XAO Banter Thread

[nulla nulla]

Logic is still wrong.

Say I go to a fortune teller who reads tea leaves to find out what my future holds. It doesn't mean that I believe the tea leaves are input to my future. I am simply believing that the tea leaves for some reason can forecast / predict / describe with some probability my future.

Same with technical analysis. You don't have to believe it, but you haven't disprove it with the logic you are offering.

Does it make any difference if the fortune teller uses "green tea leaves" or "black tea leaves"?

 

[nulla nulla]

......please those with open minds continue to explore the simple effective ways price structure can be read and used to improve returns , dont let intellectual dribble put you of . swing highs /lows , ranges , cycles of time over price can all be used extremely successfully to outperform .

Data used with risk assessment determines the merit of an entry point with an exit point already in mind. You either get it right and take a profitable trade or you get it wrong and close out at your stop loss point.

trading of news ........ by the time you hear it ....... its priced in

Too true. How many times have you seen a price rise or drop quickly for no known reason only to see the news release hours or days after the movement. By then the news is well and truly factored in.

 

[nunthewiser]

LOL is all i gots to say

sorry for low content post but some of these comments are laughable.....

it seems just because THEY cant do it ........means NO one can do it...

p.s great calls of late nun you are a true psychic

 

[Gringotts Bank]

It's all about the biotechs this last few weeks. CDY VLA BNO PRR.

Mining sector looks like it might never get its old strength back. First time since the GFC that the oomph has gone. Not sure where that leaves us as speculators. Do we start buying up dud biotechs and hope that the tide carries them?

 

[Gringotts Bank]

4653 is a major trend line. Currently 4671.

If there's a bounce it will be generated mainly by short covering IMO. This may extend into a small run but feels unlikely right now.

If we don't bounce off 4653, then I think our market is going to become very very quiet! Not a crash, just no buying, no volume. That would make trading impossible! So um... let's hope it doesn't eventuate!

 

[Synergy]

I feel like we stretched lower today, almost reaching out to the trendline because it was in sight. We certainly under performed the rest of the world. No sign of the high volumes we saw for the March low yet though... certainly not a lot of positive mindsets around.

 

[nulla nulla]

LOL is all i gots to say

sorry for low content post but some of these comments are laughable.....

it seems just because THEY cant do it ........means NO one can do it...

p.s great calls of late nun you are a true psychic

Well it is a "Banter" thread and, if memory serves me correctly, you started the thread to better explain a perspective raised in the now defunct chat room. The good thing about this thread is that it hasn't been taken over by the hindsight "Elliot Wavers".

 

[tothemax6]

LOL is all i gots to say
sorry for low content post but some of these comments are laughable.....
it seems just because THEY cant do it ........means NO one can do it...

That's fine, given a 50/50 chance there is always going to be some people who lie on the right of the distribution - and claim they can predict which way a coin will land. It's more valid to reach conclusions that are constructed from first-principles, than by selection bias.

Logic is still wrong.
Say I go to a fortune teller who reads tea leaves to find out what my future holds. It doesn't mean that I believe the tea leaves are input to my future. I am simply believing that the tea leaves for some reason can forecast / predict / describe with some probability my future.
Same with technical analysis. You don't have to believe it, but you haven't disprove it with the logic you are offering.

Well you can say I'm wrong till you are blue in the face, in every manner you choose. But a meaningless stream of text is very easy to ignore. Perhaps you could explain why my model is wrong, rather than briefly alluding to an analogy that barely fits. I'm happy to be wrong and corrected (from which I benefit), but being told I am wrong with no real reason has always indicated to me that I am probably right.

So is the meteorologist who provided the information on what the weather will be tomorrow or don't you believe that either.

Difference is, he won't have modified the weather by the time it gets to you. Perhaps think before you type.

A good trader (and blind freddy) knew that an earthquake and tsunami smashed Japan and that a Nuclear emergency was happening. They also know that USA and Euro debt is sky high! Yet look at the rally after the quake! FA did not say "this is a great time to buy!"

It did actually. Warren Buffet and Jim Rogers, the exact opposite of techies, both said 'buy, buy, buy' when the Nikkei went below 9000. Economics dictates that uncertainty increases the demand for money, and hence bidding down of prices. This is on top of any damage to the value of the equities. When the uncertainty clears, all else being equal, prices increase as the demand for money decreases.

trading of news ........ by the time you hear it ....... its priced in

And of course, those peaks and troughs of the news end up making patterns on a chart, which techies some days later then use - well after the information comes to hand. Like I said, news events occur after the economic reality has played out - indeed they are one of the biggest information lags of all. I did not say to trade on the news.

 

[motorway]

That's fine, given a 50/50 chance there is always going to be some people who lie on the right of the distribution - and claim they can predict which way a coin will land. It's more valid to reach conclusions that are constructed from first-principles, than by selection bias.

How often is the probability of a move UP equal to a move DOWN ?

And Why would it be necessary to have to predict ?

Maybe it is enough to just stay on the

right

side

of the distribution

Motorway

 

[skyQuake]

How often is the probability of a move UP equal to a move DOWN ?

And Why would it be necessary to have to predict ?

Maybe it is enough to just stay on the side

Motorway

Can you elaborate? Other than the cliched up the stairs and down the escalator part that we've all heard about, I think there is a fair bit of merit in studying the distributions.
I suppose it also differs from stock to stock

 

[motorway]

Can you elaborate? Other than the cliched up the stairs and down the escalator part that we've all heard about, I think there is a fair bit of merit in studying the distributions.
I suppose it also differs from stock to stock

check my last blog post
which is an introduction to what I think are some important aspects


esp with reference to this

That ABOVE the Blue Line the Probability of a move UP is greater than a Move DOWN and that UNDER The Red Line the Probability of a move DOWN is greater than a Move UP !

The Probability of moves up or down in any time frame are 50/50
But the Size of moves Up Or DOWN is not

TRENDS can persist and do persist
when defined in terms of MOVES with certain Durations
rather then Durations ( eg The Weekly Trend ) of certain moves

As I think is seen in the chart posted..

Motorway

 

[cynic]

tothemax6, I do enjoy reading your posts.

Well you can say I'm wrong till you are blue in the face, in every manner you choose. But a meaningless stream of text is very easy to ignore. Perhaps you could explain why my model is wrong, rather than briefly alluding to an analogy that barely fits.

I've no intention of "busting a gut" doing somebody else's research for them. If fundamental analysis works for you that's great! Good for you!

Having said that, I would like to state that based primarily upon casual observation of market behaviour over several decades, I have come to the conclusion that technical analysis does bear some merit in predicting short and medium term market behaviours.
It would appear that mankind is somewhat fascinated by the number zero. It seems that the price/index levels that have more trailing zeroes tend to be more likely to approximate resistance and support levels than any fundamental valuation that I've witnessed to date.
This is evidenced by the distributions of closing levels of EOD ("End Of Day") data on popular share market indices. Anyone willing to perform an objective (and "open minded" for those of you whom fail to understand the meaning of "objective") analysis of these values will see what I mean.

At times in the past few years I have witnessed markets rising on positive interpretations of fundamentally bad events and falling on negative interpretations of fundamentally good events (and vice versa too of course!). The best theory that I can come up with to explain these phenomena is that cash resources for the majority of market participants is finite (the US might be an exception to this - they seem to be printing a lot of additional currency lately!) hence placing a limit to the extent of uptrends regardless of how many fundamentally positive events occur. For a technical analyst, upon recognising that almost everyone who wants to be in (the market) is invested, the only thing left to do is to wait for the signal to take the profits and get out! Technical analysis of volume combined with price action has often yielded clues that indicate exhaustion of the bulls versus the bears thereby presaging the advent of changes in market direction.

Of course the fundamentalists do eventually make their move and bring the market back into approximate alignment with perceived fundamentals over the longer term. That's fine for fundamentalist traders like Warren Buffet. Best of luck to anyone patient enough to follow his fine example!

That's fine, given a 50/50 chance there is always going to be some people who lie on the right of the distribution - and claim they can predict which way a coin will land. It's more valid to reach conclusions that are constructed from first-principles, than by selection bias.

Given that the majority of market instruments by definition cannot penetrate zero and go into negative territory, one could conclude that there is a mathematical bias towards the "up" direction. This is evidenced be long, long term charts of the performance of major indices. Like humans, every listed company could be considered to have a finite lifespan and will eventually become insolvent or consumed in M&A (Merger & Acquisition) activity, suggesting that the "up" and "down" nett out. However, major indices will generally exhibit an overall positive bias over a longer timeframe, because new companies are introduced to replace those that fall by the wayside.

I'm happy to be wrong and corrected (from which I benefit), but being told I am wrong with no real reason has always indicated to me that I am probably right.

Are you really happy to be wrong? (My B. S. detector is registering at the top end of it's scale here! Maybe I need to invest in a new detector!)
No amount of intelligent rhetoric will ever convince me to doubt the evidence of my own eyes in relation to certain branches of technical analysis. Likewise, I'm sure that no amount of rhetoric will ever convince a fundamentalist to abandon his/her preferred style of trading.

Technical analysis has worked well enough for me and I would challenge anyone dismissive of it to take a closer look at price/volume action and market behavior in relation to the trailing zeroes!

Please no one insult my intelligence by asking me to present the proof that technical analysis can be seen to work (try proving that it doesn't!!). I'm already convinced, and much as I hate four letter acronyms DYOR!

 

[mazzatelli]

Economics dictates that uncertainty increases the demand for money, and hence bidding down of prices. This is on top of any damage to the value of the equities.

Aren't you playing for decreases in interest rates using govt bonds, where interest and yields priced into US Treasuries are near all time lows?

Or am I thinking of someone else (if so, my apologies)?

 

[skc]

Well you can say I'm wrong till you are blue in the face, in every manner you choose. But a meaningless stream of text is very easy to ignore. Perhaps you could explain why my model is wrong, rather than briefly alluding to an analogy that barely fits.

Let me paraphrase your logic.

1. Chartists use historical prices to predict/guess future prices.
2. Chartists think that historical prices determine future prices.
3. If historical prices determine future prices, future prices are indeterminate (as output is the input).

Point 1 is a fact and is true. Point 3 is also true. Point 2 however is your assertion, and it is incorrect. As I said, chartists use historical prices as proxy to see fundamental information that affects future prices. It doesn't mean that they think future prices are determined by historical prices.

The analogy I gave used the same logic as you.

1. Fortune tellers use tealeaves to predict the future.
2. Fortune tellers think that tealeaves determine the future.
3. If the future is determined by tea leaves, we are in interesting times.

Now, should I point out how this is also wrong in terms of logic?!

...being told I am wrong with no real reason has always indicated to me that I am probably right.

 

[Russell]

I am quite new to the stock market, so my comments will no doubt seem naive.

Wouldn't it be better to use aspects of both FA and TA when choosing what stocks to buy? It would seem like you are missing out on a wealth of information if you just choose one or another.

Surely both Analysis techniques have a place in what we do? Like I said earlier, I am not educated enough (yet) to know.

Apologies if this has been covered previously.

 

[ginar]

I am quite new to the stock market, so my comments will no doubt seem naive.

Wouldn't it be better to use aspects of both FA and TA when choosing what stocks to buy? It would seem like you are missing out on a wealth of information if you just choose one or another.

Surely both Analysis techniques have a place in what we do? Like I said earlier, I am not educated enough (yet) to know.

Apologies if this has been covered previously.

absolutely correct russell .

 

[Gringotts Bank]

Regarding charting; I believe past performance is an excellent predictor of future performance. Look at sport for eg.

Collingwood has won all but one game this year in the AFL and sits second on the ladder. It would be a sound bet that it will win at least one more game this year (such a sound bet that no one would offer you odds). This is all based on past performance. If their past performance this year to date had been abysmal and they sat at the bottom of the ladder, everyone knows that the odds change, and rightly so. Sports clubs, like public companies tend to continue in the direction they are headed. Shocks and upsets can happen, but momentum (which is calculated from past data) has actually been scientifically shown to be a good predictor of future returns on the stock market. Google it!

 

[Boggo]

Wouldn't it be better to use aspects of both FA and TA when choosing what stocks to buy? It would seem like you are missing out on a wealth of information if you just choose one or another.

Surely both Analysis techniques have a place in what we do?

Quite correct Russell.
Listening to our so called investment etc gurus is fraught with danger, they all have agendas be it personal or company orientated.
Currently TLS, TIM etc, past Onetel and many more around that period. If you read the stuff that is/was churned out by spin doctors then you will be mislead.

Applying a bit of technical analysis and pattern behaviour to most stocks will often validate the reports or highlight and flag the nonsense.

Below is one of many examples I have collected over time provides a good example where one of our major investment organisations should spend a bit more time on technical analysis and a little less on advertising.

The stock chart extract is ILU and the period is where they were selling (why would they buy some as well I wonder ), now look at where that stock price is today, brilliant bit of work on behalf of their trusting clients eh.

 

[tothemax6]

The best theory that I can come up with to explain these phenomena is that cash resources for the majority of market participants is finite (the US might be an exception to this - they seem to be printing a lot of additional currency lately!) hence placing a limit to the extent of uptrends regardless of how many fundamentally positive events occur. For a technical analyst, upon recognising that almost everyone who wants to be in (the market) is invested, the only thing left to do is to wait for the signal to take the profits and get out! Technical analysis of volume combined with price action has often yielded clues that indicate exhaustion of the bulls versus the bears thereby presaging the advent of changes in market direction.

Interesting, thanks for that. I have finally received some explanation of technical analysis which ties in economic reality.

Are you really happy to be wrong? (My B. S. detector is registering at the top end of it's scale here! Maybe I need to invest in a new detector!)

I am happier to be right, sure. But if one cannot enjoy being corrected, and learning from ones mistakes, what is the point in argument anyway?

 

[Russell]

I wonder if the XAO will end up opening higher this morning as predicted?