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Good points... all around.
-- you wrote:
<< Any Chaologist attests to Markets being holistic in nature. Made up of Meta relationships. All Macro Arbitrage trading and Macro Analysis are based on InterMarket Analysis. Now one cannot prove a system is right, but relies on its expediency for success. The Fact alone that the Quantum Fund .V, Midas Fund, and the other Macro Fund outperformed the S&P over 30 years running speaks alot in its favour.>>
Yes, I agree. My suggestion is not that one should not trade "intermarket relationships", or that one should not trade astrology, or that one should not trade the "relationship" of stock prices to the results of the Lakers against Portland. I have no problem with anyone trading these things and doing so successfully.
My beef is with *the explanation itself*. That is, I have no beef with trading bonds vs. stocks. But one should not say that there is any *relationship* between these two markets. And especially one should not say that because there is a high correlation between any two things that therefore they are (causally) related.
In other words, I do not think that one can get into too much trouble trading stocks based on Laker performance, provided good money management is used. Where one gets into trouble is when he starts believing in a *causal* relationship between the Lakers and stocks.
You're quite right: no causal relationship is needed in order to profit. But belief in such a relationship can lead to bad losses.
<< Dow theory's tenet is based on InterMarket analysis where correlations between the Industrials and Transports give good indications.>>
I do not agree that Dow Theory is "intermarket analysis". Dow Theory does not say that the industrials are up *because* the transports are up. Or that the Transports are down *because* the industrials are down. What Dow Theory says is that when both the Industrials and Transports are in trends together, the broad market is in the same trend. (Which seems self-evident to me.) The supposed relation of the Transports and Industrials in Dow Theory is not that of cause to effect, hence Dow theory is not intermarket analysis (by my definition).
<< Novice TA's always believe patterns are simply the triangles, wedges, head and shoulders etc that occur on charts. Get a couple of books that show you chart patterns and learn by rote-learnings (learning), instead of deutero-learning (learning to learn). What I find totally supprising is they accept the human mind is hierarchical in nature yet fail to search for patterns, meta patterns, meta reflexive patterns and resistances at various macro levels.>>
I see a great deal of search for meta patterns. It begins with the astrologists, who are looking for the biggest meta patterns of all. What I suggest is that the search for these "patterns" is in vain and unnecessary. Moreover, the patterns found will be the ones sought - and the analyst will find such order as his mind supposes is present...
Good discussion... And again, I have no problem with anyone trading the expedient. I just have a problem with the way they "explain" their trade...
All the best,
OM
<<Patterns come in different levels. The basic patterns can show you a profit but undiscovered Meta patterns gets you the home run. Supprising too is how many dismiss the lakers correlations. Victor Niederhoffer in the 80's was approached by the best in the business including Soros to manage their money because of his hypothesis that Markets sometime follow a Casino like approach proved expedient. He returned over 80% one year by betting on the correlations between the Chicargo Bulls and the Markets during those days. If markets are emotional, don't you think you can find patterns in the source of the emotion when it becomes self evident.
Dismiss InterMarket Analysis and correlations and you might as well count Marty Zweig off (Among the Best on Wallstreet). A typical example. Just before the Fed meeting this year I collected data dating back from 1972 of Fed Policy meetings
> followed by a short term Post-Event Window of the Markets perfomance. It turned up with a strong pattern of predicting short term Market direction every time the Fed raised or reduced by more than 1/4 point. Based on my analysis I could short
> without discrimination during the Post-Event Window time frame. This to some might be mumbo jumbo but what really matters is how much you make when right.
>
> On a finall note, when Alchemy of Finance was first published by Soros, he basically was giving his secret away. "Use your mind more, contrary to finding the perfect formula for praxeological events" Allow your mind to run free with Heuristic
> concepts and let the market dictate which concepts are expedient. Most minds are trained to think by induction from Data to hypothesis and never by deduction from hypothesis drawn from the laws of nature and phylosophy. This is what David
> Hofstadter (Author of Godel, Escher, Bach an Eternal Golden Braid), Gregory Bateson (Author of Steps to an Ecology of Mind), Dr. Gabriel Burstein (Author of Macro Trading and Investment Strategies) advocate. Observing patterns where others
> see only noise. Many ignore this road because it involves to much work and constant reading. No wonder only a few hit the home run.
>
> Do the Lakers have game? Don't know but I would like to know which team most traders favour, then see some past data. ... before dismissing it as mumbo jumbo. "The greatest ideas are the simple ones" .... Alfred North Whitehead
>
> Regards
> Shawn Andrew
>
>
>
> --
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> Ricercar Fund /SA "Quarendo Invenietis"
> http://www.RicercarFund.com
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> "It is not how right or wrong you are that matters, but how much money you make when right and how much you do not lose when wrong." ... George Soros
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