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Fred,
thank you very much for reading and answering my questions.
Dimitris Tsokakis
--- In amibroker@xxxxxxxxxxxxxxx, Fred Tonetti <ftonetti@xxxx> wrote:
> Dimitris,
>
> I may be a pain in the butt, however I am always SERIOUS when it
comes
> to investing/trading.
>
> I'm not sure what the question was/is, are you ? Was it the
prediction
> of where do we go from here ? and what do we do when we get there ?
>
> I have been asked by others from time to time to "predict" what will
> happen. This is a question I usually try to avoid answering because
> although from time to time I will use a manual override in a
> conservative way on systems that I write and trade as I recognize
that
> NO system can be the holy grail and that I would rather err on the
side
> of safety, I clearly fall in the camp of system traders as opposed
to
> discretionary traders. As I stated before this is NOT necessarily
> "right" or "better" then any other method, it just happens to be the
> method that works for me. To my way of thinking system trading
deals
> with the probabilities of what will happen and what to do when they
> don't which in a way IS a prediction, but only in terms of the next
bar
> or so and depending on ones investing/trading time frame is in
terms or
> minutes, hours, days, weeks, months or beyond. After all if we know
> whether the next bar is going to be up or down, isn't that really
all we
> need to accomplish our objectives ? If we have done our homework in
the
> development of the systems we trade then we pretty much know what to
> expect the systems to do i.e. they are going to be correct some
> percentage of time and wrong some percentage of time and return some
> known percentage with some level of risk.
>
> Now if you are asking what's my best "guess" as to what's going to
> happen then I "suspect" that the bear market lows have not yet been
seen
> and that based on a variety of long term analysis that the market in
> terms of SPX could well get below 600 before we're done. One could
use
> as supporting evidence at least the following things:
>
> 1. The very large head and shoulders formation that's present
over
> the last several years in several of the major indices with the
> shoulders being in the latter parts of 1998 & 2001 in which all
price
> activity of the past several months is below the neckline. In the
case
> of SPX with the head being at 1552 and the neckline at 933 this is
a 619
> point loss or roughly 40%. From where SPX crossed the neckline at
> roughly 952 in 7/2002 and down by 40% yields roughly 572.
>
>
> 2. The very long term trend line on the constant dollar SPX has
> only recently been broken to the downside and probably points at
prices
> even below 572 i.e. maybe the 1995 lows.
>
>
> 3. The Price/Retained Earnings ratios although they have dropped
> significantly have not reached levels attained at other long term
> historical lows.
>
>
> Now on the other side of the coin might be a variety of long term
cycle
> analysis tools:
>
> 1. Like Benner or the well known Erlanger or its components the
> Decennial or Presidential cycles all of which say we "should have"
> already bottomed.
>
>
> 2. Some sort of long wave analysis which seems to suggest
that
> although a bottom may have already occurred that we can't expect to
do
> much more then go scraping along it for some time to come.
>
>
> So there you have it, my best "guess" plus some other things that
are
> possibly contrary to that "guess" and it's worth exactly what you
paid
> for it. Will it happen ? I have no idea, does this impact what
and how
> I trade ? ABSOLUTELY NOT.
>
> Fred
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