Fundamental analysis useless right now?

[N Rothschild]

i havnt no?

 

[scose-no-doubt]

Buying stocks based solely on news releases and stuff through google. I think it was Wilmott (or some other tech bod) was talking about it in some documentary.

Some lulz Does Anne Hathaway News Drive Berkshire Hathaway's Stock? - Alexis Madrigal - Technology - The Atlantic

 

[DionysusToast]

imo support and resistance doesn't work as a trading strategy except for scalping. with out a fundamental view on a market you dont know whether support will hold and rally from, or break down. or will start a new down trend from resistance or punch through it.

S&R absolutely does NOT work for scalping. The issues you outline are the same but with the addition of:

1 - Traders who expect a reversal at the level
2 - Traders who trade when the level is broken a few ticks
3 - People that game traders 1 & 2.

That's why you get stuff like this...

Just look @ the line before the red arrow. Ignore the other stuff.

1 - Moved down to 'support' (actually a major point of resistance for a few months)
2 - Bounce off it, reversal traders now in
3 - Move back down through it, reversal traders stopped out, breakout traders now in
4 - Back up, stop out the breakout traders, reversal traders already have their fingers burnt

This happens all the time on the 'scalpy' timeframes. It's just a game. Anyone playing those levels is playing a suckers game.

 

[DionysusToast]

Sometimes you have to sell off support........it all depends what's happening on the left.

It has nothing to do with what is happening on the left.

It's just an area where a lot of suckers enter the market.

These areas are GAMED by people with deep pockets that know how weak hands play.

 

[N Rothschild]

well to me scalping is day trading. as far as im concerned. < day = scalping, days - weeks = swing, weeks - months = position.

so from day trading you got a nice 10 handle bounce, but where from there?

 

[DionysusToast]

well to me scalping is day trading. as far as im concerned. < day = scalping, days - weeks = swing, weeks - months = position.

so from day trading you got a nice 10 handle bounce, but where from there?

This pic was something I had set aside for something else. The red arrow isn't an entry point. You can pretty much ignore it for the purpose of this fred.

I've gotten out of trading reversals, it's a mugs game because of the opportunity it provides those with deep pockets.

The pic was just meant to highlight typical action around a major S/R level.

The end result could have been a move up or down, just that a LOT of people would have been caught offside before it was finally resolved because of the gameplay.

 

[Pferd]

Fundamental analysis are completely useless right now, not even sure if technical analysis is doing much better....sometimes helps but not very often.

Since mid-November the volume has been very, very thin. Only thing that matters now is news. Every little stupid headline can quickly change the markets 1% and sometimes more.

In addition, we have mad robots, people with inside knowledge and a lot of "fantasy" trading (OTC derivatives). Just look at the day the last combined central Bank action was announced:

In the previous hours, Chinese stock exchange went down more than 3%, several bank were downgraded and was announced that the EFSF was not going to have more money.

That morning (European time) the market just move a little bit down with all those negative news, as if nothing had happened. When the anouncement came the market move violenty in the next 2 minutes. After that was stable again and did not continue moving up much. If the news was so good, why did not continue moving up?

One must be very careful these days. It is very easy to get your fingers badly burned in a matter of seconds.

Maybe things will be more stable soon and we can discuss about normal subjects again, such as the difference between technical and fundamental analysis.

 

[scose-no-doubt]

It has nothing to do with what is happening on the left.

It's just an area where a lot of suckers enter the market.

These areas are GAMED by people with deep pockets that know how weak hands play.

Then why is there an abundance of mugs playing these areas?

I like to think that most people who are actually in the market aren't idiots.

 

[Kitchen Sink]

It has nothing to do with what is happening on the left.

It's just an area where a lot of suckers enter the market.

These areas are GAMED by people with deep pockets that know how weak hands play.

Wow. You must be some kind of super-duper trader if you open a chart and don't even look to the left.

Where do you look, behind you? Under the desk?

 

[scose-no-doubt]

Wow. You must be some kind of super-duper trader if you open a chart and don't even look to the left.

Where do you look, behind you? Under the desk?

Are you chinese?

 

[DionysusToast]

Then why is there an abundance of mugs playing these areas?

I like to think that most people who are actually in the market aren't idiots.

You would hope so... but...

Wow. You must be some kind of super-duper trader if you open a chart and don't even look to the left.

Where do you look, behind you? Under the desk?

Some people obviously don't get the point.

If you have a $200M account and you wanted to 'shake the tree' to wiggle people out of position and clock up 6 ticks on 5000 contracts, where exactly would you do that?

Now all you need is the leap of faith that trading isn't cricket and not all traders play is straight.

 

[scose-no-doubt]

Now all you need is the leap of faith that trading isn't cricket and not all traders play is straight.

De-whitify that for me please, bro.

 

[DionysusToast]

De-whitify that for me please, bro.

OK - two things.

1) What is one of the most visually appealing place to enter a trade? At a point of support or resistance. You have reversal and breakout traders entering there.

2) Let's say someone wanted to day trade 5000 ES contracts long with a view to getting 6-8 ticks. If trading were a gentleman's game, then they could just put in a limit order for 5000 contracts. This would not attract a big whale who would not sell them the 5000 and then run the market down 2 points to run them over. That would not happen, it's not gentlemanly is it? It's poor sportsmanship.

If you take an area like support & resistance, it attracts people trading both sides. This additional volume is a red rag to a bull or to put it another way, if you believe that some traders are predatory, they'll probably be hanging out at the oasis and not in the middle of the desert.

 

[scose-no-doubt]

skeen.

 

[VielGeld]

But DT, your time frame there is a couple ticks. What about those who want a couple points instead? They might not care that someone wants to trade 5000 contracts at X level.