The Stock Market

[jcon]

Well said Badge.

From my viewpoint - there is a longer term trendline - which most people will never be able to discern.

There is oscillation along this trendline which most experienced traders use to trade

And then - there is "noise" which inexperienced (or would be) traders "bemoan" as caused by "manipulators" or News on CNBC, Bloomberg or whatever.

Can you elaborate please, Parvis? Is there a name/theory behind this "oscillation?"

[Parvis]

Can you elaborate please, Parvis? Is there a name/theory behind this "oscillation?"

How about just telling you ahead of time when this "oscillation" occurs - you MAY be able to figure out exactly what I am doing.

Even this sometimes becomes "complicated" - because very often - these "oscillating cycles" can be very rapid - but still "predictable" for someone "trading" full time.

For instance at this point: Thursday I expected a down turn of US Stockmarket starting on Friday - to continue Monday. Friday at the end I see a potential reversal to the upside starting Monday - but yet to be confirmed. In other words while the Market appears to start higher from the outset Monday - there will be a lower low than Friday before Market can/will change "oscillating cycle" to higher. Whether this reversal will actually occur - I do not know at this point - it needs to be "confirmed" - perhaps only 2-4 hours before reversal occurs. Should this "oscillating reversal" actually occur - it very likely will turn out to be a "breakout" to the upside.

From a "pattern standpoint" we appear to be creating a H/S pattern (pointing down) - however - these patterns also very often turn out to be "consolidations" rather than "reversals". During the development of these patterns - direction of "oscillating cycles" change rapidly. But from a traders viewpoint - that's opportunity.

Did I sound "confusing enough"?

Edited May 3, 2010 by Parvis

[lannarebirth]

Can you elaborate please, Parvis? Is there a name/theory behind this "oscillation?"

How about just telling you ahead of time when this "oscillation" occurs - you MAY be able to figure out exactly what I am doing.

Even this sometimes becomes "complicated" - because very often - these "oscillating cycles" can be very rapid - but still "predictable" for someone "trading" full time.

For instance at this point: Thursday I expected a down turn of US Stockmarket starting on Friday - to continue Monday. Friday at the end I see a potential reversal to the upside starting Monday - but yet to be confirmed. In other words while the Market appears to start higher from the outset Monday - there will be a lower low than Friday before Market can/will change "oscillating cycle" to higher. Whether this reversal will actually occur - I do not know at this point - it needs to be "confirmed" - perhaps only 2-4 hours before reversal occurs. Should this "oscillating reversal" actually occur - it very likely will turn out to be a "breakout" to the upside.

From a "pattern standpoint" we appear to be creating a H/S pattern (pointing down) - however - these patterns also very often turn out to be "consolidations" rather than "reversals". During the development of these patterns - direction of "oscillating cycles" change rapidly. But from a traders viewpoint - that's opportunity.

Did I sound "confusing enough"?

The oscillations are indeed cycles, of which there are hundreds of varying duration. Rapid moves come when important cycle troughs and peaks align which tends to happen infrequently.

[midas]

'Noise' Midas.

Those are famous words, for any market participant, for hundreds of years, and they certainly wont be my last

I would suggest if you dont have any hands-on experience in financial markets your perhaps not in the best position to be offering views on them? If you simply have a keen interest in markets - as I suspect - then I would suggest you spend a few days reading the timeless and fabulous 'Reminiscences of a Stock Operator' by Edwin Lefevre, which is the biography of Jesse Livermore.

Human nature and market mechanics havent changed in the 100 years since it was penned

I probably only know a fraction of what you know but the reason I follow Wall street is

I am more interested in watching the degree to which people are now prepared to bend the

rules to continue make money rather than the actual movements of the actual markets themselves.

It will be interesting for me to see what if anything comes out of the criminal probe of GS.

I used to trade options in my spare time in Sydney and did very well pursuing the

movements of just one stock in great detail because it as excellent volatility. That was

Newscorp – until Murdoch transferred it over from the Sydney exchange to New York and

then the rules changed totally and I stopped.But we never heard about half the stuff in

those days that is going in the financial world today – mark to fantasy, bailouts,

fraud etc etc. If you are telling me that people can push to the limit and be

downright dishonest but the “ markets “ just keep “oscillating “ as Parvis said,

then I will never understand the new rules and I am not particularly interested in learning them either.

But my question is are you and Parvis saying that if there was for example a pre- emptive strike by

Israel on Iran followed by pandemonium in countries like Pakistan, Syria, Lebanon etc and the

price of oil absolutely went to the moon, that the “ oscillations “ referred to will still remain very predictably

within pre-determined boundaries ?

[Parvis]

Exactly midas - these potential "pre-emptive strikes" etc - will only be "noise" to the Market.

As "Iannarebirth" indicates these "oscillation" are indeed "cycles". I call them "oscillation" essentially because of a law in Physics "Volatile debris oscillates along the main trend and CAN change the direction of the trend".

However, these oscillations or cycles I make reference to are typically several days long in the direction of the main trendline - and only become "short and volatile" when the "main trend line" is potentially changing - as is the case at present. I would like to emphasize "potentially" and not necessarily - because a reversal and a consolidation can - very often - look identical to the "casual observer".

To my knowledge - there are no new rules the - "laws of Physics" as the "laws of Market behaviour" have existed since the beginning of time.

Edited May 3, 2010 by Parvis

[Gambles]

Exactly midas - these potential "pre-emptive strikes" etc - will only be "noise" to the Market.

As "Iannarebirth" indicates these "oscillation" are indeed "cycles". I call them "oscillation" essentially because of a law in Physics "Volatile debris oscillates along the main trend and CAN change the direction of the trend".

However, these oscillations or cycles I make reference to are typically several days long in the direction of the main trendline - and only become "short and volatile" when the "main trend line" is potentially changing - as is the case at present. I would like to emphasize "potentially" and not necessarily - because a reversal and a consolidation can - very often - look identical to the "casual observer".

To my knowledge - there are no new rules the - "laws of Physics" as the "laws of Market behaviour" have existed since the beginning of time.

Personally, signal generated trading is something that, in the hands of the right exponents, I've long advocated but it seems that there is a correlation between the quality of the results and the size, quality and ultimately cost of the Black Box

I thought that any wider attempt to relate the laws of physics to the stockmarket had died and been buried with LTCM or at the very least LTCM #2.....or rather I think that it should have....

[Parvis]

Well - LTCM has worked well for Buffet. Relating Physics to Markets has worked well for Soros. If "signals" are unsatisfatory because of cost - what do you suggest? Throwing Darts?

[Gambles]

I would suggest you spend a few days reading the timeless and fabulous 'Reminiscences of a Stock Operator' by Edwin Lefevre, which is the biography of Jesse Livermore.

Human nature and market mechanics havent changed in the 100 years since it was penned

Great book and the subject of a fantastic piece last year (or may have been in '08) by Tim Price as well as notable mentions recently by Marc Faber. A typical quotation is “Speculation in stocks will never disappear.”

Faber points out that the book may actually have been written by Livermore himself and also points to Richard Smitten's book on Livermore which I haven't read by contains the following -

“After several months of despair, Livermore finally summoned up the courage to analyze his behavior and to isolate what he’d done wrong. He finally had to confront the human side of his personality, his emotions and his feelings. . . . Why had he thrown all his market principles, his trading theories, his hardearned laws to the wind? His wild behavior had crashed him financially and spiritually. Why had he done it? He finally realized it was his vanity, his ego. . . . The outstanding success of making more than $1 million in one day had shaken him to his foundations. It was not that he could not deal with failure—he had been dealing with failure all his life—what he could not deal with was success.”

[Gambles]

Well - LTCM has worked well for Buffet. Relating Physics to Markets has worked well for Soros. If "signals" are unsatisfatory because of cost - what do you suggest? Throwing Darts?

Signals as a methodology are OK as a limited part of a balanced, diversified portfolio. The cost point being that I would go with and not fight against the Adams, Hardings and Luecks.

I prefer to use them.

LTCM & Buffet?? I thought that his only involvement was to run away fishing on a boat to avoid bailing out the fund?? 'Thousand years blow ups' happen every couple of years with blind devotion to models.

Fundamentals are ultimately more important to me than technicals - I'd say that technicals is actually closer to throwing darts - noting that leading darts players often have very successful track records for a period of time in their sport (FWIW in a former life I met John Lowe a few times)

In the best of all portfolios fundamentals and technicals co-exist but when they conflict then betting on the technicals tends to be picking up in the nickels.

IMHO.

Edited May 3, 2010 by Gambles

[Parvis]

I actually suspected you trade on fundamentals. Did I buy Citi at $1.20 on fundamentals - no. Did I buy BofA at $4.40 on fundamentals - no. Did I buy Apple at $27 some years ago on fundamentals - well - no.

We obviously have a difference of trading style, time horizon - and most likely typical "Instrument".

Edited May 3, 2010 by Parvis

[Gambles]

I actually suspected you trade on fundamentals. Did I buy Citi at $1.20 on fundamentals - no. Did I buy BofA at $4.40 on fundamentals - no. Did I buy Apple at $27 some years ago on fundamentals - well - no.

We obviously have a difference of trading style, time horizon - and most likely typical "Instrument".

Agreed and as they say horses for courses....each to their own and good luck with yours

cheers,

Paul

[midas]

I don't "predict" at all - I read "tea-leaves" as some might say.

Therefore - I do not project a month ahead (I could I just don't) - sometimes only 2-4 hours - but normally 2 days.

At this point - what will happen? By Monday we will have a substantial decline in progress.

Sounds about right.

If your kind of trading system is impervious to “ noise “, then what are the factors that contributed to the reversal last night which resulted in the opposite move to your forecast by quite a large margin ?

Edited May 4, 2010 by midas

[Parvis]

If you had read my post earlier in the day Monday - you would have seen that I had predicted the upmove Monday. But yes correct last Thursday I projected the decline Friday would continue on the downside Monday - but after the close Friday I had to change my mind - since the Market is always "boss".

Because of the fast changing directions at this point in the Market the individual moves are difficult to project days ahead of time - only hours. Those individual moves are NOT noise. The eventual resolution I still see as down - however not quite yet.

Incidentally - this is not a "trading system" - but rather - as Soros put it "reading the mind of the Market".

Paul

Edited May 4, 2010 by Parvis

[midas]

If you had read my post earlier in the day Monday - you would have seen that I had predicted the upmove Monday. But yes correct last Thursday I projected the decline Friday would continue on the downside Monday - but after the close Friday I had to change my mind - since the Market is always "boss".

Because of the fast changing directions at this point in the Market the individual moves are difficult to project days ahead of time - only hours. Those individual moves are NOT noise. The eventual resolution I still see as down - however not quite yet.

Incidentally - this is not a "trading system" - but rather - as Soros put it "reading the mind of the Market".

Paul

In that case surely this methodology can be applied equally in a casino setting where you would be

"reading the mind of the House "?

[badge]

Exactly midas - these potential "pre-emptive strikes" etc - will only be "noise" to the Market.

As "Iannarebirth" indicates these "oscillation" are indeed "cycles". I call them "oscillation" essentially because of a law in Physics "Volatile debris oscillates along the main trend and CAN change the direction of the trend".

However, these oscillations or cycles I make reference to are typically several days long in the direction of the main trendline - and only become "short and volatile" when the "main trend line" is potentially changing - as is the case at present. I would like to emphasize "potentially" and not necessarily - because a reversal and a consolidation can - very often - look identical to the "casual observer".

To my knowledge - there are no new rules the - "laws of Physics" as the "laws of Market behaviour" have existed since the beginning of time.

Personally, signal generated trading is something that, in the hands of the right exponents, I've long advocated but it seems that there is a correlation between the quality of the results and the size, quality and ultimately cost of the Black Box

I thought that any wider attempt to relate the laws of physics to the stockmarket had died and been buried with LTCM or at the very least LTCM #2.....or rather I think that it should have....

It doesnt seem to me that Parvis is suggesting hes using any kind of system or black box? Or physics for that matter, just the ideals. But Im often wrong

Seems he believes hes perfected some hocus pocus related to cycles, which apparently is changing very fast at the moment:

If you had read my post earlier in the day Monday - you would have seen that I had predicted the upmove Monday. But yes correct last Thursday I projected the decline Friday would continue on the downside Monday - but after the close Friday I had to change my mind - since the Market is always "boss".

Because of the fast changing directions at this point in the Market the individual moves are difficult to project days ahead of time - only hours. Those individual moves are NOT noise. The eventual resolution I still see as down - however not quite yet.

Incidentally - this is not a "trading system" - but rather - as Soros put it "reading the mind of the Market".

Paul

So apparently its also a 'system' Soros is familar with.

Perhaps he'll 'show some working', perhaps not.

We all have our ways of limiting risks and squeezing gains

[badge]

I probably only know a fraction of what you know but the reason I follow Wall street is

I am more interested in watching the degree to which people are now prepared to bend the

rules to continue make money rather than the actual movements of the actual markets themselves.

It will be interesting for me to see what if anything comes out of the criminal probe of GS.

I used to trade options in my spare time in Sydney and did very well pursuing the

movements of just one stock in great detail because it as excellent volatility. That was

Newscorp – until Murdoch transferred it over from the Sydney exchange to New York and

then the rules changed totally and I stopped.But we never heard about half the stuff in

those days that is going in the financial world today – mark to fantasy, bailouts,

fraud etc etc. If you are telling me that people can push to the limit and be

downright dishonest but the " markets " just keep "oscillating " as Parvis said,

then I will never understand the new rules and I am not particularly interested in learning them either.

But my question is are you and Parvis saying that if there was for example a pre- emptive strike by

Israel on Iran followed by pandemonium in countries like Pakistan, Syria, Lebanon etc and the

price of oil absolutely went to the moon, that the " oscillations " referred to will still remain very predictably

within pre-determined boundaries ?

Oh make no mistake, people 'bending the rules' is'nt a new phenomenon.

HFT, program trading, algos etc are not bending the rules much; its not on par with insider trading for example, its essentially a way for the broker to 'clip' client orders, something thats been going on since markets began. If you dont like being clipped, become a member of the exchange yourself.

I couldnt comment on Parvis' oscillations.

My point has simply been newsbites bemoaning manipulation are 99% 'noise' and are not worth worrying about. If someone tries to really manipulate a market they'll fail. Infact any gov'mint body that ever tries to move a market fails so often its a buying/selling signal, e.g. BOJ - weaking JPY, SNB - weakening CHF, SEC/FSA - financial share short sale ban etc etc

Is there such a thing as the PPT? Probably. Was the equity markets collapse in '07-'09 'manipulation'? Of course not. Is the equity markets continued rise 'manipulation'? Of course not. Are Chinas official statistics reliable? As reliable as their toys/pet food/toothpaste etc.... Does any of this effect my trading in anyway? Nope.

[Parvis]

So apparently its also a 'system' Soros is familar with.

Perhaps he'll 'show some working', perhaps not.

We all have our ways of limiting risks and squeezing gains

Right - Badge - some "new hocus pocus" at work.

If you think purely logically about "short cycles" in general - or "oscillations" as I call it - as the Market makes a top - as it appears now - the Market goes sideways which indicates a "struggle" between buyers and sellers. If buyers are to be successful and the eventual "breakout" is to be on the upside sellers eventually need to subside.

Since those "cycles" are caused by buying and selling - they tend to be changing in direction rapidly when on the top - or in a consolidation. Yet - a top takes much more time to develop than a bottom (so does a consolidation).

My comments on "Physics" are purely for the purpose of illustration pointing out similarities in behaviour.

A suggestion to "midas" - take everything in this forum with a "grain of salt" - but think logically - there are some good points made - by some posters.

Edited May 4, 2010 by Parvis

[Naam]

To my knowledge - there are no new rules the - "laws of Physics" as the "laws of Market behaviour" have existed since the beginning of time.

as a physicist and investor i [not so] humbly beg to differ

[ExpatJ]

It was pretty much a no brainer predicting todays rally.

When PM announced his 'peace' proposal yesterday i knew the market would rally big time today. I chose to buy KBANK since its a solid, growth stock, and its up 8% since Friday:) The rest of my portfolio is shooting upwards today too:)

[Parvis]

To my knowledge - there are no new rules the - "laws of Physics" as the "laws of Market behaviour" have existed since the beginning of time.

as a physicist and investor i [not so] humbly beg to differ

At least Naam - you accept that there is no such thing as "IMHO" - no opinions are ever humble - just sometimes wrong - and sometimes not so wrong.

It appears we MAY have "similar backgrounds" - and even agree - despite my comment. But most people would not understand the difference - so it's "Nitpicking" as they say IMHO.

Weren't you the one who mentioned a town southwest of Munich - sometime ago? I also have "fond memories" from there.

[Parvis]

It was pretty much a no brainer predicting todays rally.

When PM announced his 'peace' proposal yesterday i knew the market would rally big time today. I chose to buy KBANK since its a solid, growth stock, and its up 8% since Friday:) The rest of my portfolio is shooting upwards today too:)

You are right - it was a "no-brainer" to predict Mondays rally on Wallstreet - ON FRIDAY AFTERNOON

Edited May 4, 2010 by Parvis

[Naam]

To my knowledge - there are no new rules the - "laws of Physics" as the "laws of Market behaviour" have existed since the beginning of time.

as a physicist and investor i [not so] humbly beg to differ

At least Naam - you accept that there is no such thing as "IMHO" - no opinions are ever humble - just sometimes wrong - and sometimes not so wrong.

It appears we MAY have "similar backgrounds" - and even agree - despite my comment. But most people would not understand the difference - so it's "Nitpicking" as they say IMHO.

Weren't you the one who mentioned a town southwest of Munich - sometime ago? I also have "fond memories" from there.

ahhhh.... Bavaria

[badge]

So apparently its also a 'system' Soros is familar with.

Perhaps he'll 'show some working', perhaps not.

We all have our ways of limiting risks and squeezing gains

Right - Badge - some "new hocus pocus" at work.

If you think purely logically about "short cycles" in general - or "oscillations" as I call it - as the Market makes a top - as it appears now - the Market goes sideways which indicates a "struggle" between buyers and sellers. If buyers are to be successful and the eventual "breakout" is to be on the upside sellers eventually need to subside.

Since those "cycles" are caused by buying and selling - they tend to be changing in direction rapidly when on the top - or in a consolidation. Yet - a top takes much more time to develop than a bottom (so does a consolidation).

My comments on "Physics" are purely for the purpose of illustration pointing out similarities in behaviour.

A suggestion to "midas" - take everything in this forum with a "grain of salt" - but think logically - there are some good points made - by some posters.

I've no idea what the point your trying to get across is?

Markets oscillate, between buyers and sellers; and when even, it goes sideways? When its sideways it oscillates faster??

Im sure it all makes sense to you. Bonne Chance

[Parvis]

I am not necessarily trying to get any idea accross - but typically "oscillation" refers to up and down movement along a trendline. "High oscillation (large differences)" typically indicates "uncertainty" - which occurs at the top - but also in a consolidation. A consolidation is essentially a "sideway movement" between defined upper and lower limits and the oscillation occurs between those upper and lower limits. The "frequency" of this oscillation often indicates at what point the "sideway movement" is nearing completion and a "breakout" may occur.

I am sure you are aware of that - maybe just trying to be "cute".

Yes Naam - perhaps you mentioned "Unterpfaffenhofen" as I recall. Memories of a "previous life".

Edited May 4, 2010 by Parvis

[midas]

I am not necessarily trying to get any idea accross - but typically "oscillation" refers to up and down movement along a trendline. "High oscillation (large differences)" typically indicates "uncertainty" - which occurs at the top - but also in a consolidation. A consolidation is essentially a "sideway movement" between defined upper and lower limits and the oscillation occurs between those upper and lower limits. The "frequency" of this oscillation often indicates at what point the "sideway movement" is nearing completion and a "breakout" may occur.

I am sure you are aware of that - maybe just trying to be "cute".

and you are saying fundamentals have no bearing whatsover on this ?

Ok What if there was a cyber terrorist attack then and the internet went down so people couldnt see their screens

I cant believe the oscillations would just keep going on in the same predictable pattern ?

[Parvis]

Ofcourse - "fundamentals" have a bearing - but how often does that happen? You don't really think funds manager etc will run to the phone to place an order every time they hear it "snows" or whatever - on Wallstreet - do you?

I never really said "oscillations are predictable" - but rather I said they are "readable" before it happens.

Edited May 4, 2010 by Parvis

[PCA]

we drunk, dont mess, mai chob, hoob toot

my GF dictated

[flying]

Ouch....Looks like the market is not buying the repair of Greece/Euro Debt Contagion

[Naam]

Ouch....Looks like the market is not buying the repair of Greece/Euro Debt Contagion

of course not. it's not the dough made available by the €U for repairs but the willingness of the greek citizens to accept the necessary reforms to repair the situation. where is the acceptance? i don't see any acceptance but Molotov-cocktails thrown at policemen! how long will Papandreou's government last?

[flying]

Ouch....Looks like the market is not buying the repair of Greece/Euro Debt Contagion

of course not. it's not the dough made available by the €U for repairs but the willingness of the greek citizens to accept the necessary reforms to repair the situation. where is the acceptance? i don't see any acceptance but Molotov-cocktails thrown at policemen! how long will Papandreou's government last?

Your right of course & it did make me smile... That Molotov cocktail remark.

I was just watching a few clips & pics of that action over there.

Rowdy bunch them Greeks eh?

So what is it they want? Repair with no reform? Repair with no increase in taxes to pay for it?

Do they feel like some Americans that they should not be given a bill for that which they *feel* they did not create?

Just curious as I have not really delved into it. Too much to depress us right here at home

Edited May 5, 2010 by flying