In term of daily fluctuations, the market can be completely random; but for longer term, the market has a cycle the same way as the ebb and flow since it is a reflection of the economy cycle - recession and inflation. The daily fluctuations is like the waves within the ebb and flow while the market cycle is like the ebb and flow itself. If the market as a whole, from the biggest picture, is completely random then the DOW cannot be ascended, instead the DOW will be screwed up and stay under 1000 forever, or whatever the number you prefer, since the Wall Street firms cannot be always lucky enough for centuries to pick the right companies for the DOW Components.
Yes, obviously long term it cant be random because it reflects corporate earnings but its the intraday fluctuations that seem to me like a random walk down wall street.. BTW, I want to be wrong in this thinking but am convinced that collectively traders actions make for random price action intraday.
I believe there is no random movement at all. Every trade decide future trades. From tick to yearly charts. No noise
There are truly random days, trend days, 'cat and mouse' range days. Remember this quote: - "Life is like a box of chocolates, you never know what you gonna get". It kinda relates to the markets IMHO.
Maybe if we had an example.... from 11:00 to 11:01 the following orders are entered for AIG stock on the NYSE...... Joe the daytrader sees a nice spring off R1 and decides to buy 1000 Grandma sally has a forced liquidation to raise cash for her IRA distribution. 150 sold Goldmen sold 2000 as part of some arb program. Money Manager Acme investments is buying into portfolio and is working a vwap program buys 3500 Tom the swing trader is taking a nice profit from 5 weeks ago sells 2300. etc.............. Would this create randomness?
It would in this example, that's why speculators rely on various patterns in an attempt to see through the randomness.
Maybe if we had an example.... from 11:00 to 11:01 the following orders are entered for AIG stock on the NYSE...... Joe the daytrader sees a nice spring off R1 and decides to buy 1000 --This is not random, Joe decided to buy because of some technical setup. Grandma sally has a forced liquidation to raise cash for her IRA distribution. 150 sold --This may be random, but 150 shares of AIG isnt going to make or break the stock. Goldmen sold 2000 as part of some arb program. --I'm sure Goldman doesnt just sell 2000 shares arbitrarily, they must base their buy/sell programs off of the futures or the financial sector or whatever. So there decision to sell is not random. Money Manager Acme investments is buying into portfolio and is working a vwap program buys 3500 ---Again, not random. The VWAP is based on volume and price. Tom the swing trader is taking a nice profit from 5 weeks ago sells 2300. ---A swing trade does not just sell 2300 shares on a whim, Tom most likely has a plan to get out of his swing trade either into strength or into weakness (predicatable human patterns). If the stock was completely rangebound (ie stock is in a .10 range for 3 hours) and Tom sold then, then his 2300 shares would easily be eaten up without causing the stock to move (in this case there is a buyer and seller at very close levels so the stock doesnt make any significant moves) etc.............. So, in my opinion, 4 out of 5 are not random at all. The only one that could be random is grandma's 150 shares. Then again, if grandma was swinging a bigger line, I'm sure her exit wouldnt be random either.