Forum Archive Index - February 2003

["Ted" <media@umc.co.nz>]

Phaedrus   

 

I have always been an admirer of your knowledge and logic when discussing points with others. I have also always appreciated your willingness to provide charts and info. Whilst I have no intimate knowledge of technical analysis I have finally begun to grasp some basics.

 

Regarding your latest CSL chart, I accept it appears an obvious trendline, based on 8 years trading. What I have more difficulty understanding is the deciding of where trendlines get drawn in. It may be this area which also confuses t/a knockers and gets the regular quote that anything can be shown with hindsight.

 

However, to try and get you to understand my point.

 

It appears to me that if various parts of this timeframe get split up, you would come up with different trendlines, thus giving you different buy or sell signals. It is a little difficult to be exact from your 8 year chart, but let's take the period from approx. Aug 2000 to May 2001 (11 months).

 

There appears to be a trendline upwards, and then early 2001 a significant drop down through what would have been this uptrend. Surely this would have triggered a Sell signal at that stage. I have also thought this sort of thing with a number of other charts you have posted.

 

There could also have been a upward trendline starting approx. June 1999 and  being broken around March 2000, where you would have then sold.

 

How often does a trendline get adjusted? ie. It always connects a number of points on the graph.

At some stage it is obvious that different points get included which change the whole angle of the trendline, thus giving you a different trend.

Now I know this is determined in part by the volatility of the stockprice. But what else?

 

Now I am not a sceptic, and don't want to try and stir this up or be a smartass. But it does start to make me think that, with plenty of hindsight, a chart can be made to show many different things. Perhaps you could break this chart down to some of these shorter timeframes to help me out here. Trust me, I want to be a believer but I need to understand things which appear strange!

 

Cheers

Ted