Is Technical Anaylysis Bull?

[RICK430]

I trade Curde Oil daily and sincerely believe that TA is more suited for daily trading then long term, what I mean by long term is more than 1 day.

Considering that there are many external influences that drive a stock or commodity's up or down, how can a long term TA with all this charting and analysis really predict anything. I sincerely believe its a business that newbies or even some pros buy into so that they can have security in knowing that they can predict a price of a stock or commodity. What do you guys think?

 

[kut2k2]

Quote from RICK430:

I trade Curde Oil daily and sincerely believe that TA is more suited for daily trading then long term, what I mean by long term is more than 1 day.

Considering that there are many external influences that drive a stock or commodity's up or down, how can a long term TA with all this charting and analysis really predict anything. I sincerely believe its a business that newbies or even some pros buy into so that they can have security in knowing that they can predict a price of a stock or commodity. What do you guys think?

Time series analysis is usually independent of time frame. What applies to daily bars can be applied to 5-minute bars and to monthly bars. The question is whether a given time series is amenable to prediction on any scale, and to what extent. The typical TA tool is too crude to yield truly meaningful results for forecasting from price series, but that's not an indictment of all TA.

 

[Landis82]

Quote from kut2k2:

Time series analysis is usually independent of time frame. What applies to daily bars can be applied to 5-minute bars and to monthly bars. The question is whether a given time series is amenable to prediction on any scale, and to what extent.

I would agree with everything above.
Moreover, people trade PRICE.
Not fundamentals.

As a result, one can use some fairly simple T/A tools ( such as various moving averages and fibonacci retracements ) to identify trends and patterns. This is nothing new. If you don't believe me, feel free to re-read the chapter on one of my old bosses, Paul Tudor Jones in the book, Market Wizards.

He used pattern recognition and fib relationships ALL the time with tremendous success!

 

[RICK430]

So how can you forecast a predetermined price on any security or commodity by looking at past action or trends. Example, oil production and supply events, which happens daily and or future stock price as to earnings, consumer demand and company expense and profits. These things are daily, weekly, monthly events which constantly effect overall price. So how can an individual say that they know what a price of a given item will be in a week, month, year and so forth.

Since I day trade, rather successfully based on price, I have to completely agree that price is everything and nothing can be accurately predicted by any analysis. If you want to buy a stock you look at financial and decide, if you want to buy oil you look at supply and demand of the world and make an educated guess. In another words charting past behavior does not mean anything for the future.

 

[dottom]

Quote from RICK430:

So how can you forecast a predetermined price on any security or commodity by looking at past action or trends. Example, oil production and supply events, which happens daily and or future stock price as to earnings, consumer demand and company expense and profits. These things are daily, weekly, monthly events which constantly effect overall price. So how can an individual say that they know what a price of a given item will be in a week, month, year and so forth.

Since I day trade, rather successfully based on price, I have to completely agree that price is everything and nothing can be accurately predicted by any analysis. If you want to buy a stock you look at financial and decide, if you want to buy oil you look at supply and demand of the world and make an educated guess. In another words charting past behavior does not mean anything for the future.

All anecdotal platitudes. Small sample size. Use the archives. There are hundreds of threads on this topic.

 

[spersky]

Quote from RICK430:

So how can you forecast a predetermined price on any security or commodity by looking at past action or trends. Example, oil production and supply events, which happens daily and or future stock price as to earnings, consumer demand and company expense and profits. These things are daily, weekly, monthly events which constantly effect overall price. So how can an individual say that they know what a price of a given item will be in a week, month, year and so forth.

Since I day trade, rather successfully based on price, I have to completely agree that price is everything and nothing can be accurately predicted by any analysis. If you want to buy a stock you look at financial and decide, if you want to buy oil you look at supply and demand of the world and make an educated guess. In another words charting past behavior does not mean anything for the future.

Charting past and present behavior represent every single assupmtion real or imagined about the current market. That even includes company insiders. Future events are leaked. Unkown events like a terrorist bombing on a pipeline are even leaked.

Why do stocks tank before a really bad earnings?

IMHO TA will tell you almost everything about a market even seen or unseen. It reveals the hopes/expectations/ and fears of every entity involved in that particular market.

How you interpret that information is up to you.

Regards

 

[spersky]

Fundamental analysis did people a ton of good on Enron and Bear Sterns. I knew that those companies where sick way before the corrupt assholes destroyed the company because I used Technical analysis.