Re: XAO Analysis
Hi MRC,
I respect your opinion re fundamentals, but you have failed to answer the crux of tech/a’s question here. How does one successfully apply fundamentals in trading?
Over 12 months ago, you would have struggled to find economists or fund managers who base decisions from FA that were bearish the market, but there we many more cries from technicians warning of inevitable collapse. Why is this so?
The way I see it, the market movement is an expression of crowd mass psychology. As mentioned earlier its peoples perceptions that make markets move. Hope, fear and greed have always been the propellent of markets NOT fundamentals. As an example, take the dot.com boom. Was it fundamentals that drove that boom? What fundamentals? Simple answer: NONE
Another example. What drove the recent Oil bubble? Surely not just supply and demand! What has changed in 3 months for god sake?
The latest movements in the markets have been charged with one emotion: FEAR, which is the psychological reality as expressed by the movements of the stock market and other markets. The economic reality comes after that, as in a recession. So you see fundamental analysis does not lead the market, therefore you cannot successfully apply it consistently. As you mentioned, you don’t know what’s gonna happen tomorrow. The chart if properly analysed gives you something; we can look at circumstances and probable technical setups to trade from. Which is better than nothing.
When you think about it MRC, this really is a silly debate we are having here, because what causes the trends in the market is not really that important or doesn't really have to be explained. What is important, is identifying a trend irrespective of whatever has causes it, and joining in isn't and most of all trying to find ways of determing when that trend is at risk of ending.
All the best
STONER
Hi MRC,
I respect your opinion re fundamentals, but you have failed to answer the crux of tech/a’s question here. How does one successfully apply fundamentals in trading?
Over 12 months ago, you would have struggled to find economists or fund managers who base decisions from FA that were bearish the market, but there we many more cries from technicians warning of inevitable collapse. Why is this so?
The way I see it, the market movement is an expression of crowd mass psychology. As mentioned earlier its peoples perceptions that make markets move. Hope, fear and greed have always been the propellent of markets NOT fundamentals. As an example, take the dot.com boom. Was it fundamentals that drove that boom? What fundamentals? Simple answer: NONE
Another example. What drove the recent Oil bubble? Surely not just supply and demand! What has changed in 3 months for god sake?
The latest movements in the markets have been charged with one emotion: FEAR, which is the psychological reality as expressed by the movements of the stock market and other markets. The economic reality comes after that, as in a recession. So you see fundamental analysis does not lead the market, therefore you cannot successfully apply it consistently. As you mentioned, you don’t know what’s gonna happen tomorrow. The chart if properly analysed gives you something; we can look at circumstances and probable technical setups to trade from. Which is better than nothing.
When you think about it MRC, this really is a silly debate we are having here, because what causes the trends in the market is not really that important or doesn't really have to be explained. What is important, is identifying a trend irrespective of whatever has causes it, and joining in isn't and most of all trying to find ways of determing when that trend is at risk of ending.
All the best
STONER