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Oppenheimer Holdings Inc. Message Board

  • superbmindset superbmindset Mar 31, 2010 10:42 PM Flag

    Jiggles and Wiggles

    Studying the patterns today I noticed a similar set of jiggles and these jiggles and wiggles translate to an attempt to end the beginning of a sharp drop?

    in a related cryptic question: why is it legal in NY to pump your own gas but illegal in NJ?

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    • I’ve been watching Carter Worth’s illusions of order for some time....

      I just can’t see how investors can believe that a stock's past price history holds the key and a vital set of clues to its future price performance. I mean, how can the future price of a stock be ascertained by charting price movements (or jiggles and wiggles as I call them) of the past?

      I am not just making fun of Carter here....the fact that most, if not all, self-respecting brokerage research houses have their technical analysis division... suggests that it is mainstream. But the problem is that it has become “too” has captured the attention of too many do-it-yourself-investors...which now also try to make predictions by charting.

      The irony here is that chartists are becoming more and more successful in their predictions due to the fact that more people follow the same set of jiggles and wiggles. The danger lies in that it is becoming a self-fulfilling prophecy: enough people use this tool and it ultimately influences the price that it is attempting to predict in the first place. And the never-ending cycle investors overweight technical analysis and underweight fundamentals...

      Eventually....these sets of cryptic jiggles and wiggles might all signal a sharp drop (it can also signal a price rise but the danger lies in the opposite direction)....we might end up with an S&P at 600 again for no fundamental reasons. As chartists do not look at underlying reasons, just utilize herd-like mentality to be successful at what they do....

      I just don’t understand how the media is reinforcing this and makes it look more solid and portentous than it really is....

      • 1 Reply to superbmindset
      • Wow, what a coincidence! When the market last Thursday moved below the 50 day moving average, the S&P 500 broke down....only to find support at exactly the 200 day moving average...and subsequently moved back up to the 50 day moving average! I don't have an expensive charting tool system, I just used Google Finance. I brought up the S&P 500 chart, clicked technicals and voila!

        Brian Belski on Bloomberg last week: "the markets are driven by fundamentals period...period."

        I beg to differ! As I mentioned a month ago: since the new forces driving market prices today are "jiggles and wiggles"...the dangers of a sharp drop are very real...

        ...and for as long as investors follow Carter instead of might potentially lead to an even sharper drop in prices....we might even test last year's lows....

    • great analysis on jiggles and wiggles do a search for OPY...

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