Forum Archive Index - May 2001

[Phaedrus <Phaedrus@techemail.com>]

Philip,
Could I have predicted the rise (in this stock) with my methods? No. Neither I nor my methods can predict anything.
Market commentators always have explanations for any price movements. If a share rises after good news, it is a "positive reaction", if it falls after good news, the expectation "had already been anticipated". If it rises after bad news, "Worse had been expected". Any retracement is "profit-taking" etc. etc. In short, they are not worth listening to.
Volume will not alert us to the presence of a big seller. Without Market Depth information, we are unable to differentiate a single big seller from lots of small ones. In my view, the (depressing) effect on the market is much the same either way. Thus I am not overly concerned about the current lack of Market Depth info. I study the price action only, and am not interested in speculating as to what may or may not "explain" any movements.
Many clues can be picked up from volume analysis. I do not put too much emphasis on it it NZ though. It works very much better in more heavily traded markets.
The systems I have been outlining are predicated on the following Facts/Opinions/Misconceptions/Lies :-
(1) At times, stock prices "Trend" ie Rise or Fall steadily in a reasonably consistent manner.
(2) These Trends persist for an unpredictable length of time varying from days (or even less) to years.
(3) Trends are easily identified by many different methods, ranging from simple Visual inspection, trendlines, Renko charts etc, up to very sophisticated complex mathematical constructs such as the Polarized Fractal Efficiency indicator.
(4) Since these methods can tell me when a Trend exists, they can also tell me when it ends. As I am only interested in holding rising shares, I regard this as a Sell signal.
(5) When I buy a stock in the hope of its current strength continuing, and this hope is not realised, I sell. I define the point at which I will consider myself "wrong" before I place the trade.
(6) This method (as any other) suits some stocks better than others. I only use it on appropriate stocks, as selected by visual inspection, experience and/or back-testing.
To me, all of the above is just simple common sense. Empiricism. Pragmatism. It works. I don't see it as radical or controversial at all. That is why I am so puzzled to find it met by such scepticism as yours.
I see you define winning as buying any stock below its nominal "intrinsic value", even though it may be trending down. I define winning as holding rising stocks.
I wish you well in the market. There is room for both of us. When all is said and done, we all need someone to take the other side of our trades.
Phaedrus.

PS Rhonda - Re that DFM stunt. Access Brokerage don't do that. A single fee of $29.50, regardless of order size, or the number of transactions required to fill it. Jump ship.

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