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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA
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To: jt47319 who wrote (17324)6/12/2003 12:17:38 PM
From: J.T.  Read Replies (1) of 19219
 
In the end, Contrarian Sentiment is inexact and hardly
even qualifies as Technical Analysis.
Give me HARD EMPIRICAL evidence as to when one side's
supply of money is exhausted. That should be goal of
Contrarian Sentiment.

Agree.

The only way to utilize contrary sentiment to stack the
deck in your favor to make money is to monitor this data
as developed by a persistent trend over time.

Monitoring and writing down
Rydex total assets every day is the tool I use.

But that is only half the equation.

You must wait for a key reversal day against that dominant
primary trend.

That key reversal day must be measured in the form of what
buyers and sellers are DOING. - A market measurement of
supply and demand of stocks on that given day.

It is one clue to help identify when selling has exhausted
itself, when buyers are stepping up to the plate etc...

There are services out there that measure daily action of buyers and sellers.

When that key reversal day unfolds...

Contrary sentiment data must then corroborated by their
disbelief in that reversal day and further conviction that
the current dominant trend will continue.

Measuring daily Rydex total assets is the purest form of
measuring money in terms of what traders are DOING.

It is hot money. Money that is in play RIGHT NOW.

A second key reversal day must confirm the first reversal
day was no fluke. A backtest if you will.

And the same process identified above must be measured
critically. Detail analysis.

Contrary sentiment analysis is one tool in a tool box.

It is not the holy grail.

Neither is any other form of technical, fundamental,
elliott wave or any other market tool in a tool box
the holy grail.

Any tool must be confirmed by PRICE.

Indexes are a big picture snapshot of price.

Any form of analysis should be utilized only as a guide
to make money.

And is one trying to make money in the short, intermediate
or long term?

Day trade, swing trade, position trade? etc...

I believe position trading is your best chance for success
if utilizing only this tool.

If you only had this one tool (Contrary sentiment analysis)
in the tool box to use to make money, you would only get at
best a few buy or sell signals per year.

Contrary sentiment analysis works best only at extremes.

Not only do you need a key reversal day off the main trend
to identify how contrary sentiment can work to your
advantage, but you need subsequent confirmation to
validate it.

Contrary sentiment works best when disbelief persists
against subsequent reversal days against that dominant
current trend.

And measured by what traders and or investors are
DOING is more important to me than what others are SAYING.

Best, JT
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