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Gold/Mining/Energy : Barrick Gold (ABX) -- Ignore unavailable to you. Want to Upgrade?

To: Zardoz who wrote (835)	11/21/1998 6:28:00 PM
From: ahhaha	Read Replies (2) \| Respond to of 3558

As the academics have shown price does not predict price and activity level is meaningless. The only way to get an idea of demand /supply states is through the analysis of every trade, what is sometimes called tick volume analysis. In this analysis one is interested in determining the state, and the persistence of state. The primary state variable to be measured is elasticity with respect to marginal demand or supply. When this state persists relative to other stocks, this stock may have a higher persistent elasticity state, and so it is a better gamble. No time series data is of any value in predicting future value. That's true also of persistence of stochastic states. The state can change on a dime. However, it is infinitely superior to all the other TA techniques which try to extract information out of a random process. There is no information there. It's random, so it's noise. I looked at your OBV chart. It's the old primitive way of computing OBV. I can give you a much better way to do it and after you examine it conceptually, you'll see that it is superior. When you run your other stocks through it, you'll find less whipsaw city, but it is still the old TA stuff which I abandoned in 1975. At least OBV tells you that when price changes people start doing something, i.e., there's interest in the stock subtly in a given direction. All other TA is junk and will ruin you. It's all predicated on the assumption that price predicts price which is elementarily false. The T-Bond yield is starting to sag, so it wouldn't be surprising to see it and ABX go down for a test of the 9/1/98 bottom. It could do that with a net inflow of money, even with a net positive tick volume. State doesn't predict what fools will do, it only measures accurately what the wise persist to do. This was especially evident in the '87 crash. On the day the DOW fell 500 points there was a net positive tick volume. Price can drop 30% in one day on 100 shares. That's essentially what happened when the noble specialists who had come to love the CBOE and index futures computer connection, suddenly walked off the floor and let stocks seek their own equilibrium when they became fearful of the computer monster with which they had fallen in love. They can't be blamed too much with LTCM types cooking action for synthetic transactions of the portfolio insurance variety.