Sorry to keep posting, but here are two articles of interest if you have time. I don't necessarily agree or disagree with either, but I found them thought-provoking. I know little or nothing of the quality/credibility of the sources.
"The American people and the American economy are under siege by the Oil Industry....It is time to consider a national discussion about either nationalizing or heavily regulating the actions of Big Oil."
"The battle is for the untapped oil in the Caspian Region...the United States is working its way into a corner on the world arena, too large to control anymore. A formidable alliance has been in the formative stages among China, Iran, and Russia. It will change the world of commodity commerce. The Iranian oil bourse will directly challenge the Petro-Dollar system, as they will sell oil and natural gas in euro terms."
Chilax dude, as my wife would say. I'm sorry I can't spend all day debating the issue. Your argument was just the tip of the iceberg.
Sorry to insult you your worship. My vocabulary is not as educated as yours so I'll just finish by saying, "go
"I agree that TA has no sustainable merit to it, However, there are enough people that swear by it that it becomes self fulfilling."
If that's the case, I'll bet there are people who try to anticipate the crowd and trade based on that fact.
Just for fun, let's pull up an automated site and I'll have a go. Notice that the person who bought and sold with the green bands on the top of the chart would have done all right (a rising stock makes geniuses of us all!).
BP might go up $0.8 tomorrow because the stock is oversold and about $0.8 below it's 13 day EMA. In short, even though bp is in a short term down trend (hope it's short term) fat, liquid, high volume bp never gets too far away from the 13 day EMA (green line) without correcting unless something fundamental has changed.
The nice thing about T.A. is there are so many factors. Should the price actually go down tomorrow I could explain it away by saying that the MACD signals hadn't made their bullish cross yet (they shouldn't unless the price moves up a bit) so I bought too soon trying to beat the croud. We amateur TA folks can always find reasons for a false signal and look at the tea leaves again. LOL
Does T.A. based on New York trading charts miss the fact that BP is a U.K. based company and most of the value trades there? That is, does the dog in London wag it's tail in New York?
Don't forget the exchange rate factor :-)
I agree that TA has no sustainable merit to it, However, there are enough people that swear by it that it becomes self fulfilling.
If they all believe that they see a "cup and Handle" formation they all do the same thing. This is repeated for a myriad number of different squigglys that cause them to buy or sell in unison. When they all do this at the same time it does cause a blip in the price.
It's useful to be able to recognize when these movements are happening, especially for a day trader.
I doubt if TA causes any long-term change in the stock price that would not otherwise be supported by the fundamentals of the stock.
Just my opinion,
Thanks for supporting my case with your unfalsifiable, unfounded comment.
By the way, how does technical analysis predict significant stock movements due to political events, assassinations, terror attacks, climate changes, revelations of corruption in a company, etc.?
You will never 'catch on' to technical analysis. It is nothing but voodoo-mumbo-jumbo chart reading with a bit of hindsight mixed in.
You will never get an unambiguous, quantifiable prediction or analysis from these folks. Chart-lovers will draw lines between arbitrary points of what is essentially noise on a graph and pretend it is scientific. It is a complete and utter load of malarkey with enough technical jargon thrown in to give a facade of meaningful analysis.
About the two articles that caught your eye, Pipewelder has already posted an excellent (since I agree with it) critique of Mr. Willie's article.
Mr. Crockett uses the overworked fight analogy and doesn't seem to realize that prices are set by the market. He writes:
"An effective market system requires that consumers are able to bid down prices. The very nature of energy in the global economy makes this impossible when all suppliers are acting collectively to bid up prices and curb alternatives. The sheer political power of Big Oil in the Bush Administration and the Republican Party has made the consumer powerless in setting policy. The Oil Industry is essentially running our federal government via the Bush Republicans."
Consumers don't "bid down prices" nor do suppliers "bid up prices". Consumers could take collective action, through government or otherwise, by lowering consumption. The OPEC cartel could restrict supply and drive up prices. Mr. Crockett didn't write about these factors since neither seems to be happening. Seems that supplies are tight but adequate & consumers are bearing the high prices without reducing their consumption very much.
Mr. Crockett writes:
"The oil companies should be given an opportunity to start driving down oil prices with the strong support of our federal government rather than be nationalized"
Until 1980 BP was majority owned by the British Government and not a model of efficiency as I recall. As I understand it, Big Oil is already actively seeking new reserves for development (and profit). What else can they do to "drive down" the price?
No doubt oil will enter a demand driven price boom and we may be close to that time. Enron showed what a group with a certain trading philosophy could do to the electricity market in California. Whatever the traffic will bear, coupled with a certain speculative market mania. I wonder where all those skilled traders are working since Enron's collapse ;-)
Thank you, rockie, locust, pipewelder and others for your thoughts on these. The message, to me, is that a slow geopolitical earthquake is under way; in a few years the world is going to feel quite different.
I have to agree with Bridgemaster's analysis of why this particular oil crisis is fundamentally different. This is a demand question. What worries me is that I can't see global demand being significantly cut yet. Even if the US cut 10% of its oil consumption, which I don't think has ever happened before, the slack could simply be bought up by China (and India) whose coffers overflow with unspent US dollars, and the oil price would find a very solid floor.
destinys_willing thinks it's just a bubble, and perhaps it is. I guess any market shortage, like any new technology or fad, generates a bubble. But there's more to this, I think, than tulipmania, the dotcom bubble or the current housing bubble. Beneath the foam is a real shortage of crude, which can't just be talked away.