Re: Random Walk
[ QUOTE ]
It cannot simultaneously be the case that the price of a security always reflects the best possible estimate of its intrinsic value and that technical analysis is profitable.
[/ QUOTE ]
Of course it can.. here is the most simplest of examples...
A stock breaks out to new highs on significant volume, because of an intrinsic value change. The insider and early institutional buying create the volume surge. Day Traders jump on the immediate breakout. End of day traders get on the bandwagon the next day. The institutions continue to push the stock up as they refine their analysis of the new intrinsic value. The uninformed public buys at the end of the immediate trend as the day and swing traders start to sell and take their profits when price approaches the new "perceived" intrinsic value. Simple!
|