Larry: Have been a dyed (died?)-in-the-wool fundamentalist for the entirety of my limited time in this analysis business. A few years ago, after having had my extremities handed to me on a large plate, I decided that I'd better dig into "the charts", and did so. Came to the conclusion that it can be summed up in three words....trend, extrapolation and momentum. I did note that it was a heck of a lot less work than is required by fundamentals, which of course is a big plus. Also came to believe that to some extent, it works because a large number of people believe in it.... they all look at the same charts they all read the same books,and they all come to the same conclusions at the same time. All of this is well and good, but when everybody is doing the same thing in the stock market, it's usually the wrong thing to be doing, and as I noted earlier, all the world is a chartist these days. Also, when the fundamentals are coming apart at the seams, even as the charts suggest "ever upward", somebody is bound to be hurt, and it's usually the crowd.
I have great admiration for those who can successfully day trade, and you obviously are able to do this. I've tried, mostly unsuccessfully. Part of my personal problem is that I just can't bring myself to go long stocks that are fundamentally in Wonderland. That bias probably screws up T.A. trading (g)
I wander around S.I. quite a bit....to gather a "feel" for investor attitudes and confidence levels and of course to gather information. What I note is off-the-scale euphoria.....at a level I have never seen before, and virtually all of it based on "the charts".....at least as it is reflected in the amount of commentary that is devoted to charts vrs fundamentals of companies. To make a point, I suspect that chart following will take the majority of this market's participants over the edge of the cliff. I also suspect that there will be precious little warning provided by the charts when it happens.
No criticism intended in this comment, and at this point in time, I'm a lot poorer than a lot of the good chart players. (g) Still, it's a big worry.
Best, Earlie |
