Prove to me that Technical Analysis Works.

[TazTheLaz]

OP has left the thread. I repeat, Elvis has left the building.

That is the problem with these dudes. They made their minds up, and no matter how convincing you are, they would never acknowledge that you are right. He is right now on ET looking at other threads, instead of thanking us for a nice and neat explanation.

I am still reading it. I just don't bother to argue with TA traders, because they live in their own reality. I do appreciate that I was given an explanation. However, I know that TA traders are wrong, because fundamentals outperform, and technicals don't.

They made their minds up, and no matter how convincing you are

It seems like fundamentals always do better, so I can conclude that they are superior.

 

[volpri]

update
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You got a protracted downtrend on left of the chart then 15 bars sideways movement followed by a BO (that big bull bar) of that sideways movement. Next comes a pb. Followed by another BO where you are going long. So you are trading a BO PB BO. This requires a bigger SL. smallest stop loss is the bottom of the PB around (4172)before your entry on the second BO. Optional SL’s are 4169 and 4166 or bottom of the entire move up in the latter. Regardless of any patterns you may see such as H&S CONTEXT is more important. What is the context where the pattern is taking place? This is where traders say patterns don’t work and are at best a 50/50 proposition so why use them? PATTERNS MUST ALWAYS BE LOOKED AT IN TERMS OF CONTEXTS.

Price action context such as this …downtrend…sideways 15 bars….BO on good strength ….Then PB…followed by BO (your entry). So contexts says From the bottom of the sideways you got a bullish move up to above your entry. Moves like this can have deep PB’s such as where you got stopped out on but it is unlikely they will reach an properly placed SL. If you measure the distance from the top of the sideways move at the bottom of the chart to the peak of the bar after your entry bar then it is easy to see that the PB you took the loss (???) on was right at a 50% pb of the bullish move. Then price heads back up. That is often typical.

I know you didn’t ask but IMO context was not taken into account here, otherwise SL would have been larger. You likely got stopped out 6 points on the first PB after your entry. If you had had a proper SL you would have had an opportunity for averaging down …taboo….(why average down?…because price context already proved enough bullish strength) on that PB after entry. Odds favor any average down position would come back to at least the top of the PB. By the time it got back to the top of the PB that you got stopped out on (???) you not only would have made money on your initial entry but also on your average down position. And had you held both positions for one more bar you could have exited all at 4187 and your wife making a run for Dillards instead of Dollar General.

The market cycle and context is important to the location of any pattern or individual bars.

 

[volpri]

I am still reading it. I just don't bother to argue with TA traders, because they live in their own reality. I do appreciate that I was given an explanation. However, I know that TA traders are wrong, because fundamentals outperform, and technicals don't.



It seems like fundamentals always do better, so I can conclude that they are superior.

Fundamentals ultimately usually in the end determine the price but TA with PA shows the twists and turns the market makes as it reaches the Fundamentals price. Consider this: much more $$$$ can be made trading the twists and turns over and over as price is marching to the drumbeat of the fundies than a buy and hold for fundies only. J.M. Hurst explains it all in his outdated book written years ago.

 

[Gasparov]

However, I know that TA traders are wrong, because fundamentals outperform, and technicals don't.

Well I'll be damned. Pack it up technical traders, what we've been doing all this time hasn't been working. I don't know where all the money came from or why every chart keeps obeying these funky lines and patterns, but I suppose I'll need to try something new now.

 

[NoahA]

You got a protracted downtrend on left of the chart then 15 bars sideways movement followed by a BO (that big bull bar) of that sideways movement. Next comes a pb. Followed by another BO where you are going long

Wonderful analysis. Thanks for sharing. Missing your charts with trades marked up in your journal.

 

[Pekelo]

I know that TA traders are wrong, because fundamentals outperform, and technicals don't.

See, that is a wrong conclusion based on a false premise.

1. I already explained earlier, there is no such a thing as TA's performance.
2. Even if there was such a thing, just because it underperforms fundamentals that doesn't mean it is not profitable. If I make 10% compared to your 20% I am still profitable, fucking DUH!
3. You just proved that you have a closed mind so we may as well close this thread.
4. I also explained earlier you can not over generalize about TA. You could say H&S patterns don't work, but you can not say TA doesn't work. It is like saying surgeries don't work because people do die during surgeries.
5. I already explained your misbelief has no bearing on TA working or not. I don't believe in gravity, but I am still careful on the stairs and skislopes.

 

[deaddog]

It seems like fundamentals always do better, so I can conclude that they are superior.

Could you give an example?
What's in your portfolio?
Mine is mostly cash with a few enery stocks.

 

[TazTheLaz]

Could you give an example?
What's in your portfolio?
Mine is mostly cash with a few enery stocks.

I am not holding any stocks at the moment, because I do not believe there is any good opportunity. However, I am interested in buying Magna, Petrobras, and Hamilton Lane in the future.

Magna makes consoles, and other parts for cars. They also do contract car building (similar to Foxconn). My research concludes the intrinsic value is above the quoted price, because the company is in a VERY stable financial position, has growth potential but has seen a large selloff.

Petrobras is an oil company run by the Brazilian government. It is in a stable financial position, has a VERY good dividend. Intrinsic value is above the quoted price, solely because of the dividend. The company has high growth potential, and there is nothing to suggest that it will fail.

Hamilton Lane is a private equity and fund company. It is very well run, has future growth potential, and a decent dividend. My adjusted-DCF formula values shares around $110-140, which would double my money.

The companies do have some insider selling, however I do not believe management has lost confidence in them.

 

[taowave]

What discount rate are you using to value cash flows??

Thats the issue in a rising interest rate enviorment...

No pun intended,are you fundamentally against timing a trade?? Do you believe in MM ,I.e stops or adding to positions on bigger discounts to fair value as the stock trades lower??

I am not holding any stocks at the moment, because I do not believe there is any good opportunity. However, I am interested in buying Magna, Petrobras, and Hamilton Lane in the future.

Magna makes consoles, and other parts for cars. They also do contract car building (similar to Foxconn). My research concludes the intrinsic value is above the quoted price, because the company is in a VERY stable financial position, has growth potent but has seen a large selloff.

Petrobras is an oil company run by the Brazilian government. It is in a stable financial position, has a VERY good dividend. Intrinsic value is above the quoted price, solely because of the dividend. The company has high growth potential, and there is nothing to suggest that it will fail.

Hamilton Lane is a private equity and fund company. It is very well run, has future growth potential, and a decent dividend. My adjusted-DCF formula values shares around $110-140, which would double my money.

The companies do have some insider selling, however I do not believe management has lost confidence in them.

 

[TazTheLaz]

What discount rate are you using to value cash flows??

Thats the issue in a rising interest rate enviorment...

No pun intended,are you fundamentally against timing a trade?? Do you believe in MM ,I.e stops or adding to positions on bigger discounts to fair value as the stock trades lower??

I use a complex formula, this one is similar:
It takes interest rates (perpetual growth rates) into account as well.