Quote from dottom:
Not true, and there is also a lag associated with observing only price. This is a fundamental flaw of TA. E.g. inside information, order flow, nonlinear dynamics of intermarket relationships, etc. are not obtainable by observing only price & volume of a single market.
Have you read any papers on complexity theory as applied to stock market behavior?
So you get some inside information like IMClone is going to have some trouble and you have a bazillion shares and you do what? You sell. Why? Because you fear losing your money. You are about to enter the market on the long side and you are as certain as ever that it is about to take off and suddenly a bid for 10,000 shares pops up and puts you behind. You want in badly so you lift the offer. The numbers come out unexpectedly positive for housing and consumer confidence and Saddam Hussein hangs himself and the bonds start tanking and you cannot click the mouse with your greedy little hands fast enough to scoop up all the spoos or es you can.
Every decision to buy or sell in the markets made by a human is driven ultimately by the emotions of fear and greed...
after that human has considered the insider information, the order flow, the non-linear intermarket relationships, etc. All of the components you suggest factor in to one of two decisions... buy or sell. But
after all the components have been digested, the bottomline decision is, "am I going to make money if I buy"... greed, or "am I going to lose money if I don't sell"... fear. But the key word is 'after'.
Just like the key word to your question is "theory".
Btw, has anyone come up with an indicator or pattern that has stopped doing what it was designed to do? I mean triangles still show indecision, and despite what ScaleOut says, macd still shows momentum, etc. Just checking... you know, for the good of the thread.
What can I say, I live in the south, more root doctors down this way.
