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Hi
Jason !
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size=2>
I
think you hit the nail on the head - take day's like today - good grief what a
nightmare - a gazillion variations of emotions, reactions and effects because of
those reactions...
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size=2>
Keep
well and thank you for your reply !
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Kind
regards,
<FONT face=Arial color=#0000ff
size=2>
Louw
Coetzer
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<FONT face=Tahoma
size=2>-----Original Message-----From: Jayson
[mailto:jcasavant@xxxxxxxxxxx]Sent: 20 November 2003 08:31
PMTo: amibroker@xxxxxxxxxxxxxxxSubject: RE: [amibroker]
Wedges
<SPAN
class=321165917-20112003>Louw,
To understand market
behavior we must first understand exactly what the bars on a chart are telling
us.These bars are a road map <SPAN
class=321165917-20112003>which offer insight into the markets underlying
psychology. Markets are fueled by 2 simple human emotions.......Fear
and Greed. When a market is rising there are simply more <SPAN
class=321165917-20112003>Greedy participants then there are Fearful
players. The buyers believe that they will have the opportunity to sell their
shares for more than they have paid for them and so Greed instructs them to
hold on or buy more. After a time the Greedy become Fearful that the Market
will try to take some of their money. As this Fear takes hold the holders
begin to sell. This selling in turn fuels Fear in other holders who in<SPAN
class=321165917-20112003> turn
begin to sell shares.
<SPAN
class=321165917-20112003>When volatility is high it is simply because there is
little consensus amongst the players. The Greedy are confident and so are the
Fearful. In your example you have the Greedy pushing the stock up but ,
as seen by the increasing volatility, the Fearful are growing more afraid. IMO
this is a scary time to get involved. If the Fearful gain control it will get
ugly fast. In your example you will note that
the sell offs happened quickly while the march forward seemed more orderly.
This would indicate to me that the fearful are gaining control while their own
greed has simply not yet allowed them to sell with vengeance. Instead I
prefer to see the battle take place with decreasing volatility. Once one side
eventually asserts itself then the volatility will increase. At that point
(the break of a converging triangle for example) it is far easier to get in on
the right side of the trade. This process is repeated in pattern after
pattern. Think of a cup/handle. The buyers push the stock up the right hand
side only to be met by a fearful few who form the handle as volatility
decreases. Then the buyers gain control fueled with volume pushing the stock
higher on increased volatility and the break out fuels more optimism and
higher prices.
Trying to
put statistical probabilities to price patterns is challenging at best and
certainly at the mercy of the particular data set studied. People make the
markets trade and their emotions drive their behavior. As technical
analysts I think perhaps we often try to make things more complicated then
they need to be.
<SPAN
class=321165917-20112003>my 2 cents
FWIW
Regards,
Jayson
<SPAN
class=453581615-20112003><FONT face=Arial color=#0000ff
size=2>
<BLOCKQUOTE
>
From: <A title=louwcoetzer@xxxxxxxxxxxxx
href="">Louw-Roux Coetzer
<BLOCKQUOTE
>
To: <A
title=amibroker@xxxxxxxxxxxxxxx
href="">amibroker@xxxxxxxxxxxxxxx
Sent: Thursday, November 20, 2003
3:46 AM
Subject: [amibroker] Wedges
<FONT face=Arial
color=#0000ff size=2>
<FONT face=Arial color=#0000ff
size=2>Hi there all,
<FONT face=Arial color=#0000ff
size=2>
<FONT face=Arial color=#0000ff
size=2>Just a easy question that is confusing me a wee bit ....What is
the technical significance of a "Rising Widening Wedge" against &
with a trend...see pic for example...is it the same as a "Narrowing
Wedge " with & against a trend ?
<FONT face=Arial color=#0000ff
size=2>
<FONT face=Arial color=#0000ff
size=2>Kind regards
<FONT face=Arial color=#0000ff
size=2>
<FONT face=Arial color=#0000ff
size=2>Louw
Coetzer
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