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Old 10-04-2018, 03:15 PM
 
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Quote:
Originally Posted by FREE866 View Post
lol
what exactly is one supposed to extrapolate from all this jargon?

Stocks are what a statistician would call "not serially correlated." Which means when a stock is heading in a particular direction, the odds are 50/50 the stock continues in that direction or reverses course.

Anyone can see what a stock has done. What we want to know is what a stock will do. But no one can. We can’t because despite what someone may have told you, no amount of charting tells us anything about what a stock will do other than the random occasion of unexpected luck.
lol the earth is flat too right
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Old 10-04-2018, 11:01 PM
 
12,022 posts, read 11,522,798 times
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Quote:
Originally Posted by FREE866 View Post
lol
what exactly is one supposed to extrapolate from all this jargon?

Stocks are what a statistician would call "not serially correlated." Which means when a stock is heading in a particular direction, the odds are 50/50 the stock continues in that direction or reverses course.

Anyone can see what a stock has done. What we want to know is what a stock will do. But no one can. We can’t because despite what someone may have told you, no amount of charting tells us anything about what a stock will do other than the random occasion of unexpected luck.
It means that there is a path that the price has followed due to the flow of money and the default interpretation is that the path will continue until the pattern is breached in a meaningful way.

channel definition

The slope of the channel determines the disposition: bullish, bearish, or range-bound.

I think the January high gets tested again. It's not much of a drop. The market stays within the channel. My own bias has been that the market will be held up until after the year end because of the seasonality, post-election bounce, and share buybacks in November.
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Old 10-05-2018, 09:54 AM
 
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Nasdaq indices and Russell breaking previous lows. The midcaps have actually broken below January's highs. Russell and Midcaps were up about 90 and 80 percent in 2+ years and due for 25-30 percent pullbacks;i.e., return about one-half to two-thirds of the gains that were made. Bonds and stocks selling off together as well.
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Old 10-05-2018, 12:06 PM
 
Location: moved
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Quote:
Originally Posted by lchoro View Post
It means that there is a path that the price has followed due to the flow of money and the default interpretation is that the path will continue until the pattern is breached in a meaningful way.
That's predicated on an idea analogous to investment-flows being like a large cargo ship... even if the ship's pilot detects some objective well in advance of the ship's current position, a steering-correction must be made now, because the ship has inertia. With the correction made, the lumbering vessel slowly begins to change course, and as it does so, a careful observer notices it. The observer, can then anticipate what the ship will do, without being psychic and having access to the pilot's thoughts, or without having insider information on the ship's objectives. If in a sufficiently light boat himself, the observer can act accordingly.

The flaw in this analogy is in the belief that the larger the metaphorical ship, the higher its metaphorical inertia. Instead, the pros can sell billions of shares (or perhaps buy and sell multiple times) faster than I could sell a single one. It's the observer who is actually in the ungainly, lumbering ship. And unlike with a real ship, the actual navigational objective isn't approached in smooth, deliberate trajectory. An initial course-correction would be revised, reversed, and resumed multiple times. The analogous ship's pilot is erratic and scatterbrained. From observing the analogous ship, however carefully, we obtain no information - none whatsoever! - to suggest what its eventual course will become. It is a mistake to even bother looking.
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Old 10-05-2018, 01:14 PM
 
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Quote:
Originally Posted by ohio_peasant View Post
That's predicated on an idea analogous to investment-flows being like a large cargo ship... even if the ship's pilot detects some objective well in advance of the ship's current position, a steering-correction must be made now, because the ship has inertia. With the correction made, the lumbering vessel slowly begins to change course, and as it does so, a careful observer notices it. The observer, can then anticipate what the ship will do, without being psychic and having access to the pilot's thoughts, or without having insider information on the ship's objectives. If in a sufficiently light boat himself, the observer can act accordingly.

The flaw in this analogy is in the belief that the larger the metaphorical ship, the higher its metaphorical inertia. Instead, the pros can sell billions of shares (or perhaps buy and sell multiple times) faster than I could sell a single one. It's the observer who is actually in the ungainly, lumbering ship. And unlike with a real ship, the actual navigational objective isn't approached in smooth, deliberate trajectory. An initial course-correction would be revised, reversed, and resumed multiple times. The analogous ship's pilot is erratic and scatterbrained. From observing the analogous ship, however carefully, we obtain no information - none whatsoever! - to suggest what its eventual course will become. It is a mistake to even bother looking.
No. It means market prices are affected by supply and demand which is the net flow of funds into the market. The flaw in your misrepresentation about statistics that prices have no meaning and therefore have no relationship to the next. It tries to portray market prices in the same manner as a coin flip or a dice roll. All it means is that information is not evenly distributed among all participants as in a casino, and some observers choose to ignore information and chalk it up to randomness.

Market is bouncing off the January high this afternoon. In a random market, markets would have no memory and would behave accordingly.

Last edited by lchoro; 10-05-2018 at 01:24 PM..
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Old 10-05-2018, 03:00 PM
 
Location: moved
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Yes. Thank you for that summary; I mean it sincerely. You’ve elegantly worded, the whole crux of the debate. Some people believe that past and present information about stock prices, contains at least probabilistically-sound knowledge about impending future movements. Others believe the negation of the above. I’m in the latter group.

The casino analogy is how many people view the stock market. I dissent. First, the expected value (expectation, in the sense of the first moment (integral) of the probability density function) in casino games is zero, or slightly negative. In the stock market, the expected value is strongly positive. Second, casino games often have strategy, offering an advantage to skilled players; the stock market, by my reckoning, offers no such advantage. Third, a casino player loses nothing, by sitting the game out, choosing not to play; whereas an investor who doesn’t invest, loses to inflation. Fourth, in a casino, there’s the house – which hosts the games – and the customers, who play against the house; whereas in the stock market, “the house” is on both sides of the bet, buying and selling… in other words, there is no “us vs. them”.

But where the stock market is very much casino-like, is that the landing of a ball in one spin of the roulette wheel, has zero bearing on the outcome of the subsequent spin. Prices may have a meaning in terms of what is or is no perceived to be a good value, but that meaning is not conveyed into what people actually do – or where the market actually goes. Why? Because over the short term, people are quite happy to buy overvalued stocks, or to sell undervalued ones. But over the long term, all fluctuations are filtered out, and the market just goes up. In the short term, we have no reckoning of what’s going to happen. In the long term, the outcome is already self-evident.
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Old 10-06-2018, 09:02 AM
 
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Quote:
Originally Posted by ohio_peasant View Post
The casino analogy is how many people view the stock market. I dissent. .
You're not allowed to count cards in blackjack and make an educated prediction as to what card is next and how it fits into your hand. That is probably the closest casino analogy. The casino is one operator. The market is a cartel of firms that dominate the activity on the exchanges. In the short term, the market is like a casino and you're playing against the casino operators. In the longer term, larger flows have a bigger influence.

You really can't have technical support and resistance as a viable concept if stock prices just acted randomly. It's been shown repeatedly to have an influence on price movement.

Last edited by lchoro; 10-06-2018 at 09:12 AM..
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Old 10-08-2018, 07:06 AM
 
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There is almost 800 billion dollars in new treasury supply.

https://www.breakingviews.com/consid...GjuQjw.twitter

It is spread out over six months and roughly matches the amount of debt issued in late January through March when the debt ceiling was raised. QE is running at about 55 to 95 billion dollars per month, probably enough to absorb the supply in Japan and Europe at the low end but still not enough to absorb the US supply at the higher end of the range. About a third of the debt has already been issued and been absorbed by the liquidity in the system without much impact. Last time this occurred, the market sold off before entering a period of favorable demand-supply where there was 90 billion dollars of debt being paid down by the Treasury and the stock market rallied.
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Old 10-08-2018, 07:34 AM
 
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China processing economic news with a 5% sell off so far--
Various reasons including the lowering of banks' reserve requirements
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Old 10-08-2018, 08:55 AM
 
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Their central bank is draining liquidity from the banking system, and has been for awhile.

rates are rising
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