In realmoney's columnist conversation he said: Aaron, I'm not a believer in much of TA, and I've spent a lot of posts explaining why, including the one to which you refer and link, which I think delineates part of my stance rather well. That said, I've also been quick to point out that none us in the market can avoid using TA. As for day to day, and especially intraday movements -- I don't do much day trading, and most of the time I think such intraday moves are usually a function of broader movements in the markets. A great recent case in point -- can you imagine what we'd all be reading as explanations for the market's actions if we'd sold off immediately after the London bombings rather than rallied? From being cautious in late 2004, to being outright "aggressively bullish" in April of this year to my current "cautious" stance (all of which I've been very vocal about here in these pages), I certainly do move and bob with the markets, depending on the pitches it throws to me. But my biggest point in most of the commentary to which you're referring is that, at least right now, things in this market and in this economy are pretty darn steady-as-she-goes. Finally, as for Helene -- I read a lot of what she writes and am a big fan. Notice that, for example, her "TA" analysis today does not include a bunch of "pivots, supports, and resistances" which are dervived from a bunch of apparently random moving averages and time frames, as so much other "TA" does seem to. It's that "type" of "TA" that I'm mostly questioning/dissing. Shooot, one more "finally". Finally, I'm decidedly not trying to make this an "us" vs. "them" thing as in fundies vs. TA. I'm just calling things like I see them, as usual. Love that movie "Pi", which was all about an ultimate TA key to Wall Street
Few people have the will and drive to study intraday price action for years... but a funny thing happens along the way. What happens is that a full-blown framework emerges, as the market swings from one level to another. Take a couple of moving averages for trend, some bands for mean reversion, and throw in key S&R -- and all of a sudden it's magic, but only after much study of how the market reacts above/below/around these levels. If you have the stamina to grasp choppy markets, then you achieve knowledge that others will not bother trying to understand -- there is an underlying microstructure, and you're part of a small fraternity. All of a sudden, what seems to be a muddle becomes clear as day -- day after day. If you want to play the orchestra, then you need to understand both dimensions of time and instrument. What are the ES, NQ, and YM doing on a daily, 30-minute, and 5-minute basis, for example? Which is the leader, and which is the laggard? Which are hitting key resistance? Which are touching key support? What starts to happen is that you flow from level to level (the closest thread is Jack Hershey's SCT) in an effortless manner. Finally, I have to believe that Cody Willard loved the movie Pi because of its entertaining notion of an ultimate market key -- that's what everyone wants. But I think the movie was all about Max's search and drive, and his countless hours of devotion to the craft. You can work hard all your life and never find the Holy Grail of trading, but you can come pretty damn close.
Choppy like today. Agreed that if you can figure that out trend vs. chop you're good. But I find trading chop tiresome as you can lose all your profits for the day just by spacing or making one mistake. But trading chop is a skill well worth learning.
duard, it can be tiresome at the beginning -- yes. But try and get to the point where you can pick out 3-5 trades each day consistently. There is no substitute for watching the market at key S&R levels ad nauseum. Is the market trading at high pro-rated volume or lower than normal? These are just some ideas for you, but keep at it.
Thanks oddi and Holmes. After developing this framework independently, I'll have to check out the SCT thread again. And Holmes.... beautiful country... when I was in high school, we hosted a Maori exchange student named Moana. A true warrior spirit, and our family learned a lot from him in that brief time.