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Where Have all the Chartists Gone?

Reading price charts which may give you direction in the market using established TA methodology
GeoffF100
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Where Have all the Chartists Gone?

#116911

Postby GeoffF100 » February 9th, 2018, 3:16 pm

I do not believe that it is possible to predict the future by studying charts, but it would be nice to see all views expressed here. Does anyone believe they know where the market is going?

Jonetc15
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Re: Where Have all the Chartists Gone?

#117466

Postby Jonetc15 » February 11th, 2018, 8:46 pm

GeoffF100 wrote:I do not believe that it is possible to predict the future by studying charts, but it would be nice to see all views expressed here. Does anyone believe they know where the market is going?


Charts are about possibilities and probabilities, but no way certainties. Here are some which show the current dilemma:

The FTSE 100 one year daily: http://bigcharts.marketwatch.com/advcha ... e&state=11 - perhaps 7100 is critical support with the market oversold?.

FTSE 100 two years weekly: http://bigcharts.marketwatch.com/advcha ... e&state=11 - perhaps 6800 (200 dma) is the real test.

Dow Jones: http://stockcharts.com/h-sc/ui?s=%24DJIA - perhaps the 22800 level is a downside target.

Volatility index (VIX) upwards: http://stockcharts.com/h-sc/ui?s=%24VIX - complacency well and truly discouraged.

Acid test. If you have cash (especially if you are overweight cash) would you buy either market? Are there likely to be investors buying, rather than short-covering purchases? By the way, this post is only an attempt to show where we are (and to introduce some charts on the TA board...). DYOR.

Jon

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Re: Where Have all the Chartists Gone?

#117481

Postby gryffron » February 11th, 2018, 10:03 pm

Just my tuppence worth:
I can just about believe that charts could tell you something about individual shares. Reflecting the underlying sentiment. Floors and ceilings representing overhangs caused by the limits of individual large traders. IF you can read it right. But I cannot for the life of me see why they should help you with indices. Only a tiny proportion of traders deal indices directly. Mostly, indices are the sum of the sentiment of the huge number of individual constituent shares. I can't possibly see how a chart can help you with that?

Gryff

Jonetc15
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Re: Where Have all the Chartists Gone?

#117526

Postby Jonetc15 » February 12th, 2018, 9:57 am

gryffron wrote:Just my tuppence worth:
I can just about believe that charts could tell you something about individual shares. Reflecting the underlying sentiment. Floors and ceilings representing overhangs caused by the limits of individual large traders. IF you can read it right. But I cannot for the life of me see why they should help you with indices. Only a tiny proportion of traders deal indices directly. Mostly, indices are the sum of the sentiment of the huge number of individual constituent shares. I can't possibly see how a chart can help you with that?


IMHO individual shares are more likely to have factors that invalidate TA - eg reporting results (especially profit warnings, adverse trading conditions), takeovers and so on, as well as macroeconomic developments. But indeces spread such company-specific factors and far better represent market sentiment. Of course TA is used to complement fundamental analysis of companies. And indeces cannot take into account unpredictable factors - especially so-called ‘black swan’ events/‘unknown unknowns’. But the spread of ‘unknowns’ within an index mean that they are best if we want to gauge market sentiment, as now.

So we’ll just have to agree to disagree.

ATB

Jon

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Re: Where Have all the Chartists Gone?

#117528

Postby Jonetc15 » February 12th, 2018, 10:03 am

P.S. The last sentence of the main paragraph should have referred to indeces (rather than an index) - ie to read ‘within indeces’.

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Re: Where Have all the Chartists Gone?

#117531

Postby RececaDron » February 12th, 2018, 10:06 am

GeoffF100 wrote:I do not believe that it is possible to predict the future by studying charts, but it would be nice to see all views expressed here. Does anyone believe they know where the market is going?


Is this like the atheist octogenarian who decides to start attending church, "just in case"?

Or something else?

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Re: Where Have all the Chartists Gone?

#117535

Postby Jonetc15 » February 12th, 2018, 10:19 am

RececaDron wrote:
GeoffF100 wrote:I do not believe that it is possible to predict the future by studying charts, but it would be nice to see all views expressed here. Does anyone believe they know where the market is going?


Is this like the atheist octogenarian who decides to start attending church, "just in case"?

Or something else?


I tried to make it clear that TA isn’t about predictions when I referred to possibilities and probabilities. As for 7100 being a possible support level please see as an example an analysis today at https://www.ig.com/uk/indices-news/2018 ... -dow-42112

Jon

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Re: Where Have all the Chartists Gone?

#117538

Postby RececaDron » February 12th, 2018, 10:33 am

The questions were directed to the OP GeoffF100.

GeoffF100
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Re: Where Have all the Chartists Gone?

#117612

Postby GeoffF100 » February 12th, 2018, 2:18 pm

Is this like the atheist octogenarian who decides to start attending church, "just in case"?

Or something else?

As I said, it is useful to get as many perspectives as possible. Far be it from me to trouble stir, of course. The IG link was interesting. They seem to think that the market's next move will be a rebound. If enough people believe that, perhaps it will happen.

For the most part, I do not have much choice but to do nothing. Indeed, I am a believer in the DALAP principle. Do As Little As Possible. Nonetheless, I still have investment decisions to make. I try to make my decisions as mechanical and judgement free as I reasonably can, but I am still left with timing decisions, and no sound basis on which to make them. I had an inheritance late last year. I decided to invest it in bonds, which is looking very sensible now. I need to trim my largest UK share holdings to fill my CGT allowance, and decide where to invest the proceeds. I also need to decide whether I want to re-invest my dividends, and if so where.

If the market rallies, I plan to do my CGT sales right away. If it falls, I plan to wait until my usual time at the beginning of March, and will probably buy overseas equities. If it falls further, I will re-invest my dividends, probably in overseas equities. If it falls further still, I still have plenty of dry gunpowder that I can use, if that seems expedient.

The fact that the markets are unpredictable does not remove the need to predict them.

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Re: Where Have all the Chartists Gone?

#117710

Postby DiamondEcho » February 12th, 2018, 7:27 pm

To the original question - well I'm still here. I read the TA daily from the usual suspect sites previously linked.
To me TA is chicken and egg. Some think it's outright puffery, but after years having a weather-eye on it I am quite sure the key levels at any time are of material significance to the market. The minor daily ebb and flow matters less to me, but things like 200 DSMAs I'd suggest you'd be unwise to ignore (if TA is on your radar in the first place).

Although I keep a weather-eye on it, the major levels are published by various sources each morning, so to me there isn't a lot to discuss here beyond any anomalies or battles around 'key levels'.

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Re: Where Have all the Chartists Gone?

#132561

Postby Miaw » April 16th, 2018, 3:16 pm

I also think that any chart analysis and prediction is a lottery, pure luck is no more. How not to try to scientifically justify the case, this is a vain idea in fact.

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Re: Where Have all the Chartists Gone?

#132567

Postby johnhemming » April 16th, 2018, 3:25 pm

I am not a chartist myself, but market psychology is a key element and momentum cannot be ignored. Charts will bring some of this out.

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Re: Where Have all the Chartists Gone?

#133789

Postby bungeejumper » April 21st, 2018, 7:03 pm

I'm not a TA fan either, but I do take at least a quick look at the charts before I make a decision. (Usually.) There are a thousand elephant traps out there that a chart might - just might - be able to help me spot.

In practice, I can't think of any time, ever, when the charts have had less to tell us. The wisdom of TA (insofar as it has any) is that it builds on long years of empirical market experience - or tries to, anyway. But here we are in 2018, with Trump trying to dislocate the entire world trading order, and that makes a lot of the past patterns potentially redundant. :(

And another thing. I read somewhere that there's about $50 trillion of cash sitting on the global sidelines at the moment, earning pretty well zero interest and just waiting for something better to invest in. On the one hand, a chartist would be tempted to say that that draws a big fat resistance line under the chances of any global equity crisis. On the other, the Trump phenomenon (which could very well result in war) casts most of those certainties right out of the window.

When it comes to indices, these days I spend more time looking at the Shiller CAPE indices, TBH. And no, they're not perfectly reliable either. There's a good international selection at Siblis Research (http://siblisresearch.com/data/data-cat ... ndex-data/). Worth a look.

BJ

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Re: Where Have all the Chartists Gone?

#133798

Postby Lootman » April 21st, 2018, 8:14 pm

johnhemming wrote:I am not a chartist myself, but market psychology is a key element and momentum cannot be ignored. Charts will bring some of this out.

Yes, that, and also charts reflect the sum total of what all market participants think, know and are doing. There are other ways to divine that, but charts show it in a very simple and intuitive way.

Charts often indicate and anticipate major market moves because they reflect the early insider action and professionals getting on board with something. That isn't 100% accurate but it doesn't need to be. Being right 60% of the time can make you very rich.

Charts are also good for showing support, resistance and trading ranges, and these are useful as keys to when to get in or out of a position. That's particularly helpful with options - I set my strike prices based on what a chart is telling me.

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Re: Where Have all the Chartists Gone?

#134078

Postby OhNoNotimAgain » April 23rd, 2018, 11:21 am

It always amuses me that chartists ignore dividends yet they provide the bulk of equity returns.

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Re: Where Have all the Chartists Gone?

#134116

Postby Lootman » April 23rd, 2018, 1:03 pm

OhNoNotimAgain wrote:It always amuses me that chartists ignore dividends yet they provide the bulk of equity returns.

It's pretty hard to be wrong twice in just one sentence but somehow you have managed it.

Charts do reflect dividends. They show the dips on ex-dividend day and the gradual accretion until the next one. They are also reflected in option price charts where the changes are more obvious.

About 40% of equity returns have typically come from UK dividends (less in other markets). About 60% comes from capital gains.

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Re: Where Have all the Chartists Gone?

#134328

Postby OhNoNotimAgain » April 24th, 2018, 9:26 am

Lootman wrote:
OhNoNotimAgain wrote:It always amuses me that chartists ignore dividends yet they provide the bulk of equity returns.

It's pretty hard to be wrong twice in just one sentence but somehow you have managed it.

Charts do reflect dividends. They show the dips on ex-dividend day and the gradual accretion until the next one. They are also reflected in option price charts where the changes are more obvious.

About 40% of equity returns have typically come from UK dividends (less in other markets). About 60% comes from capital gains.


The longer the holding period the more important dividends become. You need to specify the time scale for your 40% figure.

I have yet to see a chartist look at a graph of Total Return.

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Re: Where Have all the Chartists Gone?

#134413

Postby GoSeigen » April 24th, 2018, 12:35 pm

OhNoNotimAgain wrote:The longer the holding period the more important dividends become. You need to specify the time scale for your 40% figure.


"Important" is ambiguous, but if it means what you have argued in the past and what is implied by the above, then the mathematical howler you rely on to reach your faulty conclusion has been demonstrated numerous times.

What might be correct is that the ratio of returns due to dividends vs returns due to retained capital becomes more steady when measured over a long period.


A 40:60 split is not so far from the 50:50 I'd expect over long periods.


GS

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Re: Where Have all the Chartists Gone?

#134425

Postby OhNoNotimAgain » April 24th, 2018, 1:13 pm

GoSeigen wrote:
OhNoNotimAgain wrote:The longer the holding period the more important dividends become. You need to specify the time scale for your 40% figure.


"Important" is ambiguous, but if it means what you have argued in the past and what is implied by the above, then the mathematical howler you rely on to reach your faulty conclusion has been demonstrated numerous times.

What might be correct is that the ratio of returns due to dividends vs returns due to retained capital becomes more steady when measured over a long period.


A 40:60 split is not so far from the 50:50 I'd expect over long periods.


GS


The data is out there to contradict you.

In the UK over 6 months dividends provided almost 2% of the total return, over one year it was 4.6%, 3 years 14% and over 5 years dividends contributed 20%.

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Re: Where Have all the Chartists Gone?

#134428

Postby GoSeigen » April 24th, 2018, 1:23 pm

OhNoNotimAgain wrote:
The data is out there to contradict you.



You're welcome to present it.

GS


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