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S&P Chart Voodoo


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#1 Douglas

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Posted 06 January 2022 - 09:17 AM

Voodoo, like stock chart patterns, doesn't work if people don't believe in it.  It's people's reaction to the doll with needles in it, not the needles themselves that causes the hysterics.  The green and blue trend channel and triangle shown on the plot below are ominous if you believe, if you don't, they're mildly interesting at best and positively annoying if bullish.  I am a sucker for symmetry, so I think that this is probably the umpteenth time that I have shown similar trend lines and made wild predictions, and I can't for the life of me remember more than a couple that worked out in my favor, and I do realize that this place is called Fearless Forecasters, not Foolish Forecasters, but I live by the credo that if you can't predict accurately, predict frequently.

 

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Regards,

Douglas



#2 steadyquest

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Posted 06 January 2022 - 11:02 AM

Yeah, charts have a way of making one believe whatever he/she wants to believe.  Maybe the market can continue defying gravity with the 200 week chasing it higher - or maybe not.

 

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#3 12SPX

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Posted 06 January 2022 - 11:41 AM

Biggest problem about drawing lines on charts is they always get moved lol!!  Otherwise the S&P should only be around 4500 right now.  I guess actually it could end up below there and go all the way to 2750 but think that'll take a little more time lol!!! 



#4 brucekeller

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Posted 06 January 2022 - 11:54 AM

I've found over the years that indicators are worthless if my psychology isn't in line, because as others have said, you can always fine a few trendlines or indicators to suit the narrative. MAs at least are pretty agnostic to bias as long as you don't ignore them and saw which ones the stock likes to react to. 



#5 Douglas

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Posted 06 January 2022 - 01:10 PM

In the olden days, I always did my trend line charts in pencil with an eraser nearby, an ink jar nowhere in sight.  Computers have made changes almost too easy with  150 indicators right at your finger tips, a bit like my satellite TV, dozens of channels and nothing worth watching.  I'm a great believer that following the KISS rule, keep it simple stupid, pays off in the long run.  My favorite KISS technique is to note if higher highs and higher lows or lower highs and lower lows in the time frame that I am interested in are being made.  Currently on a daily time frame the DJIA is sending out mixed signals with a higher high, but a lower low which is just typical of so much going on today, uncertainty reigns.

 

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Regards,

Douglas



#6 pdx5

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Posted 06 January 2022 - 09:10 PM

I am skeptical of charts which are essentially historical data. It is like driving forward looking in the rear view mirror. Yes, trends tend to continue, but trends can also change quickly.


"Money cannot consistently be made trading every day or every week during the year." ~ Jesse Livermore Trading Rule

#7 Douglas

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Posted 07 January 2022 - 08:03 AM

pdx5, I agree, but when I asked stockcharts.com to publish next week's DJIA chart, they asked me to please get back on my meds.  Yesterday is all we have.  Speaking of yesterday charts that speak volumes, the following ones of the Nasdaq are saying a lot to me, and it's not good.  In the first the AD line is deteriorating more than at either the 2018 or 2020 top.  In the second the bullish percentage plot is ratcheting down a lot like in 2018.  And in the third the number of new highs was heading in the wrong direction when the index was recently at new highs.  All in all a pretty sorry picture, but you know that Jerome and his magic pump can turn that frown upside down if he even sees two down weeks in a row, so I suppose you're right that the past is not prologue as long as the FED's got your back.

 

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Regards,

Douglas


Edited by Douglas, 07 January 2022 - 08:10 AM.


#8 12SPX

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Posted 07 January 2022 - 08:57 AM

Yes agree charts are always looking backward especially when it comes to trendlines.  I've yet to see anyone put up a chart with trendlines and then a month later put up the new one right beside it to show how it really turned out.  It's really easy to make it look good adjusting lines lol!!  They are great to know general oversold/overbought indications but like I say I just follow stochastics but I'm old lol!! 



#9 tradesurfer

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Posted 07 January 2022 - 09:34 AM

sometimes the charts just dont matter.... like when we are in the midst of a massive panic CRASH

 

like right now



#10 tradesurfer

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Posted 07 January 2022 - 09:35 AM

QQQ needs to hold here !!! urgent !