Technical analysis

[IlliniRyRy]

I thought I'd see how many people are interested in this, and maybe we can get a discussion going. If anyone uses technical analysis to make stock picks on a regular basis, let's set up a forum here to discuss your thoughts. I'm seeing some nice setups right now in some nasdaq stocks, and the index itself looks really strong too, provided we see a couple more advancing days on good volume this week. Anybody have any nice chart setups for stocks, indices, or futures?

[J_V]

let's do it. Thanks for telling me to bail on that dollar short 6 months ago.

[MaxPower]

Sorry, I'm too busy working on my Pattern Map to predict Turn and River cards on Party Poker.

Good luck though.

[ctv1116]

I used to be a believer in technical analysis, and know all the terminology, but I'm skeptical of its effectiveness. I mean, if KNOWN technical analysis techniques are used, everyone would use it and the methods would become useless. You need to develop UNKNOWN technical analysis techniques that work; otherwise, the efficient market hypothesis takes over.

Technical analysis is the way the go. I listen to guy on AM1590 out of Nashua, NH. Go to www.tfnn.com (http://www.tfnn.com) to listen to his shows that are archived.

He is a technical trader who uses price and volume and fibinachi (sp?) analysis to predict where stocks may go to. It is pretty amazing that he is right quit often.

[Ray Zee]

ctv, you are so right. just think about it. if tech. analysis worked they would just program a computer to use it and trade. soon there would be no money left in the world. everyone wants an easy way to make money when the only easy way is to inherit it.

[bunky9590]

Listen, If you want to make money in the market, you have to dig and think ahead of the curve.

I haven't bought any stcoks in like a year but bought a few for big numbers when the market was way down. Look for companies with solid balance sheets and good markets, even if they are in a bit of a depressed time.

Last four purchases:
Oct. 2002 REIT (vanguard fund) @ $11.83/share (yeilding 8.1% div) now at over $16.00/share

Oct. 2002 Disney bout at 14.60 now over 27.00
Bought it when ABC was number 4 in the ratings and the movie studio had drawn a few blanks and tourism was down. (so was the stock price)

Nov. 2002
Rite Aid (just over $2.00/share) 3,000 shares. Company head was being investigated and stores were closing to retool and cut costs.

(sold it at 4.50/share a year later)

the bargains are out there, but right now don't buy the indices, look for the diamonds in the rough.

A nice long term play right now is LLL.
Communications company working on satellite and space communications (as well as other things). (a long term play but is pulling in numbers and beating projections every quarter)

[IlliniRyRy]

ctv1116 and RayZee both bring up good points about technical analysis. It's true that if everyone used the same technical patterns and setups in the market to make trading decisions, it would be self-defeating. There is no strategy that works all the time, but that doesn't mean the whole science itself should be dismissed. Quite the contrary. Thousands of hedge funds and proprietary trading desks (such as the one I work for) use their own computerized models and mathematical algorithims, and they work if the trader knows how to manage his money correctly. Technical analysis, like poker, is all based on probabilities. Patterns in price movement and volume repeat constantly, that's what a trend is. When a pattern fails to setup in the way you might expect it, it's your job to get out when you're wrong and cut your losses quickly. Most people don't want to admit they're wrong, and they let fear and greed dictate their decisions. Price movement is all based on psychology, and that's what technical analysis is. Ask the guy sitting across from right now at work, he took home over $700,000 last year.

[scrub]

[ QUOTE ]
Ask the guy sitting across from right now at work, he took home over $700,000 last year.

[/ QUOTE ]

Ask the drunken, slobbering idiot at your 10/20 table how he's up 3 racks despite the fact that he's playing blind until the turn...

scrub

[IlliniRyRy]

Hardly an accurate analogy scrub.....you don't make money trading day in and day out if the odds are against you. He's not catching.

[scrub]

My point is that if the argument is whether any method of technical analysis has predictive power and isn't just an indicator that has been correlated to past results, pointing to the results of someone using the method in question isn't particularly helpful.

You can make money using a flawed strategy to predict the market, just like you can make money using any sort of flawed strategy to make gambling decisions. The question is how long you stay lucky.

scrub

[ctv1116]

Like I said in my original post, the technical analysis has to be ORIGINAL (what you said as proprietary). I don't question people's ability to make money using technical analysis, but you aren't going to make it by reading a book or reading a website how to use Fibonacci retracements or MACD or identifying head and shoulders tops.

[adios]

Ok I think we're all agreed that if something is easily available to everyone, it probably doesn't have much value. For instance a chart fits in here. Regarding charts, there was a poster who posted on the poker forums named Dick in Phoenix. He posted several graphs of random variables with a positive expectation. Several posters remarked how they resembled charts of various stocks they had seen. Nuff said about that.

Nobody is going to post trade secrects on a web site like this but perhaps there are ideas that people have that might bare some fruit. I'll just say that IMO there probably are some opportunities in day trading the indices especially QQQ. It does seem to me that there is "momentum" on both the downside and the upside. Quantifying momentum is another story. FWIW I do believe stock prices tend to gravitate towards option strike prices and that people that follow the market closely on a daily basis do take advantage of exagertated movements for short term trades (David Sklansky posted one for MSO when the Martha Stewart story started breaking that turned out to be very profitable), sometimes just plain "flipping" a position in an hour or so.