Sigmund:
I couldn't disagree with you more. In finding, evaluating, and investing in stocks, I put much more weight on fundamental analysis than I do with technical analysis. For now, this is partly because my understanding of technical analysis is in its early stages as I try to read more and more on the subject. I can tell you from first hand experience that TA from a statistical point of view, works enough of the time to be valuable and profitable if you know what you're doing.
>>I was told that some time ago Merrill Lynch did a study to see if there were different length of moving averages which had different predictive powers.<<
There's your problem. MAs are not supposed to be used as a means of predicting anything.
To simply dismiss a relatively small aspect of TA on the basis of a report that you have neither refreneced with dates or guidelines of what actually was tested is premature in my opinion. I for one appreciate all posters that from time to time give their "take" on how THQI's stock is doing from a technical point of view.
Whether TA works because, as you asset, it is a self-fulfilling prophecy or because it actually does graphically display the psychology of masses in predictable ways (as asserted by Dr. Elder), is beside the point. The fact that it does work is the underlying assumption most here will adhere to.
>>But as far as I know, people can't make
money trading moving averages. <<
Using nothing but MAs is probably very hard to make money with. I know the LizzrdKing area on SI has a lot to do with MAs. Using them alone probably won't yield great results. However, they can tell you when a stock is weak or strong with divergances or other means. Todd was just giving us a "FYI" and looking at THQI's main MAs (I use 25, 50, and 100) reveals a remarkable correlation with the short and intermediate rise and fall of the stock price. As for the long term, that's what all the Fundamental Analysis is for <g>.
Conservatively Yours,
Raymond J. Norris |
