Agree for the most part with your comments. However,
"So obviously, the BBs aren't going to be market predictive. They are a short term crowd momentum trading tool with 20 days worth of data for a base. The swings around the mean create profit(or loss limit) opportunity for the players with time/profit horizens of various duration and magnitude. So it works pretty well until elephants start to stampede."
-- I am most definitely not the target audience for what you describe above. I make my $$$ when elephants stampede (luv it when they do), and most investors are like 'deer in the headlights.' Funny how 'success' breeds complacency. Happened during the late '90s, and is going on right as we speak -- with the techies leading the charge no less. The crashing dollar is going to create a fit for policy planners -- so watch out below. This move is going to be tied to a spike in interest rates (JMHO). The consumer is indebted up to their eyeballs, and housing is sickeningly bubble-licious. In the midst of this, Insiders are dumping PNRA like there is no tomorrow, the U.S. dollar is crashing, and the expectation is that consumers will continue to pay for PNRA's high priced faire.......Let's see where she goes......Good luck to all.....
Your description of Bollinger during the market unpleasantness is very interesting. but I guess not too suprising. Not to minimize his good idea and all the work he did to figure out just how they can be applied t he could have very well called them standard deviation bands instead of Bollinger bands. But to get fees as a consultant, it helps to have a special tool and some persona of infallability. Apparently he didn't have all the tools to deal with the larger cycle.
By the way, John Murphy in his market letter, warned in 2000 based upon the slope of treasuries yield curve.
The "Bollinger Bands" are from standard deviation (sigma)for price scatter(Price-average delta) for some unit of time(day, week, hour) where the average is moving with a commonly used time of 20 units. For a normal distribution (the good old bell shaped curve), +/-1 sigma encloses 65% of the data, +/- 2 sigma encloses 95% of the data, +/- 3 sigma encloses 99.7 % of the data. So if the time frame isn't too long allowing momentum in the crowd behavior to change, the odds of prices outside the bands are low. The time frame commonly plotted in internet charting services is 20 time periods but I guess others might be applicable in some situations.
So obviously, the BBs aren't going to be market predictive. They are a short term crowd momentum trading tool with 20 days worth of data for a base. The swings around the mean create profit(or loss limit) opportunity for the players with time/profit horizens of various duration and magnitude. So it works pretty well until elephants start to stampede.
People who get public attention have usually sought it and maintaining the public persona of an "expert" while dealing with something as unpredictible as the market has got to be a strain.
Right now, UTX looks interesting. Breaking down form a little horizontal flag. Election coming with a lot of questions about the war should make it reasonably safe from bullish news anouncements.
shorted 500 ORB @$11.89/sh. on 12/17/03
shorted 500 more ORB @$13.23/sh. on 01/09/04
I am losing money on this 1000-sh. short position.
You are correct that there is risk. Yahoo lists a forward P/E ratio of 20 for the year ending 12/31/04. It is trading at over 30 times tangible book value per share as of Sept. 30, though:
shareholders' equity: 113,147,000
tangible equity: 17,854,000
shares out: 47,783,528
tang. eq./share: $0.374
I shorted at an avg. price per share of $12.56. It's a position I'll stick with for a while.