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Strategies & Market Trends : Technical analysis for shorts & longs

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Nov 10 4:00 PM EST

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To: Brian Lempel who wrote (18029)	10/13/1998 10:58:00 PM
From: j g cordes	Read Replies (2) of 67839

Brian, admirable study.. but I'd like you to think about something before you dive into TA. Something that most TA people don't understand, even those well versed in various techniques. It has to do with the market itself. Its a jungle not a playing field. The market is a place to make money. Sounds simple right, you just find good companies and hang on tight. There are also ways to make lots of money betting against a company. Not only that, but they will sometimes intentionally try to drive a stock down. There are a variety of ways to play the full value of a stock using a smaller amount of money... these are generally called derivatives. Recently you must have read about Long Term Capital in that regard... no less than Allen Greenspan and the Treasury took serious notice also. TA tries both to normalize and put boundaries of reaction on price movement. When the price touches these lines or price, its a signal that (based on previous behavior) a period of greater probability and prediction has been crossed... or at least one that's better than a blind bet. The problem is that any predictability is eventually (and these days very quickly) taken advantage of in the opposite direction. For practical purposes this means that any time a really good indicator is discovered and used by a lot of people it becomes used by others in the opposite direction... sort of like you noticing that a rabbit always runs to the left when you jump for it, so one day you jump to the left and the rabbit runs right into your arms. Finding a rigorous TA indicator is not the point of TA. Finding the momentary TA indicator, the one that works when the rabbit jumps left.. that's the real trick. Hope this helps.. Jim

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