Back up the truck, here comes some serious rambling stream of consciousness type babble.
Too much babble for one post. For TWO posts even. Three posts of crap! Yowza!
Just so no one complains or dies of boredom, can't say I didn't warn you.
Was looking at some market commentary in my boredom, peppered with 'the bulls this' and 'the bears that' and 'the bulls pressed here' but 'the bears drew the line there' etc. Anybody besides me think the bulls and bears language is way too black and white? Obviously the terms are metaphorical shortcuts to describe a more complex process, but I think it's too easy to take them literally in a mental sense. The bears did this, the bulls did that, which is which? We hear so much about these animals that we tend to assume them as actual static groups even if our conscious mind doesn't say it out loud. The gray reality is much more tenuous. What about bears that cover and bulls that sell out? What about guys who switch sides every few days? What about the guys on the sidelines? What about market neutral players? What about auto executions based on index tracking and mutual fund flows?
I don't really have a specific point here except maybe that a lot of the terminology traders use implies more concreteness than is actually there. The closest we can come is statistical grouping of probability clusters, i.e. bad things have been unfolding lately so it's likely that more bad things will unfold before good things dominate again, same in reverse on upside. The news media is on a witch hunt for earnings misstatements now, so their increased vigor in looking increases the odds they'll find more, mutual funds in the hole will be selling out good positions to make up for hits on bad ones which will depress the market further, etc. etc. That kind of chain reaction thing, that probability clustering, is why trends exist and technicals work, the hidden substance behind the charts. Technicals are basically a loosely knit price-based assessment of the fundamentals, a broad picture of willed ignorance that is superior to false confidence because it filters out extraneous information. If you take a step back, technicals and fundamentals are the same thing on different levels, they just have different labels, and if you look at them hard enough they blur together. (Except for elliott wave and fibonacci, which don't fit into this equation because they are bunkum- in my humble opinion. All the other stuff can be traced back to jenyoowine informashun.) Indicators aren't the source, charts aren't the source, hallowed price itself isn't even the source- they're just as close as we can get to the reality machine in all its complex glory. Different filters and approaches mean different folks pay attention to different strokes, but in the end we all play the same game, just mixed up variations on a theme of gaming what is likely to happen next at a given point in time. Not recommending becoming a fundamental analyst or anything, just trying to inject a little bit of the 'who knows' back into the TA equation but also to temper it with 'a lot of the time you CAN know something,' the answer is in between. A good market thesis will always fit loosely because you just don't have the right to get tight without super strong information and mr. market rarely coughs up all the puzzle pieces. Having an idea of what goes on adds to that elusive feel we seek if you are smart enough not to overplay your hand.
Simple, logical movements in response to a complex system = good.
Assuming a complex system is itself simple = naïve/bad.
Knowing what you don't know and staying humble = good.
Embracing ignorance as a virtue beyond the negation of false confidence = bad.
It's better to be more informed than less IF you can utilize the extra information. If there's no value in the surplus info then chop it down, cut it out, turn it off. But it IS possible to see the big picture sometimes if you think hard and squint real hard. So why do many technical analysts embrace their lack of certainty as if it were a good luck charm? Saying 'I don't know' is indeed honesty, and honesty is pretty much always the best policy, but there's no need to embrace a state of blindness if it's possible to figure things out to the benefit of the bottom line. Saying 'I don't know and I can't know and neither can you' is a no-no, uncertainty run wild, humbleness gone bad. Some stuff we CAN know, and sometimes a bell really does ring (in our minds anyway). On the other hand, false confidence is indeed much worse than humble deference so the pendulum swings back again. How much to try and find out? How hard to work the puzzle so you know enough but don't strain to know too much? It's like asking how hard to press or how much to risk- 'enough' is the best blanket answer because situations are so unique and different. How much is enough? No pat answer for that one anywhere, and especially not for $99.95.
Too much babble for one post. For TWO posts even. Three posts of crap! Yowza!
Just so no one complains or dies of boredom, can't say I didn't warn you.
Was looking at some market commentary in my boredom, peppered with 'the bulls this' and 'the bears that' and 'the bulls pressed here' but 'the bears drew the line there' etc. Anybody besides me think the bulls and bears language is way too black and white? Obviously the terms are metaphorical shortcuts to describe a more complex process, but I think it's too easy to take them literally in a mental sense. The bears did this, the bulls did that, which is which? We hear so much about these animals that we tend to assume them as actual static groups even if our conscious mind doesn't say it out loud. The gray reality is much more tenuous. What about bears that cover and bulls that sell out? What about guys who switch sides every few days? What about the guys on the sidelines? What about market neutral players? What about auto executions based on index tracking and mutual fund flows?
I don't really have a specific point here except maybe that a lot of the terminology traders use implies more concreteness than is actually there. The closest we can come is statistical grouping of probability clusters, i.e. bad things have been unfolding lately so it's likely that more bad things will unfold before good things dominate again, same in reverse on upside. The news media is on a witch hunt for earnings misstatements now, so their increased vigor in looking increases the odds they'll find more, mutual funds in the hole will be selling out good positions to make up for hits on bad ones which will depress the market further, etc. etc. That kind of chain reaction thing, that probability clustering, is why trends exist and technicals work, the hidden substance behind the charts. Technicals are basically a loosely knit price-based assessment of the fundamentals, a broad picture of willed ignorance that is superior to false confidence because it filters out extraneous information. If you take a step back, technicals and fundamentals are the same thing on different levels, they just have different labels, and if you look at them hard enough they blur together. (Except for elliott wave and fibonacci, which don't fit into this equation because they are bunkum- in my humble opinion. All the other stuff can be traced back to jenyoowine informashun.) Indicators aren't the source, charts aren't the source, hallowed price itself isn't even the source- they're just as close as we can get to the reality machine in all its complex glory. Different filters and approaches mean different folks pay attention to different strokes, but in the end we all play the same game, just mixed up variations on a theme of gaming what is likely to happen next at a given point in time. Not recommending becoming a fundamental analyst or anything, just trying to inject a little bit of the 'who knows' back into the TA equation but also to temper it with 'a lot of the time you CAN know something,' the answer is in between. A good market thesis will always fit loosely because you just don't have the right to get tight without super strong information and mr. market rarely coughs up all the puzzle pieces. Having an idea of what goes on adds to that elusive feel we seek if you are smart enough not to overplay your hand.
Simple, logical movements in response to a complex system = good.
Assuming a complex system is itself simple = naïve/bad.
Knowing what you don't know and staying humble = good.
Embracing ignorance as a virtue beyond the negation of false confidence = bad.
It's better to be more informed than less IF you can utilize the extra information. If there's no value in the surplus info then chop it down, cut it out, turn it off. But it IS possible to see the big picture sometimes if you think hard and squint real hard. So why do many technical analysts embrace their lack of certainty as if it were a good luck charm? Saying 'I don't know' is indeed honesty, and honesty is pretty much always the best policy, but there's no need to embrace a state of blindness if it's possible to figure things out to the benefit of the bottom line. Saying 'I don't know and I can't know and neither can you' is a no-no, uncertainty run wild, humbleness gone bad. Some stuff we CAN know, and sometimes a bell really does ring (in our minds anyway). On the other hand, false confidence is indeed much worse than humble deference so the pendulum swings back again. How much to try and find out? How hard to work the puzzle so you know enough but don't strain to know too much? It's like asking how hard to press or how much to risk- 'enough' is the best blanket answer because situations are so unique and different. How much is enough? No pat answer for that one anywhere, and especially not for $99.95.
