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Strategies & Market Trends : TA Science Projects & Experimental Indicators -- Ignore unavailable to you. Want to Upgrade?

To: Smooth Drive who wrote (188)	6/10/1998 9:58:00 PM
From: ftth	Read Replies (1) \| Respond to of 237

[TA QUOTE OF THE DAY] Hi Eric, thanks for the link. I'm familiar with Ralph Bloch and am impressed with his record and methods. Here's a passage from Bloch; the part in bold is an important distinction that most people don't make: Technical analysis, in my opinion, is a reflection of people's perception, of what they think the fundamentals are, of the market in general, or an individual stock, when they finally put their money where their mouths are. And that's all the chart is. So if I find chart X attractive, what I want to do is get another opinion. I track down what a fundamentalist or another brokerage firm might think of the stock. If I get a confirming fundamental opinion, obviously that's no guarantee of success, but I feel I have improved my odds because at least I have a pragmatic understanding that the chart looks good, the supply and demand factors are solid and at least one or two guys ' opinion that the fundamentals there are pretty solid. So I've improved my odds if I use the two disciplines. To play the game of "I don't even want to know the name of the stock, just show me the chart"- that's fine and wonderful and I can play that game with every other technician, but this is the real world and people don't like to function with that kind of drama. So I feel there's a slight edge if you combine the two disciplines. --Ralph Bloch

To: Smooth Drive who wrote (188)	6/10/1998 11:41:00 PM
From: ftth	Respond to of 237

As far as experimenting with Bloch's two favorite indicators, he doesn't give enough information. Divergence analysis means different things to different people, and he doesn't say "divergence between what" either. Put-call ratio is also too vague to say. He does say specifically OEX, so that narrows it down some, but there are a zillion different ways of using put and call information to form ratios. Can't say that I've tested, or even looked at, the entire zillion, but one that made sense to me was Bollinger's use of CBOE total put volume. He uses the ratio of today's put volume to today's 10 day MA as the signal. He found it only useful for calling bottoms, and couldn't find a similarly successful ratio for calling tops. Nope, same setup except using call volume doesn't work for tops. As well, I don't believe any put-call indicator that worked well 10 years ago works well today. Total volume has increase dramatically and average experience level of participants has gone down. The public bias toward "bullish or nothing" gives call volume a different bias than puts, so ratios that were tweeked 10 years ago need revision. It seems these days, the average joe-market-participant is more likely to buy naked calls on their favorite internet "company" than to sell short "because short selling is too risky" Stocks never go down very long! Naked calls are a no-brainer! I actually heard that over the wall at work a while back. The truly scary thing is they made a killing on this one. Confidence is high so they'll bet even more on the next one. Eventually, they'll get their head handed to them by the market's evil twin. dh