Does it make sense to adjust analysis to incorporate any view of relative strength or weakness? For example, months from now when you're looking at a chart for the Widget Company Limited, it shows that WCL only fell 5% during the September sell-off whereas most stocks in its category fell, say, 20%?
Just wondering if chart paterns should be given the same wheight, given the volatility of stocks at this time, or should they be viewed differently.
If so what criteria (if any) should be used to compensate.
I'd be more concerned not with the increased volatility, nor with the banning of shortselling, but with validity of TA (and FA, for that matter) in a manipulated market. We have absolutely ZERO idea of the local effect of a sudden injection of an extra trillion odd dollars to prop up the ailing US market.
The playing field has probably changed. We just don't yet know how it has changed or for how long, if indeed it has. I'm pretty happy to be sitting on the sidelines for this ****storm.
I'm mostly playing gold at the moment, and traditional TA is quite useful, but sentiment is eclipsing almost everything right now. So I'd have to say that both FA and TA are less than absolute predictors at the moment. Support and resistance levels, for example, are being moved through like they're tissue paper.
That is of course if TA was ever meant to be used as a Predictive tool.
Hands up if ya reckon that is what TA is. I certainly don't.
Simply,
A set of guidelines to find and ride a trend (whatever time frame) until it bends.
I just don't think its main use is predictive. For example a stock bounces off an old trend line 3 times. But does that mean the next time it approaches that trend line you can give it anymore odds of bouncing again?? You can't.
BUT you can use that as a way to manage the trade to stay in while it is trending or get out if it breaks.
I think this is the big trap people that are skeptics and even people that use TA fall into. Its not predictive its a way to manage wrong/right.
Technical analysis works under any circumference. However, with this financial crisis, most stocks go down, so it becomes harder to make profit.
You can use TA to short stocks too.Technical analysis works under any circumference. However, with this financial crisis, most stocks go down, so it becomes harder to make profit.
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