What is the study of technical analysis?

[tech/a]

***You may have closed your position at resistance last night which would have been more the play.***

Yes I agree hence the note at the top of the chart.

 

[mikeg]

I was referring to the position at 11.30am. Double top, end wave 3.

 

[tech/a]

I would have only taken the position AFTER the 3 waves were complete.
as you can see the first trade wasn't taken until then (I didnt actually trade this).First long was at 1.00pm

 

[mikeg]

OK, understand now. What threw me was were you have marked the last long position at 11.30. From what you are saying, then it should be at the 1.00pm position?

 

[tech/a]

Hang on got you now.

You mean here!!

If thats so the resistance above wasnt reached so I would have held till stoped (and it came close or reached the Exit

 

[coyotte]

Now you're talking my short term language Tech.

But you don't need EW for this -- simple trend lines -- ma -- bollinger -- will all do the same trick --- just something to focus on.


Cheers

 

[barney]

I began to illustrate this in another thread , several months ago but got shot down by the gurus on this site -- only problem was one of the stocks in question went on to repeat the same situation 3 times in as many months -- all in profit.

Have a look at the "potential breakout thread" --- FLX as a recent example (post 249)

Your looking for MAs, Simple Patterns, Trend Breaks, Bollinger Bands Breaks anything that takes your fancy --- just ONE only of a repeating occurrence with the same tool ---

Howdy Coyotte,

Thats true (on all accounts above ), but the thing is, the cash is in your pocket, so you can sit back and ....... Cheers M8.

Been an interesting thread this ........... well done lads.

 

[wintermute]

I won't add anything on what's already been said, but I will ask an additional question.

Is T/A ever self fulfilling?

That is, if a chart in general looks like a buy in enough T/A's minds, will that be enough to force the price up?? A few will get on board early, making the next lot a little more confident, that pushes it up a bit more, as more and more T/A's jump on more and more decide their analysis was correct and join the crowd.... Similarly if a chart is saying sell, will that perpetuate a down trend that may be going against all fundamentals, or for that matter cause a reversal because the stock looks overbought (even though there may be a damn good reason for the price to be going up)??

I guess to be succinct, how much of the crowd is using T/A??!!

Tony.

 

[motorway]

Most things are following something else.
Most people are following someone else.

Most things feedback into events as they are unfolding...

Tech/A has said TA is about the crowd and what it is doing..

Well crowds have a life cycle.. most things do.

Crowds become polarised and they become unified.

Do fundamentals move mkts or do mkts create fundamentals?

IF USA mkts tank would that be because of a looming recession?
Or would that be a cause of one?

Nothing Succeeds like success until it doesn't..


Buying generates selling .. Until it generates buying..

Selling generates selling until it generates buying..

A look at 52 week highs and lows show that mkts swing much more than the fundamentals would allow...

But that is because of uncertainty and the act of following

What is not self fulfilling?
Even people who don't look at charts get swept along.

In all fields confidence is very effective.
Confidence builds confidence it leads to successful endeavour.

Until it leads to over reaching.. And then small doubts grow
that lead to failure and loss of confidence..

Trends arise because they gather a following a confident following.
Trends carry in them their own end.

Because it is only when you HAVE gone a bridge too far that you know for sure..

Mkts are a natural process of growth and decay.

All natural processes oscillate... But mkts also contain human reflection.

So the answer is Yes but even without charts and TA mkts would act in much the same way..

So it is about the crowd and the crowd will chase it's own tail
Until it catches it and then the trend evaporates.

Like those cartoon characters that find themselves walking in thin air..

But the crowd is also chasing real things too. But coming after.

Trends often don't have much trading volume.. holders are holding
and prices are being marked up by positive sentiment as much as buying and selling.. That is why The largest volume on a chart ( a day a week a month )

Is such an important flag... The crowd has lost it's unity .. The seeds of character of the next trend (reversal trading range) have germinated
The seeds sown by the previous mkt action itself..


A stock is overbought when on a time frame all have bought who want to.
selling (profit taking) will then take prices down to create liquidity.

If prices fall enough then buyers retreat to the sidelines selling generates selling .. When the volume surges then the selling has generated buyers
When all who want to have sold .. Then the fact that the new holders have a cost price = or below mkt means technically the position is strong. Buying now generates buying and prices rise to create liquidity..

Mkts have Human reflection .. So That automatically means they are manipulated.. Those who won't buy until it stops going down.. Those who won't sell until it stops going up.. Those who would buy if it was lower or sell if it was higher.. If it would just leave the trading range etc.

Everybody is withdrawing and providing demand and supply
contingent on something happening.. Manipulation..

Human Nature = manipulation. Nature itself is unmanipulated.

(Tides of the sea don't become self aware and change because of that reflection)

So trends emerge and gain a following.. TA is about tracking the crowd and identifying the various stages of its life cycle..


With or without TA human nature is the same.
TA is just another thing feeding into the mix.
Refection on reflection on reflection...

It takes time for everybody to buy.. Mkts create liquidity and prosperity so
expansion and trends persevere.. But at the end of the day it becomes like pushing string and if you push the string up into the air.. collapse

Corrections are healthy...They keep things on a firmer foundation.
Liquidity alone can not keep pushing string up into the air..

So I guess the answer is Yes.

I guess to be succinct, how much of the crowd is using T/A

All of the crowd is using it... But in various ways and competencies.

Even those who wait to buy at the top.. The laggards of the crowd.
Even those who Buy all the dips on the way down the misfits out of step members of the crowd.

Anyone who follows.. Everybody..

TA itself has many levels and application.

The existence of false signals demonstrates and suggests that
There are always those who will take the other side.
You can not push string for long.. For a trend to arise some thing real has to be in existence.. When a trend does arise the diversity of the crowd at that time evaporates this happens with or without TA..

Maybe someone selling on an overbought signal is tempering the trend and making it stronger. On every time frame when the crowd becomes too one sided correction sooner or later arises..

Mkt is action reaction .. test response..

Is T/A ever self fulfilling?

Mkts themselves are.. Now if We all stop buying until markets start going up We should very soon get some real bargains

motorway

 

[ducati916]

motorway

Pretty much agree with your previous post.

*Cyclical
*Reversion to the mean
*Overshoot

Is the precis version.
jog on
d998

 

[tech/a]

Motorway.

Seems 2 of the crowd have similar views!

Possibly 3 with the Ducster.

 

[ducati916]

Motorway.

Seems 2 of the crowd have similar views!

Possibly 3 with the Ducster.

I agree with the facts as presented.
It is in the measurement of those facts that we differ.
That however is no great thing.

jog on
d998

 

[wintermute]

Great post motorway thanks! and thanks to Tech/A for starting the thread and everyone else's contributions, it has been a great read

I'm probably to a degree one of the misfits I will sometimes buy before a clear reversal signal, on the way down, but only if I feel the fundamentals are right, mostly though I use TA to time entry so as not to buy at a peak. More recently I have used it to try and time exit, selling when I think the stock is becoming overbought..... still very much a novice!

Tony.

 

[coyotte]

I feel though if the main ingredient in your T/A is YOU .

Then you must determine how you think -- logically or creatively .

Someone thinking on Logical lines such as a engineer would surely perceive a chart or T/A, differently to how a architect would .

Likewise different schools of T/A would be based on either Logical or Creative thinking


Which brings about a return of the style of debates Utzon and the Engineers would have , which reduced the Sydney Opera House to a shadow of the architects vision --- neither side was capable of SEEING what the other was on about .


Cheers

 

[motorway]

Thanks Tony

There was an interesting article on the expert mind and how to develop one
in the AFR a while back.

The key was effortful endeavour... Always trying things that are just outside ones competency... Not too hard not too easy.. Always stretching oneself..
With full attention..

Learning to drive a car .. One makes rapid impressive progress.. But then a level is reached that is good enough and then We no longer get better and we never will become an expert.. We Always need to push the boundaries and try what it is We are just not able to do...

The article suggested it takes 10,000 hours of such practise to make an expert mind.. But practise of what is just beyond Us. Not just doing the same thing that is good enough over and over again..

With the market You have terrific feedback.. So We just have to be honest with our selves have reflection and keep trying in a effortful way..

Who can say what limit there is to How good We can become if We make that effort ..

motorway

.......Figuratively speaking, therefore the small trader should imagine himself as a hitch-hiker in the market. For the ordinary hitch-hiker, someone else supplies the car, chauffeur, oil and gas. When he thinks the car is about to go in his direction, he jumps aboard and rides as far as he thinks the car will go. When he notices the machine has been stopped by a red light, or is about to turn a corner and go in some other direction, or that the car is running out of gas, or the brakes failing to work properly, he steps off and figures he has secured about as long a ride as he may expect. All he has supplied in this transaction is a modest commission and whatever brains were necessary to observe and recognize the opportunity when to get on and off.
So it is with the market. The observer, whether a small trader or large operator, watches for his opportunity. When he sees a chance that offers reasonable odds in His favor, where the probability of profit far exceeds the risk, he buys, limits his risk and awaits developments.
So long as the stock behaves properly, in accordance with the technical action that confirms his oringinal judgment, he maintains his position. As soon as he finds the stock has reached it's indicated objective.... Begins to waver in it's stride, or passes through a set of maneuvers that clearly indicate supply is increasing, and a reactionary movement seems imminent, he acts on the information thrust upon his attention and gets out.......

Richard D Wyckoff

Here is a link to a crowd life cycle model

http://www.hankpruden.com/lifecyclearticle.html

 

[coyotte]

Hope Wyckoff had the decency to acknowledge Guppy with that view.

It's virtually word for word from Guppy


Cheers

 

[weird]

Well he died Mar. 19, 1934, according to Time Magazine.

 

[CanOz]

Well he died Mar. 19, 1934, according to Time Magazine.

So Guppy should have acknolwedged him?

Great link to a great article, i think the penny has dropped for me on Tech/As thread.

Cheers,

 

[It's Snake Pliskin]

Hope Wyckoff had the decency to acknowledge Guppy with that view.

It's virtually word for word from Guppy


Cheers

Coyotte,

I'm not sure where you are going with your comment. Wyckoff was a legend and Hank Pruden is a Wyckoffian. Guppy is good and respected by me but I have studied Wyckoff at length suggesting you may be wrong.
Wyckoff is far from the Holy grail, as is EW and all other TA methods.
Regards
Snake

 

[coyotte]

My mistake.

Thought the reference was to a reporter.
Maybe Wyckoff was clairvoyant.


Cheers