Jeff Greenblatt (lucaswaveinternational.com) on Sunday 2/22, presented at the NY Traders Expo, and his thesis was that the technicals (price/volume) drive the news, rather than the news driving the technicals. Certainly counterintuitive for me, anyway. In particular, he believes that fibonacci timed cycles are responsible for major market events. I belive he calls these cycles Lucas time series. As an example, he said that on Monday (2/23) we will have ended a 233 trading day cycle, which indicates a major market event (+/- several trading days) ... can't remember the starting point from the lecture. I'll try and figure it out. What think ye ?
Sounds like another Charles Nenner. Does news drive TA or does TA drive news? In my opinion, the answer is yes. It's a combination of both, with big news events trumping everything else. Unfortunately, the media plugs in whatever recent news event that is convenient or happens to support their political views. It's nothing but noise. It's impossible to KNOW if a news event moved the market. It could have been Nenner's or Greenblatt's magic cycles that did it after all.
Don't agree. News drives the stochastic shocks. Technical analysis is a mapping of price to some constructed/constricted mathematical domain in an attempt to model a scenario, whether it's oscillatory behavior or trending or whatever. It may be that a scenario is lining up or that there's a regime change about to happen and that a trader has a technical indicator for it, but the efficient market is going to attempt to put a quantitative valuation on an asset -- and news either rejects or supports assumptions made in pricing models.
But something must drive the news. Greenblatt thinks it's the golden ratio (afaik). I'm as skeptical as you are, but it is an interesting idea.
Have a think about answering this question. You have 2 different days with the same news. Why does the market rally on one day and then tank on the other??