Thinking through it more, yes the technical damage done to gold has been immense and it seems we have still not seen the final capitulation. I am also not touching it for sometime now.
Volatility vs. direction is an important distinction. Do you think that quant/TA analysis techniques like ACD and others are more effective at identifying inflection points for volatility than picking a direction?
ACD is used to help form a bias for direction. No one said anything about using to help pick inflection points for vol! The discussion was about the similarity between mean reversion strategies and selling volatility, while momentum strategies tend to mimic a long vol strategy.
Thanks, I understood the previous discussion, and you clearly use ACD in one manner. I introduced a new question.
Point taken and insights greatly appreciated (Shan). My questions are trying to broaden the discussion of ACD beyond the topics already covered.
You are trying to make the simple complex. Dumb it down. Seriously. Just take it as it is, and go with that. ACD is a bias filter, it was not meant to be anything else.
The point made about pairs trading was that there are a gazillion possible combinations, the idea being you can trade a product that hasn't been traded by all and sundry. I think when Mark Fisher was on he talked about short yen long ccj (cameco). Mav has had some interesting posts about this you may want to scroll back a few weeks, the discussion was around 11/30 or so when Fisher was on the tube. some of these articles are helpful if you scroll down. http://biggercapital.squarespace.com/
Direction and volatility are kind of synonymous. Generally speaking an increase in volatility is associated with falling prices in risk assets and a decrease in volatility with an increase in the prices of risk assets. Outside of that, I'm not sure what your question is.