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Strategies & Market Trends : The 56 Point TA; Charts With an Attitude -- Ignore unavailable to you. Want to Upgrade?

To: Doug R who wrote (27495)	3/19/1999 3:22:00 AM
From: Doug R	Read Replies (1) \| Respond to of 79233

One more note to my previous post; Some TA types might say that my approach would result in what is known as "analysis paralysis". What I have done with all those indicators and parameter sets is to "blend" (hence the occasional references to "the blender") a dynamic approach which keys off intermediate to long term technical strength across the board in order to catch short term timing factors that increases the probability of participating in a relatively rapid price increase. I like to use a horse race analogy to describe the idea; At the track (I used to never gamble but since the St Louis seminar at Harrah's I can only say now that I "rarely" gamble. Or maybe I should say that one night, I gambled) a bet must be placed on a horse before the race begins. With TA, you don't have to place a "bet" until you see that the horse you like is a furlong out in front with just a pole or two to go. It's true that any such horse can break a leg before it reaches the finish line but the probability of its winning is greatly increased. If you think about it, there would probably be a very few percentage of races in which a horse would be a clear winner down the stretch. If you only attended one track (which is akin to only being able to track so much of the market over any given time period) it would take a good bit of patience to see that type of race. Photo finishes are exciting but add a lot of risk. It's the patience factor that is most difficult. If the situation at the track were the same as the situation involved with the current state of TA, most races would not see any "betting". Some may notice that there are actually relatively few hits on the scans developed here using my overall thesis of technical strength across the board with short term timing factors as icing on the scan. I like to think that with so many stocks doing little or nothing most of the time, it's better to use paralysis as a way to narrow the field to a great extent. If the scans turn up nothing...wait...paralyzed. The power of technology now allows for a huge reduction in the patience factor but it's still the most important aspect of the market: the patience to wait out a temporary setback, the patience to hold after an initial run as the stock bases before the next run, the patience to wait for just the right horse, the patience to take a loss knowing that better opportunities to recoup will present themselves rather than holding a long term non-performer, the patience to monitor the market daily (essential when trading individual stocks). This power of technology now available to a wide (and ever widening) population of investors and traders has very likely caused the perceived divergence between the new market highs and the advance/decline ratios. Now that people have better tools to time the market AND individual stocks, it only makes sense that there will be fewer stocks running at any given time. This technological advance should be seen as actually increasing the efficiency of the market. It's also the same technology that is increasing efficiency across the board, in all sectors of the economy. The efficiency trend in the stock market and the same in the economy cross-verify each other IMO. Over the long term, just as many stocks will run but the immediate focus will fall upon those that technically DESERVE to run NOW. With the technical tools available, why buy a stock that's not going NOW??? It's still not an easy proposition to find those that are about to heat up but with the proper tools it's not extremely difficult either. This is why there has been non-performance in the "value" based arena of investing for the last few years. 20 yrs. ago, buying a "value" stock was a shrewd move. Now it's just dumb since shrewd takes a lot less time than it used to. Also, I developed most of what I do as the transition from buying value to buying "now" was taking place so if I miss on some of the low price "obvious" stocks like CYTR, well, that's why. I still have a bit of that value thing (value as based on long term technical stuff) kicking around...which I don't really take to be a negative...it's just another piece of the puzzle. Although it's getting less significant, I feel it's still required for proper perspective in the very long term. Well, that takes care of ......what? Doug R