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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: eichler who wrote (61637)	10/31/2000 1:19:30 PM
From: ahhaha	Read Replies (4) \| Respond to of 99985

Charts are always a posteriori so in the final analysis they don't tell you what you need to know. You need to know what price is likely to do. Stock charts don't do that although the chart reading community has somehow got itself hypnotized into believing so in spite of every individual's real time performance from relying on price pattern interpretation. What you need to know is the internal state of the market. Price action reflects that state after the fact. What you say is moot. The scoreboard will only tell you what you should have done. You claim that stock charts reflect all market forces. If stock charts did that, how could you expect to benefit? You have to anticipate a force that is coming that isn't in the charts in order to take advantage of the presumed result of that force. That's what beating the market is. Of course, you could believe that charts reflect what is coming in the future. This is the "discounting theory" of the stock market. The stock market never discounts the future. It reflects the present. Let me explain. People see the market move. Then later they find a reason for why it moved. They conclude that the market move was a discounting at the margin of the possibility that that event could occur, but this conclusion is synthetic. It's a posteriori just like stock charts, and just like stock charts you will never know what the stock market is counting, discounting, re-counting, or re-discounting and neither will you know what the stock charts mean. The only thing you can accurately say is that price randomly walks around earnings expectations. At times it seems the fluctuations away from those expectations are so great that you are lead to think the expectations have changed. You never know that either. The universal experience is that when you rely on stock charts, you lose. The rate of loss is a negative expected return of about -10%. You're better off in Lost Beggas, or better yet, with a coin toss.