Comments on: January 31, 2008 Stock Market Recap

By: Bill aka NO DooDahs!

Bill aka NO DooDahs! — Fri, 01 Feb 2008 15:04:00 +0000

Joe, trend lines ARE just a theoretical concept. Much like “earnings” under GAAP accrual accounting, or “free cash flow.”

Whether it’s a Technical, Fundamental, or FundaTechnical indicator, the keys are (1) finding one that is statistically predictive i.e. has an “edge,” and (2) tweaking the parameters so that it is productive in your style of trading, even if your style of trading resembles Buffett’s more than it does Simons’.

By: Dr. Duru

Dr. Duru — Fri, 01 Feb 2008 05:02:42 +0000

I know noone wants to hear it, but the homebuilders ETF, XHB, also broke its downtrend that was well-defined by the 50 DMA (one great example of how trendlines and moving averages do matter!)
Given how steep, persistent, and long this downtrend was, I think this break should not be taken lightly?

By: Michael

Michael — Fri, 01 Feb 2008 02:45:41 +0000

Joe,

I couldn’t say what % of traders trade solely on TA. But I’d bet that over 50% of the “big boys” have some TA as part of their over all strategy.

What you say about people using different setting & indicators is very true. The way I see it is that you just have to use *something* and use it consistently. I just find a set of indicators that I’m comfortable with. But all they ever do is give you a probability of being right — just like fundamental analysis.

By: Joe

Joe — Fri, 01 Feb 2008 02:38:10 +0000

Correct me if I’m wrong, but the only people who care if a trend line is broken are other traders who focus intently on charts. Trend lines are only a theoretical concepts. Same goes for the 10 day moving average… why should it matter any more than a 9 day or 11 day moving average? So if these concepts only dictate the actions of other chart-readers, my question is this, what percentage of traders do you think do this kind of technical chart analysis?

By: Michael

Michael — Fri, 01 Feb 2008 02:33:34 +0000

Jake,

Just after 10:30 I set alerts for QQQQ under 44 and another stock that I thought was about to roll over. The QQQQ alert fired but by the time I was able to react to it it had already bounced back above 44. I watched it chop around for abut another 30 minutes, saw the Russell 200 in the green, strength in financials and figured that we weren’t gonna roll over.

I couldn’t have predicted the surge of buying that came shortly thereafter though.

By: Jake

Jake — Fri, 01 Feb 2008 02:17:48 +0000

Mike,

Your comment this morning said you were looking for a short entry, as was I. I ended up getting in SDS then covering. I was using the opening gap (yesterday’s close)and the pivot point for entry. When/how did you know the market was going to blow right thru these levels? When would you have entered a short?