RE: RE: RE: RE: RE: A word about Technicals....donHere's my take on technical analysis. Like any trick, not based on fundamentals, its only useful if you are the only one who knows about it.
Like a great tip on a horse race or knowledge of traffic jams - once everyone knows, any perceived advantage is lost.
Take a horse race - you get the skinny that the favorite has a sore leg, and the next favorite has a bad hoof. As long as you are the only one to know about it, everyone else is betting the favorites and you're betting heavily on the third and fourth longshots. You make out like a bandit. But as soon as the news is out, everyone is onto that game and the odds of you winning big go down.
Same with traffic snarls. If the highways is clogged because of an accident, you can take the backroad and it'll be fine. But once the radio announces the accident, everyone heads to the alternate route and it becomes more backed up than the highway.
Thats why - at this point, my opinion if that you're probably better off to go contrarian on the technical signals if they differ from your fundmanetal analysis . At one time, the techncial signals were probably driven by some fundamental changes in the market and/or stock. But these days the technical signals are normally triggered by other technical signals, the sheep jump in, and you get the wicked volatility that we see in the market. In the medium term though, the fundamentals will almost always win out.
Since I don't short term trade, I can't back up any of what I've said works in the market. However, consider this:
Suppose you wanted to make some money on the favorite horse, or get to work quickly - and you were someone who had some influence. Someone asks you who you're betting on, and you carefully plant the seed by saying you're not going to bet the favorite because something didn't seem quite right about the way he was moving in the morning, and you make a similar comment about the next favorite - finally stating that you think number 3 looks like the best value. Meanwhile you bet like hell on the favorite.
Or suppose you call into the radio station Annonymously and say that you are southbound on the highway and there is major congestion caused by an accident at X ramp, and it took you an hour to get through. Except that you're actually just getting ready to leave the house and by the time you get to the highway, traffic is sailing, because everyone else heard your report and took the sideroads.
Ever watch BNN? Those clowns will tell you they are buying something when they have already bought and are ready to sell. They'll tell you they are selling, when they've already sold and want to buy back. Take these clowns and the technicals, listen to what they say, and if you're DD tells you it doesn't make sense - do the opposite.