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Strategies & Market Trends : Technical Analysis - Beginners -- Ignore unavailable to you. Want to Upgrade?

To: Richard Estes who wrote (7924)	1/21/1998 4:47:00 PM
From: Robert Graham	Read Replies (1) \| Respond to of 12039

Thankyou for replying to my question about the Fib book. I will take a closer look at this book. I find that Fib is considered as an "extra" chapter in the few books that I have come across, and not as a key technique for an approach to TA. I agree that market sentiment shows up in the price movement. I see this is different ways: RS and how market movements impact the price action of the stock, how strong the trend is (momentum and distance from significant MA), and so forth. I think the RS of a stock and its associated stock index, and intermarket analysis such as between a stock index and bonds can provide a good part of the picture on sentiment. Perhaps a few "extras" can be added to this formula like noting if the traders are purchasing on the market dips, and how are the traders responding to earnings surprises. I do not know if something like the put to call ratio would be worth tracking. Some tehcnicians use this approach like Zweig and Williams and I think even Pring tracks something like this for the sentiment part of his tehnical approach. However, indicators like this are not very timely, even though they have some relevance at their extremes. I think this type of analysis would be non-essential but useful supporting material for the technician. It is interesting to see all the effort that is being placed in an effort to either make a "system" very good at predicting the market (an impossibility IMO) to trying to find way to improve the predition of the next major stock market trend change. As long as the technician is closely following the markets and some key individual stocks, experience will be able to help identify these market turning points. As you say, all this shows up in the price of the stock. The attempts at extended analysis is an attempt to put a larger time buffer between the present and the time a market correction takes place. Like I have said recently on another thread, I see that TA leans more to the side of price "tracking" than price "prediction". Of course there is the FIb, Gann, and Elliot methods that specifically adress price prediction. A review I have read on the Chande book give it a glowing report on covering in very understandable terms what goes into developing a system that works. This includes the pitfalls of analyzing testing results and the concept of a robust system that handles a changing market. I also understand thathe addresses the quality of data that is used for testing a system. Is all of this true from what you have found? Bob Graham