No, you are not betting against the FED.
You are betting against the HERD that thinks QE is some sort of magic that makes the stock market go up forever. The same herd that thought the magic was the internet in 2000 and real estate in 2007.
Gargantuan Head and Shoulders Top in the Dow - Dow 2000 target
- Thread starter dasenbrj
- Start date
No, you are not betting against the FED.
You are betting against the HERD that thinks QE is some sort of magic that makes the stock market go up forever. The same herd that thought the magic was the internet in 2000 and real estate in 2007.
I know the difference quite well, it just seems to be you dont like to be corrected.
Have you ever seen Bulkowski's books? That's the required level of detail for trading chart patterns.
Good job noticing that the chart was from 2010. Good "prediction." Go play some golf or something relaxing.
smallStops: Thank you for having something coherent to day that does not blame all problems on the Fed and HFTs. Sincerely, me.
Seems like most people (a) didn't read your second paragraph and/or (b) didn't notice that you left off the last three years.
Patterns exist because people see bunnies in clouds. And there is an oooo factor among the unsophisticated that prompts them to view pattern people as experienced and knowledgeable. But when it comes to evidence and reliability, problems arise.
Be that as it may, patterns -- such as they are -- exist due to behavioral dynamics. The so-called Head & Shoulders is no different. But the H&S is a story of greed and desperation and panic which cannot be told without volume. And you don't have anywhere near the necessary volume. So it evolves into nothing more than a series of higher highs.
If the materials you're using stress patterns, perhaps it's not too late to get a refund.
Thanks for the great reply. I started with the CMT stuff mainly because it seems to be an unbiased source for a list of materials to start studying technical analysis. Edwards and Magee was on the top of the list, so I've started there. What you said about behavioral dynamics and patterns is very interesting, E&M lays out a theory for why head and shoulders patterns exist, and it makes a ton of sense from a behavioral perspective.
E&M really stress the importance of looking at volume when considering patterns, and I notice that few people seem to actually practice this when looking at patterns.
And yes, I think the fact that the chart is three years old may be sorting the wheat from the chaff here
Thanks for the great reply. I started with the CMT stuff mainly because it seems to be an unbiased source for a list of materials to start studying technical analysis. Edwards and Magee was on the top of the list, so I've started there. What you said about behavioral dynamics and patterns is very interesting, E&M lays out a theory for why head and shoulders patterns exist, and it makes a ton of sense from a behavioral perspective.
E&M really stress the importance of looking at volume when considering patterns, and I notice that few people seem to actually practice this when looking at patterns.
And yes, I think the fact that the chart is three years old may be sorting the wheat from the chaff here
"CMT" is not ringing a bell but that may be feeble-mindedness on my part. But as for Edwards and Magee, that can mess you up, especially if you're reading an edition that came out after Bassetti got hold of it.
If you're really interested in this stuff, I suggest you set the E&M aside and get the Schabacker work (Technical Analysis and Stock Market Profits) that is the basis of it (few people know now that Schabacker did nearly all the work first but asked Edwards, his brother-in-law, to finish it since Schabacker was too ill to do so; if you're interested in the Schabacker original, it's available for free as a pdf; the Magee stuff is of course unique to Magee).
Edit: About CMT. If you're referring to the Chartered Market Technician material, the bias is demonstrated by the choice of material, and much of what you're reading or will be reading will likely send you down the same wrong course that everyone else has traveled (and in many cases is still traveling).
If you're really interested in technical analysis, i.e., the analysis of price movement, start at the very beginning, with Dow (actually that's not the very beginning, but close enough), Hamilton, Rhea (which I'm sure are also available in free pdf). Then move into Wyckoff (available in free pdf), deVilliers (ditto), Schabacker, Elliott. You'll know a hell of a lot more about technical analysis than anyone with whom you're likely to come in contact.
That sounds like an excellent list. I will try to track them down.
I am getting the general idea that you are suggesting that going to the horse's mouth is the best route. So Frost and Prechter would not be recommended in regards to Elliot?