Massive stock rally today (3/10/2009)

[halik]

Everything in that box is bullshit, especially if it mentions "chartists" or "chart pros".

 

[Slew Foot]

The funny part is the main headline that says credit is getting tighter.

 

[Special K]

Originally posted by: halik
Everything in that box is bullshit, especially if it mentions "chartists" or "chart pros".

I have read that there is absolutely no academic evidence supporting technical analysis.

That said, I see numerous posts in the stock market thread explaining decisions made based on technical principles.

 

[sactoking]

Originally posted by: Special K

Originally posted by: halik
Everything in that box is bullshit, especially if it mentions "chartists" or "chart pros".

I have read that there is absolutely no academic evidence supporting technical analysis.

That said, I see numerous posts in the stock market thread explaining decisions made based on technical principles.

Which is why I, personally, never go into that thread. It's too full of laughable fail.

 

[The-Noid]

http://en.wikipedia.org/wiki/E...ient_market_hypothesis

 

[halik]

Originally posted by: Special K

Originally posted by: halik
Everything in that box is bullshit, especially if it mentions "chartists" or "chart pros".

I have read that there is absolutely no academic evidence supporting technical analysis.

That said, I see numerous posts in the stock market thread explaining decisions made based on technical principles.

All my finance profs always regarded that as pure bullshit. I've seen papers that show statistically sig. alpha (95 or 99% a>0...can't remember offhand) with genetic algos using technical indicators to buy and sell, but there's no evidence showing any sort of fixed technical analysis strategy creating a positve alpha.

On the latter note, this is how i explain that phenomenon:
if I have 100 people roll a 6sided die 100 times, the winners will have long streaks of rolling 6s. The fact that they were able to roll many 6s in row isn't a testament to their rolling skill, but merely a demonstration that they were the luckiest of all the 100 people and won the competition.

The fact that some people made money trading on some technical indicator isn't a testament to their skill, but rather that they were the luckiest of the bunch. Think about the CNBC portfolio challenge... do you think the winners were the most skilled of all the "investors" playing?

(I stole the above from Samuelson's research on efficient markets I think)

 

[theeedude]

So CEO of an insolvent bank says it's "profitable" and the market rallies 5% ?
Bear market rally, which is not to say some things like oil/commodities are not oversold.

 

[Hacp]

Wait a month. It'll be at 600(S&P I'm talking about).

 

[Special K]

Originally posted by: halik

Originally posted by: Special K

Originally posted by: halik
Everything in that box is bullshit, especially if it mentions "chartists" or "chart pros".

I have read that there is absolutely no academic evidence supporting technical analysis.

That said, I see numerous posts in the stock market thread explaining decisions made based on technical principles.

All my finance profs always regarded that as pure bullshit. I've seen papers that show statistically sig. alpha (95 or 99% a>0...can't remember offhand) with genetic algos using technical indicators to buy and sell, but there's no evidence showing any sort of fixed technical analysis strategy creating a positve alpha.

On the latter note, this is how i explain that phenomenon:
if I have 100 people roll a 6sided die 100 times, the winners will have long streaks of rolling 6s. The fact that they were able to roll many 6s in row isn't a testament to their rolling skill, but merely a demonstration that they were the luckiest of all the 100 people and won the competition.

The fact that some people made money trading on some technical indicator isn't a testament to their skill, but rather that they were the luckiest of the bunch. Think about the CNBC portfolio challenge... do you think the winners were the most skilled of all the "investors" playing?

(I stole the above from Samuelson's research on efficient markets I think)

Agreed, although I would take your analogy a step further and include the majority of professional fund managers in that group as well.

 

[bobsmith1492]

Woo hoo, it's where it was 5 days ago.

 

[geoffry]

Originally posted by: dullard
Here are the DJIA's biggest % gain days:

#1) March 1933: +15.3% in a day. Yes, this was near the all time bottom and was near the start of a new rally. But the DJIA stagnated in 1933 and 1934 and didn't really get out of its funk until 1942.
#2) Oct 1931: +14.9%. This was halfway through the 1929-1933 crash.
#3) Oct 1929: +12.3%. This was right at the start of the depression stock market crash.
#4) Sept 1932: +11.4%. This was still in the 1929-1933 crash.
#5) Oct 2008: +11.1%. Well, you know what happened since then.
#6) Oct 2008: +10.9%. Well, you know what happened since then.
#7) Oct 1987: +10.2%. The 1980s were a decent decade. But 1987 was flat. It started and ended at about the same point.
#8) Aug 1932: +9.5%. This was near the end of the fall.
#9) Feb 1932: +9.5%. This was still in the 1929-1933 crash.
#10-#13) All were in the 1929-1933 crash.
#15-#16) All were in the 1929-1933 crash.
#18-#20) All were in the 1929-1933 crash.

Today's gain of 5.8% was a bit less than the 6.8% gain of #20.

With the possible exception of #1 and #7, all big gains were in the crash phase. Stocks don't rally big during bull markets. Stocks usually rally big when the stock market is still falling.

Actually, I believe that 1987 day was the day after Black Monday...which was one helluva crash.

 

[LegendKiller]

Originally posted by: halik

Originally posted by: Special K

Originally posted by: halik
Everything in that box is bullshit, especially if it mentions "chartists" or "chart pros".

I have read that there is absolutely no academic evidence supporting technical analysis.

That said, I see numerous posts in the stock market thread explaining decisions made based on technical principles.

All my finance profs always regarded that as pure bullshit. I've seen papers that show statistically sig. alpha (95 or 99% a>0...can't remember offhand) with genetic algos using technical indicators to buy and sell, but there's no evidence showing any sort of fixed technical analysis strategy creating a positve alpha.

On the latter note, this is how i explain that phenomenon:
if I have 100 people roll a 6sided die 100 times, the winners will have long streaks of rolling 6s. The fact that they were able to roll many 6s in row isn't a testament to their rolling skill, but merely a demonstration that they were the luckiest of all the 100 people and won the competition.

The fact that some people made money trading on some technical indicator isn't a testament to their skill, but rather that they were the luckiest of the bunch. Think about the CNBC portfolio challenge... do you think the winners were the most skilled of all the "investors" playing?

(I stole the above from Samuelson's research on efficient markets I think)

I've *never* read one piece of statistically accurate data show that technical analysis works as the sole reason for gains.

 

[LegendKiller]

Originally posted by: senseamp
So CEO of an insolvent bank says it's "profitable" and the market rallies 5% ?
Bear market rally, which is not to say some things like oil/commodities are not oversold.

It wasn't just that. Bringing back the uptick rule and reconsideration of FAS157 are pretty huge items.

 

[WHAMPOM]

Originally posted by: Skoorb
March10_2009.jpg

I highlighted the real doozies here. Granted, the articles are more than just the title, but I found the titles fairly representative of the highlights.

Stock Picks for 'Dow 8000' Bounce
BlackRock's Doll: Don't Miss Rare Buying Opportunity
Hirschhorn: 5 Reasons to Get Back Into the Market
Global Pros Say: Market to Bottom This Quarter

We've seen a lot of bottom calling and bullishness all the way down. I don't buy it. I do, for once, hope I'm wrong. Anyhow, I'm marking in my calendar to bump this!

Or a rally just before the next dive?

 

[WHAMPOM]

Originally posted by: miketheidiot
odds are it will go down a bit more, probably into the mid-5k's

I personally think we are nearing the end, with job losses slowing toward the end of the year. this quarter will probably be another bad one though.

How about the mid-3k's before the end of the year?

 

[imported_Lothar]

Originally posted by: Special K

Originally posted by: halik
Everything in that box is bullshit, especially if it mentions "chartists" or "chart pros".

I have read that there is absolutely no academic evidence supporting technical analysis.

That said, I see numerous posts in the stock market thread explaining decisions made based on technical principles.

"Charts are great for predicting the past."
-Peter Lynch

"I realized technical analysis didn't work when I turned the charts upside down and didn't get a different answer...If past history was all there was to the game, the richest people would be librarians."
-Warren Buffett

I'm more inclined to listen to them than some idiot bubblehead on CNBC spoting technical analysis data.
All this talk about "resistance", "support", etc... is moronic. I've seen no such evidence that their predictions always turn out to be correct.

 

[LegendKiller]

Originally posted by: Lothar

Originally posted by: Special K

Originally posted by: halik
Everything in that box is bullshit, especially if it mentions "chartists" or "chart pros".

I have read that there is absolutely no academic evidence supporting technical analysis.

That said, I see numerous posts in the stock market thread explaining decisions made based on technical principles.

"Charts are great for predicting the past."
-Peter Lynch

"I realized technical analysis didn't work when I turned the charts upside down and didn't get a different answer...If past history was all there was to the game, the richest people would be librarians."
-Warren Buffett

I'm more inclined to listen to them than some idiot bubblehead on CNBC spoting technical analysis data.
All this talk about "resistance", "support", etc... is moronic. I've seen no such evidence that their predictions always turn out to be correct.

Agree 100%. You haven't seen it because it doesn't exist.

 

[ultimatebob]

Google the term "Dead Cat Bounce"... then you'll know my opinion on this co-called "rally"

 

[StageLeft]

Originally posted by: LegendKiller

Originally posted by: Lothar

Originally posted by: Special K

Originally posted by: halik
Everything in that box is bullshit, especially if it mentions "chartists" or "chart pros".

I have read that there is absolutely no academic evidence supporting technical analysis.

That said, I see numerous posts in the stock market thread explaining decisions made based on technical principles.

"Charts are great for predicting the past."
-Peter Lynch

"I realized technical analysis didn't work when I turned the charts upside down and didn't get a different answer...If past history was all there was to the game, the richest people would be librarians."
-Warren Buffett

I'm more inclined to listen to them than some idiot bubblehead on CNBC spoting technical analysis data.
All this talk about "resistance", "support", etc... is moronic. I've seen no such evidence that their predictions always turn out to be correct.

Agree 100%. You haven't seen it because it doesn't exist.

So you guys are saying this is bullsh*t? It sure reads like it. Lots of pretty terms and numbers, though

 

[dullard]

Originally posted by: geoffry
Actually, I believe that 1987 day was the day after Black Monday...which was one helluva crash.

Good catch! I rushed my post and basically skipped over the details of that event. As you said, #7 was the day after Black Monday. The market kept crashing for about a month after #7. So, it too followed the trend of being a big gain in a bear market.

 

[The-Noid]

Every rally or beginning of a bull market feels and looks different. Having said that seeing you guys believe it is BS makes me think more and more that this could be a real bottom. Generally bottoms are formed when retail investors believe that the market will keep going down as retail investors generally are not the ones to trust.

I changed around my book at the open to be the most neutral (from severe short bias) it has been in a few months and sold Nordstroms at 14, bought limit 12 at some point on Friday. Having said that my book is still as small as it has been in a couple of years as the European money center banks are insolvent and there isn't enough capital in the French government to save SocGen and definitely not enough Swiss capital to save UBS (unless they start taxing their citizens).

I will make a prediction that the rally follows through today and you see a move of 100-125 points at the close. As you have previously posted if we can get over 732 on the S & P's (which I think we will) it will be one of those fancy technical buy signals and we will be off to the races for another 7-8 points on the S & P.

There are technicians that make money in every market. Having said that, all of the work to disprove them using the EMH comes back to three points: transactions costs (in this day and age this is a minimal point, but in the fraction days it was hard to be a technical trader with spreads), timing (technical trades are quick not necessarily buy and hold), and finally if all else fails risk adjusted and R^2 regression (the risk of technical trading is more than the market).

Overall, technical trading is just a part of any strategy, like any other part.

 

[LegendKiller]

Originally posted by: Skoorb

Originally posted by: LegendKiller

Originally posted by: Lothar

Originally posted by: Special K

Originally posted by: halik
Everything in that box is bullshit, especially if it mentions "chartists" or "chart pros".

I have read that there is absolutely no academic evidence supporting technical analysis.

That said, I see numerous posts in the stock market thread explaining decisions made based on technical principles.

"Charts are great for predicting the past."
-Peter Lynch

"I realized technical analysis didn't work when I turned the charts upside down and didn't get a different answer...If past history was all there was to the game, the richest people would be librarians."
-Warren Buffett

I'm more inclined to listen to them than some idiot bubblehead on CNBC spoting technical analysis data.
All this talk about "resistance", "support", etc... is moronic. I've seen no such evidence that their predictions always turn out to be correct.

Agree 100%. You haven't seen it because it doesn't exist.

So you guys are saying this is bullsh*t? It sure reads like it. Lots of pretty terms and numbers, though

Yeah, it's bullshit. First off, if you could read a chart and predict where things were going, the market would catch on, read the same thing, and eliminate all predictability.

 

[The-Noid]

Originally posted by: LegendKiller

Originally posted by: Skoorb

Originally posted by: LegendKiller

Originally posted by: Lothar

Originally posted by: Special K

Originally posted by: halik
Everything in that box is bullshit, especially if it mentions "chartists" or "chart pros".

I have read that there is absolutely no academic evidence supporting technical analysis.

That said, I see numerous posts in the stock market thread explaining decisions made based on technical principles.

"Charts are great for predicting the past."
-Peter Lynch

"I realized technical analysis didn't work when I turned the charts upside down and didn't get a different answer...If past history was all there was to the game, the richest people would be librarians."
-Warren Buffett

I'm more inclined to listen to them than some idiot bubblehead on CNBC spoting technical analysis data.
All this talk about "resistance", "support", etc... is moronic. I've seen no such evidence that their predictions always turn out to be correct.

Agree 100%. You haven't seen it because it doesn't exist.

So you guys are saying this is bullsh*t? It sure reads like it. Lots of pretty terms and numbers, though

Yeah, it's bullshit. First off, if you could read a chart and predict where things were going, the market would catch on, read the same thing, and eliminate all predictability.

That is the basis of technical trading though, they start the rally, or fade the rally, then the market catches on...you just made their point in a sense.

Technical and fundamental analysis looks to beat the weak and semistrong versions of the EMH by using public knowledge and the past to predict future pricing and market mispricings before the market catches on.

Technical and trend analysis has been right the whole way down from upper left to lower right on the chart for the last year.

 

[halik]

Originally posted by: Yoxxy


That is the basis of technical trading though, they start the rally, or fade the rally, then the market catches on...you just made their point in a sense.

Technical and fundamental analysis looks to beat the weak and semistrong versions of the EMH by using public knowledge and the past to predict future pricing and market mispricings before the market catches on.

Technical and trend analysis has been right the whole way down from upper left to lower right on the chart for the last year.

If the above were true, then you would have no problems showing statistically significant alpha with these strategies. (also to add to your comment, presumably you can replicate the "technical strategies" for equities as well as broad indices, so R^2 will be pretty close to 1). Also to make a direct comparison, you can make the technical strategy go short on the sell signals so that you can you compare it to buy and hold strategy.



No study has ever been able to do that, which means the "technicians that make money in every market" are just the luckiest of all the ones doing it.

 

[theeedude]

Originally posted by: LegendKiller

Originally posted by: senseamp
So CEO of an insolvent bank says it's "profitable" and the market rallies 5% ?
Bear market rally, which is not to say some things like oil/commodities are not oversold.

It wasn't just that. Bringing back the uptick rule and reconsideration of FAS157 are pretty huge items.

Only if you assume that the stock market and accounting are the causes of the problems with this economy and not a reflection of it.