as good advice and only looking out for his best interests.

 

Cheers,


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## nizar (25 February 2007)

Smart money dont wait in the depth.

Coz if you have 10,000,000 shares to sell, placing the bid there would "Scare" the rest of the market, causing the market price to drop, and you get less money for your parcel.
Or if you want to buy, you dont want to put a massive bid in there as it will make the price go up, or is likely to do so.

Smart money, like tech/a described with the QBE chart, ALWAYS buy/sell at market, and do so in a manner to get the price as cheap as they can, or to offload as expensive as they can. Its because of their stealth that they are called smart money.

And i personally think there is some truth to professionals closing the market and newbies opening it - though i havent proved this.


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## stoxclimber (25 February 2007)

Don't see how its any different to other technical tools that arent proven to work.



edit: not to name any names, but if one looks at the post history of a highly respected technical trader/analyst on ASF, theres no evidence of superior returns. Would be an interesting introspective analysis for ASF posters to go through - looking at their post history and seeing how their predictions performed.


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## Garpal Gumnut (25 February 2007)

tech/a said:
			
		

> Moses.
> You would do well to study Wycoff on volume analysis,you may well change some of your bias




I just can't find my copy, to give you the isbn number, but agree that it is an invaluable text for analysis but not for entries, look it up on asf, amazon or others. Its not a big read.

Garpal


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## Kauri (25 February 2007)

Garpal Gumnut said:
			
		

> I just can't find my copy, to give you the isbn number, but agree that it is an invaluable text for analysis but not for entries, look it up on asf, amazon or others. Its not a big read.
> 
> Garpal




  I agree the book doesn't have a lot of depth, around the web there are a few resources that go deeper.. i.e..
http://www.activetradermag.com/special/pruden01-0201.pdf

  The author of this snippet is putting a book out... due in a month or two from memory.

  The Wyckoff book link..below.. as they say DYOR for virii etc..


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## moses (25 February 2007)

CanOz said:
			
		

> I'm sure Moses understands and accepts T/As posts as good advice and only looking out for his best interests.



I certainly do. Tech/A, I'm all ears, I'm here to learn. 

I will buy the SVM package, and I will read the book; I don't reject advice from good experienced people, but that doesn't mean I won't challenge stuff from time to time in order to understand it. I was hoping Nick Radge would engage with a reply re. volume/history, but you've probably answered that in your example.

Yes, your definition of smart money is much better than Neilsons; but for all that and for all the skepticism expressed to date, for a certain class of stock the SMA really does seem to pick up a signal in the market that may otherwise be missed. Certainly it was being missed by me (but that isn't saying much), so its been a positive step and I'm happy with it atm. Yes, its not 100% reliable (nothing is) and doesn't stand alone, and yes it is important not the folow the signal blindly, but...at the end of the day, if it gives me an edge I'll use it.

But I'm all ears for a better edge.  

PS. I'm looking for stocks that will move say within a week to 3 months, from 50% to 500%. I'm not promoting the SMA for day trading, which makes me wonder if our wires are getting crossed?


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## barney (25 February 2007)

nizar said:
			
		

> Smart money dont wait in the depth.
> 
> Coz if you have 10,000,000 shares to sell, placing the bid there would "Scare" the rest of the market, causing the market price to drop, and you get less money for your parcel.
> Or if you want to buy, you dont want to put a massive bid in there as it will make the price go up, or is likely to do so.
> ...




Howdy Niz,  Could I offer the thought that "smart money" does (at times) wait in the depth queue, but mostly to have the exact opposite effect of what it appears on the surface .............. as others have eluded to, a massive buy order (smart money) sitting in the queue may have the effect of "pushing" the "less smart" buyers above and beyond the said price, while the same "smart" operator is discreetly selling off his holdings to the "less smart" buyers ............... Vica-Versa for big orders sitting in the sell queue .............. The "smart" smart money wont be fooled, but the smaller punters (like me   ) will often get caught up in the "hype" ........... Buyer/Seller beware at all times!!  .............. Cheers.


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## Nick Radge (25 February 2007)

Moses,
I can offer 4 real time examples that I have been involved in where the depth has been "exploited". I think manipulated is the wrong word, because what I am talking about is not illegal. Here are 2:

(1)
When I worked in Singapore we did a lot of dealing for the worlds second largest hedge fund (behind Soros) called Tiger. Their macro view was that the Nikkei was going to go sub-10,000 verse the 18,000 it was at then. The trader came to me and asked me to sell 1000 Nikkei at my discretion. I slowly sold these off without "spooking" the market. Obviously such a large order did stand out as it was, but slowly feeding the order out a little at a time was not upsetting the price action a great deal. When I completed the order I was told to sell another 1000. This went on until he had sold about 6000 contracts, which was a huge percentage of the days volume, but never once did the market know what the complete volume was. Even I had no idea how much he was looking to sell. He was withholding from me and I was withholding from the market so there was no possible way that the depth was an accurate indication of supply or demand.

(2) 
On the floor of the SFE in about 1993 I was given an order to sell 2000 SPI contracts. Back then it was a substantial percentage of the days volume. The order had no time limit or price limit; the instruction was just sell the 2000 and get back to me when you can. Every 30 mins I walked into the pit and sold 200 contracts. Even that 200 lot order was enough to stir it up. This went on all day. I had about 400 left with a few minutes to go in the session and sold them hard into the close forcing the price down. The average sell price for the 2000 contracts was some 30-points higher then where the market closed placing the clients account into a large credit margin for the evening.

The same thing happened in London and as more recently in 2001 here in Australia with stocks. I would take the full morning to buy and sell positions so as not to skew the price away from what the model was saying to trade at. The orders were simply not placed into the market and therefore not represented in the depth. When they were placed into the market it was hitting the bid or offer without offering the opportunity for the bid/offer to be removed. Clearly then the current bid/offer or depth was not an accurate indication of what the true supply/demand was. I am not saying for one moment that I was Smart Money, but the same processes will occur. The Smart Money will even bid a stock up in order to sell it back down again. They will build an air of bullish confidence with their own bidding, but at the end of the day they have actually built a net short position.

Because any bid/offer in the market can be added to or removed at will, it is in essence a false sense of security. Yes, they may stay until filled, but they can be removed and the fact that they can be removed opens the door for this kind of indicator to be flawed. I would assume that it takes a snapshot or an average for the day? I don't know, but either way it can be exposed to be incorrect. 

But as many others have said, if it works for you then that's all that is important.

Regards


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## nizar (25 February 2007)

Nick Radge said:
			
		

> Moses,
> I can offer 4 real time examples that I have been involved in where the depth has been "exploited". I think manipulated is the wrong word, because what I am talking about is not illegal. Here are 2:
> 
> (1)
> ...




Great post. Thanks for sharing your experiences Nick.

Barney - on the ball, your absolutely right.


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## ric371 (25 February 2007)

CanOz said:
			
		

> Hi Ric, if you could see past T/As sarcasm and look through some previous post and threads you'll see that he is a well respected member of the forum and known through out Australian trading circles as a sucessful trader and mentor to many.
> 
> If their was truly something of value in the Nielson SMA he and the rest of us would have been very supportive of the theory I'm sure.
> 
> ...




Thanks for the comment CanOz, there is now some good information coming out of this thread, I appreciate that everyone has an opinion and that is normal for differences to occur.

To me it is important in any kind of forum for the "wiser" long termers to be positive when commenting on new comers with ideas.

To help test out the theories I would like to propose a competition that will help clear up some of the muddy waters,

What about using whatever tools you have available to predict from the entries in next months stock picking competition the most likely top ten finishers and the most likely bottom 10 finishers.

To give the charts time to show the way as it were this could close off a week into the competition.

So are you and teck/a and any one else up to such a challenge????

I am and I look foward to a really practical result.


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## nizar (25 February 2007)

ric371 said:
			
		

> Thanks for the comment CanOz, there is now some good information coming out of this thread, I appreciate that everyone has an opinion and that is normal for differences to occur.
> 
> To me it is important in any kind of forum for the "wiser" long termers to be positive when commenting on new comers with ideas.
> 
> ...





I'll be up for it 4 sure.


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## tech/a (25 February 2007)

ric371 said:
			
		

> Thanks for the comment CanOz, there is now some good information coming out of this thread, I appreciate that everyone has an opinion and that is normal for differences to occur.
> 
> To me it is important in any kind of forum for the "wiser" long termers to be positive when commenting on new comers with ideas.
> 
> ...





Dont have the time nor the interest.
There is enough on forums of my stuff,and I spend far to much time on them anyway.
The last thing I wish to do is spend more time.

Goodluck guys hope you find whatever it is your looking for.


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## ric371 (25 February 2007)

tech/a said:
			
		

> Dont have the time nor the interest.
> There is enough on forums of my stuff,and I spend far to much time on them anyway.
> The last thing I wish to do is spend more time.
> 
> Goodluck guys hope you find whatever it is your looking for.




I am dissapointed


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## theasxgorilla (25 February 2007)

ric371 said:
			
		

> I am dissapointed




In any case the person to beat is you.  Find a relatively objective measure of your performance and try to better it with the technique you are discussing.

Feel free to post your results here, but I wouldn't recommend it.


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## Porper (25 February 2007)

ric371 said:
			
		

> Thanks for the comment CanOz, there is now some good information coming out of this thread, I appreciate that everyone has an opinion and that is normal for differences to occur.
> 
> To me it is important in any kind of forum for the "wiser" long termers to be positive when commenting on new comers with ideas.
> 
> ...




It wouldn't prove anything over 1 month.

You would need to do it for a few years at least in my opinion, then find the average for it to mean anything.Not practical.


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## CanOz (25 February 2007)

ric371 said:
			
		

> I am dissapointed




Don't be mate, these guys spend alot of thier time on these forums.

I'm flat out just trying to keep learning and keep focused on my full time career too. 

Thats why i try to learn as much from T/A, Nick, Wayne, Kennas etc.

Good luck and fasten your seat belt for the suspense waiting for the markets to re adjust again.

Cheers,


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## ric371 (25 February 2007)

Thanks for the positive responses,
My apologies to tech/a if I misunderstood

Joe has given his approval for a tip the tipsters contest using the monthly tipping contest entries and doing our best to identify the top 10 and the bottom 10 at the end of the contest.  

I will be posting the details in a new thread in the next couple of days so start checking out the entries and picking the winners and loosers.
Road test your system


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## Out Too Soon (27 February 2007)

ric371 said:
			
		

> Thanks for the positive responses,
> My apologies to tech/a if I misunderstood
> 
> Joe has given his approval for a tip the tipsters contest using the monthly tipping contest entries and doing our best to identify the top 10 and the bottom 10 at the end of the contest.
> ...




I think it was on this forum I saw a pic of a toilet with computer screen for stock watching installed.   Some ppl cant leave it for a moment, hope I never get that tied up but any full timers who spare us beginners the time that they do on this forum is very appreciated, much thanks to tech/a & all the rest of you.


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## Chorlton (14 April 2007)

tech/a said:


> Moses.
> You would do well to study Wycoff on volume analysis,you may well change some of your bias




Tech/a,

I read with interest your comments about Wyckoff. I too, am a great believer in Price & Volume action (afterall, ALL indicators are only normally based on these 2 pieces of information!!!) 

I was just wondering whether we could create a new dedicated section on this site (or just a seperate thread if one doesn't already exist) to discuss this side of trading. I'm sure a lot of other posters would be interested in this style of analysis.

Just a thought........

Happy Trading,

Chorlton


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## Chorlton (14 April 2007)

ric371 said:


> ...It would also help you you were able to spell the name correctly it is "Wyckoff" and he did his thing 100 years ago, who knows if he had access to computer power of today he may have developed his own smart money analyser?




I don't want to cause any further arguments in this thread, but IMO sometimes the simple concepts are the best. 

With all this computer processing power we now have these days, more & more complicated indicators are being created & released to the public.

My question in response to this, is how did traders make money way back when computers didn't exist????  Answer: They used the only elements known to them - price & volume. 

IMO In all these years, Trading hasn't changed (afterall, ultimately its all about Supply & Demand). All thats changed is our perception of the markets.

Just my view and my apologies for interupting this thread........

Good Luck to All,

Chorlton


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## new_trader1984 (15 June 2007)

Hello moses,

I recently purchased phoenix ai live data software and they have 6 different indicators which are used to come up with the smart money.

They have a full market depth, the first 5 levels of the market depth and first 8 levels. The other 3 are the same but just the buyers/sellers numbers.

Just with the phoenix ai software with those indicators it changes as the market depth and buyers change. You dont see the black line though but can still work out what the number is during the day. Ive been using the demand/supply indicators on the phoenix ai software and have noticed on some stocks very large increases up to 5 times on the buy side to the sell side but by end of day might finish just above 1. 

When the blue line is moving up and the red line is starting to move down it shows there are less buyers but they are buying bigger amounts of shares each time, and looking at the trades at the same time can see some very large trades going trough during the day. Thats when the smart money line would increase on the inside trader charts but you would only see the difference at the end of day but there may be big movements in demand and supply during the day which might or might not suggest big buyers were buying the stock.

The scanner can also pick out stocks that have increased by a certain percentage using the demand indicator with no price movement which could help find stocks before they move. 

I think the inside trader blue line is the full market depth, not sure but there can be a big difference between full market depth and using just the first 5 levels.

Just thought i would share what i have noticed using phoenix ai with the same indicators that come up with the smart money line on the inside trader website.


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## nizar (15 June 2007)

new_trader1984 said:


> Hello moses,
> 
> I recently purchased phoenix ai live data software and they have 6 different indicators which are used to come up with the smart money.
> 
> ...




Well i dont have this tool but ill tell you what MPO has had smart accumulating and thats what brought it from 10c to 30c.

20-30mil+ vols on the runs, and 5-10mil vols on the pullbacks -- This one is truly textbook. I wouldnt be suprised if Stan was riding it alongside me.


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## krisbarry (15 June 2007)

Chorlton said:


> I don't want to cause any further arguments in this thread, but IMO sometimes the simple concepts are the best.
> 
> With all this computer processing power we now have these days, more & more complicated indicators are being created & released to the public.
> 
> ...




Well said, and again it cements my view that humans just love to complicate things, just to feel more in control of their lives and to create purpose.  I bet your bottom dollar that all these charts and indicators are simply keeping them from being in control, but controlling the controls is what humans do best


I say they are all control freaks:


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## nizar (15 June 2007)

Stop_the_clock said:


> Well said, and again it cements my view that humans just love to complicate things, just to feel more in control of their lives and to create purpose.  I bet your bottom dollar that all these charts and indicators are simply keeping them from being in control, but controlling the controls is what humans do best
> 
> 
> I say they are all control freaks:




Yeh i know.
We should just disregard FA and charts, and just punt on random stocks


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