14 replies to this topic

[arbman]

When I say "fair", it is not the funnymental, it is what the liquidity dictates over the direction of the cash markets. They can manipulate the cash markets with the derivatives for a while, but only for a while. If there are the insitutional buyers or sellers, the price will move. That's my point. It doesn't matter how much hedging there is out there in these times, I think they are called the delta hedge failures.

[youmast]

Kisa, I'm strongly believe that derivatives DICTATE the stock market direction. Not opposite. Even Bernanke obeys.

[maineman]

My 2 cents. WIthout fundamental analysis there would be no long term capital appreciation. My weatlh comes from long term value investing, long term holdings, company analysis, valuation, etc. BUT trading, for me, is completely different. It is ALL based on technical analysis of charts and intraday phenomena like TICK, price, relative strength, etc. For me, the overlap only is relevant in that I need to know NOT to be in a trade when the FED is announcing, or a key number is being released, etc. Finally, for TA, there is NO SUCH THING AS A GOOD NUMBER OR BAD NUMBER. There is only the market REACTION to that number. And that, my friends, tells us all we need to know about the "fundamentals" for trading... mm

[relax]

[more or less agree maine sure there are key numbers, but really TA determines how we react to it if the time is right, we will react positively to the figures no matter what (or at least no negative reaction) in the month of september there were several fundamental events with the potential for sell offs, but the time was not right, bears had missed their chance which was in august when the big cycle low was due I think those who choose to follow fundamentals, do it to make the game a bit more real and logical with regards to picking stocks i agree fundamentals can really make clear a potential which can't be seen yet with TA for instance the dry bulk sector - sure TA was good, but knowing your fundamentals would give you confidence which TA could not give you

[arbman]

Kisa, I'm strongly believe that derivatives DICTATE the stock market direction. Not opposite. Even Bernanke obeys.

People take derivative positions according to the price, although the derivatives are heavily influencing the prices, the price is the one dictating those decisions in the first place, imho. Whenever the market is heading toward an important juncture, people will have to hedge, but that's only traders' thinking...

If this becomes a chicken or an egg problem, I'd say it is the prices, price momentum and price cycles and associated volumes over the derivative prices, derivatives price momentum, derivatives price cycles and derivatives open interest. The derivative positionning and prices might tell what the people are thinking or projecting, but it is still the changes in the prices that will effect the changes in the derivatives in real time...

One can read the market's thinking with the derivative positioning ahead of time (say Fed), but the price and volume relationship will tell the final decision in real-time...