Mano and Thread
I'm going to try and respond to your post here but first let me lay out my "investing philosophy" so you know where I'm coming from... I'm a fundamental investor and technical trader...its that simple...
<<Even if one person decides to buy Seagate on a purely technical basis it has an impact on demand and supply for stock and its price.>>
No one said technical analysis has no validity (at least I didn't)...what I'm saying is this....
<< Fundamentals only set the overall trend. >>
ONLY set the overall trend?...come on....ONLY, thats a pretty big only and its not true....look at RMBS or MCHP today if you want to see selling (short term) on FUNDAMENTAL news....i.e. short term stock movements based on fundamental events...
<<And technicals, which monitor buying and selling activity, can signal changes in those trends.>>
So can fundamental ANALYSIS (and is even more effective if you're good at it because you get the information that DRIVES the technical changes ahead of the technicians)....if you were in tune to the HDD industry and talked to many of the companies involved (including other computer/tech related companies like the box makers) you would have known that the market was turning because many of the companies were confirming key fundamental changes such as increasing demand and significantly lower channel inventories....if you know the HDD sector you know the implications of these statements...what I'm saying is there were fundamental investors that took significant positions in the HDD market in Oct near the bottom because they knew the worm was turning....not that technical analysis doesn't matter but it isn't necessarily always best and statements saying fundamentals are ONLY this or ONLY that are pure BS....(thats my theme here if you miss it...)
<< Seagate price action before the results and William's price calls attest to that.>>
Yes they do and I agreed with his technical read (IMO the specialist walked this puppy down to the 50 DMA on no volume at the end of the year buying all the way down because he had "good knowledge" of the fundamental news to come). But again, it was a short term call he made there (and I know he made a long term call also but those are impossible to make
RE: The bond market analogy....it's meaningless here...IMO people make a huge mistake confusing markets with stocks and vice versa...and remember I don't argue the short term implications of technical influence outside of fundamental news...I actually trade quite a bit off it....
<< I consider myself more of a fundmentals type of person, but my results have certainly improved after I started paying attention to technicals.>>
We are the same here except I'll qualify mine by saying technicals have helped me become a much better trader and although they have had a small impact on my investing its minimal..
<< And it requires an ostrich-like mindset on my part to ignore the
technicals-based trading in the stock index futures that have a
significant and major impact on every stock I own. >>
I think you should insert the phrase "short term" between major and impact (thats where we appear to disagree, you think technicals drive stocks on the longer term and I disagree completely) because index futures don't control the overall trend of any issue....
<<In any event, I don't understand the acrimony on this thread the last few days. I'm at a loss to understand the questioning of technicals' raison d'etre on a thread explicitly designated as a technicals thread. Is there a gestapo out there holding fundamental feet to a techincal fire? I am sure nobody would appreciate my going over to the fundamental thread and asserting that all buying and selling are ultimately simple leaps of faith, so enough with heads and platters, gross and net blather already.>>
Heres what I see as your weakest point and tells me quite a bit about your mindset....I have been converted to the value of technical analysis in certain situations because people like you argued your case, I listened and did some reading/research and found there was some validity to it...for you to whine about anyone challenging the validity of your thoughts is mind boggling...don't you constantly challenge yourself, don't you like it when other people challenge your ideas...I do, I love it..it makes me rethink them and either affirm or alter them.... these boards aren't anyones private Idaho and they are best used to hear other points of view and stack them up against your own...they aren't a back slapping, coffee clatch, good ole boys club where the unspoken rule is everyone agree's with the party line.
<< I don't know if faith can move mountains but it certainly can move
stock prices. >>
If you insert short term I'll agree....but it sure is funny how fundamental events (earnings) turn faith into a lack thereof and "earnings" determine stock prices....(and if you don't believe it look at RMBS or CREE or MCHP today and explain the technicals that affected the relative price declines associated with each)
<< Earnings, or even the lack thereof, do not determine stock prices.>>
Pure baloney...earnings (and this includes the perception of earnings growth or lack thereof) ultimately determine stock price....show me ONE stock that went into an earnings announcement with a "positive chart pattern" didn't meet expectations, gave poor forward guidance and went up (kept that positive pattern alive)...just ONE stock....
<<If that was all there was to it you would have a linear relationship
between the two. Relative perceptions of worth and value, risk and
stability, determine prices.>>
I never said thats all there is to it but ultimately earnings and the ability to grow those earnings will determine where the stock ends up in the market (understanding that the relative market will determine the extent of the gain or decline.... companies with good earnings AND growth will outperform)
<<Both are mumbo-jumbo meant to provide a rational framework for a
buy/sell/hold decision centred around projections and anticipations for the future.>>
I don't agree either is mumbo jumbo....good information and lots of hard work (fundamental analysis) will allow you to outperform and coupled with competant analysis of trading patterns (technical analysis) those returns will be even better.
<< A future which everybody is happy to admit they cannot predict.>>
I completely agree, but it's not about predicting because that point is mute...its about limiting risk by increasing knowledge...whether fundamental or technical....that allows your winners to swamp your losers and allows you to make $....something we all strive to accomplish.
As always, IMO and FWIW
Tim |
