TA vs FA

smallfil said:
I'll give you two chart examples, examine the charts of WYNN and NVDA. If you bought it when it broke out after the downtrend, you would have been rewarded with huge gains. No news will tell you to buy at the bottom. Even CNBC and its numerous analysts and even CEOs will tell you to buy their companies at the very top. So, what news or even fundamentals will tell you to get in when most people are scared to get in such stocks? The big boys (hedge funds, banks, brokers, mutual funds) all did because buying drives share prices higher. Chances are good the hedge funds and other big boys bought heavily on the breakout. Just common sense. Funny too, I have been lectured by some ET trolls that technical analysis does not work at all. Good. More for us.
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I’m not interested in buying at the bottom Well, actually, I am, but don’t need to) I’m just thinking that yes, the hedge funds and big boys jumped on the breakout. But after the breakout, IF THE FUNDAMENTALS ARE GOOD, AND PROSPECTS FOR HIGH OCTANE GROWTH ARE HIGH, then there will be a lot of institutional buying over the next few weeks, even months, because there are a lot of funds that are so big that it takes forever for them to buy a full position.

take a look at CRWD. Look at their revenue growth rate…

2020 2021 2022 TTM
Revenue (Mil) 481.41 874.44 1,451.59 2,231.29
fast growing EPS will ultimately follow, and in the intermediate or longer term that’s what drives price action. So when I see a stock breakout, with those kids of growth rates, that’s what I want to own,

Not sure if that makes sense, but that’s my thinking.
 
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KGTrader4 said:
I’m not interested in buying at the bottom Well, actually, I am, but don’t need to) I’m just thinking that yes, the hedge funds and big boys jumped on the breakout. But after the breakout, IF THE FUNDAMENTALS ARE GOOD, AND PROSPECTS FOR HIGH OCTANE GROWTH ARE HIGH, then there will be a lot of institutional buying over the next few weeks, even months, because there are a lot of funds that are so big that it takes forever for them to buy a full position.

take a look at CRWD. Look at their revenue growth rate…

2020 2021 2022 TTM
Revenue (Mil) 481.41 874.44 1,451.59 2,231.29
fast growing EPS will ultimately follow, and in the intermediate or longer term that’s what drives price action. So when I see a stock breakout, with those kids of growth rates, that’s what I want to own,

Not sure if that makes sense, but that’s my thinking.
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Buying at the exact bottom is not really the goal but, the turning points in the trend which was down then, the trend changed with the breakout and moved to the upside. On a longer term basis, I will stick with the trend as long as it is intact to maximize potential gains. When following trends, you want to be at the right side of the stockmarket. Direction does not matter as you can make monies both ways. Yeah, CRWD looks impressive as far as revenues go. Looks like it broke out and likely, headed higher.
 
KGTrader4 said:
Interesting, I never thought to look at who the directors are.
Do you also look at growth rates? To me, that’s seems like it should be a key driver if price action intermediate to long term
What’s your general holding period? Swing? Position?
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Checking out directors really for me more to do with small cap companies, not medium or large.
Small caps frequently have no revenue, no earnings, so not much that can be checked on financials.
There's a huge amount of small caps on ASX and imo a huge amount of bs spin from these small guys, so ya gotta check out the exagerations.
If I like their story but suspicious at the same time, I'll google maps their work residence, check the carpark, see how many and what type of vehicles. I'll even check the directors fees to see they are not too greedy.
There's a lot you can do to try and stack the odds a bit more your way on small caps.
Directors are the ones running the show, so its important to look at them. I even check their ages, if there are for example 3 directors all in their 60's, fugettaboudit, they are too old and fucked to get the energy to propel anything, chances are they'll just wanna flog the business off or capital raise continually into their retirement fund.
 
themickey said:
Checking out directors really for me more to do with small cap companies, not medium or large.
Small caps frequently have no revenue, no earnings, so not much that can be checked on financials.
There's a huge amount of small caps on ASX and imo a huge amount of bs spin from these small guys, so ya gotta check out the exagerations.
If I like their story but suspicious at the same time, I'll google maps their work residence, check the carpark, see how many and what type of vehicles. I'll even check the directors fees to see they are not too greedy.
There's a lot you can do to try and stack the odds a bit more your way on small caps.
Directors are the ones running the show, so its important to look at them. I even check their ages, if there are for example 3 directors all in their 60's, fugettaboudit, they are too old and fucked to get the energy to propel anything, chances are they'll just wanna flog the business off or capital raise continually into their retirement fund.
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interesting thanks. I’m 72,though, so F*ck off lol. (Just kidding, )about the f*ck off, not about being 72) thanks for the explanation)
 
One thing I use fundamentals for is to triangulate the variance in sell-side expectations around a stock (and sometimes to develop my own unique view). If a stock has two competing narratives -- one of accelerating growth and the other of the beginning of a slow decline, you'll see that data point in clusters of sell-side estimates.

For example, while consensus NTM EPS on a stock might be $15 -- it's simple an average. The actual views might be more like a big group seeing NTM EPS at $10 and below, and another group seeing NTM EPS at $20 and above.

I'll build a model of the stock (full 3-statement integration, usually takes 6-8 hours) and will then spend time understanding why group A and group B differ. If I can find a unique edge or insight before earnings, I will make a bet on the side of EPS I think actuals will print to. If not, I'll wait until earnings and trade aggressively after the earnings release.

You can estimate the implied market EPS on a stock by using recent multiples (e.g. average P/E since the quarter began). If the market is pricing a 75% chance of group A (sub$10 EPS) and I don't think we have enough visibility into earnings, I made may fade it back to 50/50, and vice versa.

In the above example, it means that a stock trading at $50 might be pricing in a high chance of the stock missing consensus and falling within group A's target. But priced on 50/50, the stock should trade around $60, and if I think it'll end up beating, up to $80.

Because the market is constantly moving, market implied EPS is moving with it. This presents unique short-term opportunities to trade.

Ultimately, to make these trades, you need to have a model that allows you to run various scenarios and search for edges.... The problem with technicals is that the amount of false positives makes it far less useful to generate consistent pnl. The approach I follow is much more dynamic and allows you to utilize information more successfully. This is also the primary method used at hedge funds and active managers.
 
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longandshort said:
Both suck and both are lagging.

If you talk to traders at hedge funds (known as portfolio managers) they will rely heavily on fundamental equity research, positioning, and quantitative insights. The reality is that most trading won’t be round trips in the day, because the driver of small time intervals is flow and that market is dominated by ull-hft.

Finding a unique opportunity with the right risk characteristics opens up the world of leverage which is actually how most hedge funds and such build wealth. If you take $100 and lever it 10x to find a 5% return, you get 50% to your net equity. A strategy with a high sharpe ratio is more suited for leverage, which is why professionals care about that. If you can do this reasonably well, you will raise as much money from your friends and investors as possible (aka launch your own fund), and do this full time.
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Christ do not use leverage! And don't ask family members for money either!

I don't understand your question. TA should be used as goal posts to give you perspective.

It's not near as mystical as it sounds. TA is also always in the eye of the beholder so we see what we want to see and two people can see different things.

My holding time is about 3 months. I would consider myself a swing trader //

I use TA and I feel it helps. But I never start my research there.

Hedge Funds tend to cluster buy. They buy what the other guy is buying.

Markets move in cycles. That much is 100%.

Patterns in nature (spiral shell) Patterns in markets. TA Patterns...
 
So the question is- What are the most reliable patterns?

On balance volume can tell you a lot. Acc/ Dist, momentum//

In the other direction high vol helps detect a bottoming process

Breaking above a large amount of angry stock holders - is another tell.

Lets take an imagined Stk, a Biotech that IPO's at $17 last year and is now $10.

With a lot of fundi news coming.... In my mind those stuck at $17 they aint selling until the stock approaches that....

Right? So there you are combining Fundamental and TA in an interesting way.
 
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