Technical based trading

[vaibhav]

We all know that technical are important and can provide a good opportunities for investment and trading.

Lets use this space to discuss the chart of stocks which are making any technical pattern and should be looked into.

[longlake95]

5 hours ago, vaibhav said:

We all know that technical are important and can provide a good opportunities for investment and trading.

Lets use this space to discuss the chart of stocks which are making any technical pattern and should be looked into.

Really?

[Parsad]

6 hours ago, vaibhav said:

We all know that technical are important and can provide a good opportunities for investment and trading.

Lets use this space to discuss the chart of stocks which are making any technical pattern and should be looked into.

 

Please do not be offended.

 

Phhhhhppttttttt!    I couldn't find a raspberry emoji.

 

Never used technical, don't need technical and if it serves any possible purpose at all, that would be for very short-term trading.  Which I don't do.  Really a waste of time and will not improve results one iota!

 

Investors would be far better served taking any time at all spent on analyst reports and technical analysis, and just use it looking for fundamentally cheap companies to buy.  And if they can't find any...they would still be better served not doing anything and just read a good book on business or investing instead.

 

There are lots of things in life that I can see two sides to...technical analysis is not one of them!  Unless you are a daytrader or speculate in extreme short-term movements of stocks, currencies, etc...it will not help at all...and I'm not sure it even helps them!

 

Cheers!

[Gregmal]

I find it helpful in sometimes assessing levels of support for a stock. Or for milking an existing position, IE Id probably wanna sell MSGS puts around $150 cuz Id be fine owning it with that basis and it tends to bounce off that pretty quickly. Sanj you cant say low $400s weren't meaningful and obvious for Fairfax while the turnaround was talking place. But in general I agree. If you are focusing on valuing a business or asset than the charts are just kind of a distraction. 

 

So perhaps if you are a full time market professional and you kinda have to be doing something...sure. But for a normal person its stupid and for a long term investor, outside of using options strategies, I just think your better off doing other things with your time. Anyone telling you their entire investment strategy is day trading based on charts is either lying or making money doing something else. 

[Parsad]

17 minutes ago, Gregmal said:

I find it helpful in sometimes assessing levels of support for a stock. Or for milking an existing position, IE Id probably wanna sell MSGS puts around $150 cuz Id be fine owning it with that basis and it tends to bounce off that pretty quickly. Sanj you cant say low $400s weren't meaningful and obvious for Fairfax while the turnaround was talking place. But in general I agree. If you are focusing on valuing a business or asset than the charts are just kind of a distraction. 

 

So perhaps if you are a full time market professional and you kinda have to be doing something...sure. But for a normal person its stupid and for a long term investor, outside of using options strategies, I just think your better off doing other things with your time. Anyone telling you their entire investment strategy is day trading based on charts is either lying or making money doing something else. 

 

TA works in hindsight.  It has no useful benefit in predicting what will happen next.  I didn't care that Fairfax was at $400...I looked at price to book...it was at 0.55-0.6.  That's all I cared about.  Just like I don't use TA to predict when to sell.  If FFH gets to 1.5 times book, I'm completely out.  In between, I average in and average out.  Simple and it works!  Nothing to do with TA.  Cheers!

[Castanza]

Unless you can match the resources of the below there is no point in even messing with TA imo. Any retail investor who has success is just lucky imo. Always seems like smoke and mirrors to me. But what do I know? I’m just some average Ape from Pennsylvania. 

 

 

Renaissance Technologies 
 

Founded in 1982

 

Avg Annual Return: 39%  

 

Average tenure of more than 13 years across our 300 employees

 

Intellectually vibrant culture of collaboration, discipline, critical analysis, and intense research

90 PhDs in mathematics, physics, computer science, and related fields

 

A MacArthur Fellow, National Academy of Sciences members, and many authors of widely cited scientific papers

 

40 years of experience in developing and managing proprietary quantitative trading strategies

 

Uniform data-driven approach applied across all funds

 

A research database that grows by more than 40 terabytes a day

 

50,000 computer cores with 150 gigabits per second of global connectivity

 

Redundant computational facilities, each fully capable of supporting our trading operations

[Parsad]

26 minutes ago, Castanza said:

Unless you can match the resources of the below there is no point in even messing with TA imo. Any retail investor who has success is just lucky imo. Always seems like smoke and mirrors to me. But what do I know? I’m just some average Ape from Pennsylvania. 

 

 

Renaissance Technologies 
 

Founded in 1982

 

Avg Annual Return: 39%  

 

Average tenure of more than 13 years across our 300 employees

 

Intellectually vibrant culture of collaboration, discipline, critical analysis, and intense research

90 PhDs in mathematics, physics, computer science, and related fields

 

A MacArthur Fellow, National Academy of Sciences members, and many authors of widely cited scientific papers

 

40 years of experience in developing and managing proprietary quantitative trading strategies

 

Uniform data-driven approach applied across all funds

 

A research database that grows by more than 40 terabytes a day

 

50,000 computer cores with 150 gigabits per second of global connectivity

 

Redundant computational facilities, each fully capable of supporting our trading operations

 

RenTech used algorithms to find patterns that they could exploit through levered trades by the thousands and most were done in milliseconds.  As you say, the average investor cannot access that type of processing or do the statistical modelling they were using.  If you can...knock your socks off.  But the average investor using TA is going to have less than average results.  Cheers!  

[Spekulatius]

31 minutes ago, Parsad said:

 

RenTech used algorithms to find patterns that they could exploit through levered trades by the thousands and most were done in milliseconds.  As you say, the average investor cannot access that type of processing or do the statistical modelling they were using.  If you can...knock your socks off.  But the average investor using TA is going to have less than average results.  Cheers!  

As I understand it (from the book - The man who beat the markets) Rentech is not a high frequency trader who holds stocks just for milliseconds. They hold stocks for hours and even a few days. They exploit correlations between stocks and other data that have some persistency.

Edited May 25, 2023 by Spekulatius

[Parsad]

7 hours ago, Spekulatius said:

As I understand it (from the book - The man who beat the markets) Rentech is not a high frequency trader who holds stocks just for milliseconds. They hold stocks for hours and even a few days. They exploit correlations between stocks and other data that have some persistency.

 

You're partly right.  They do hold some positions, but most are held for extremely short periods of time.  Cheers!

 

https://www.institutionalinvestor.com/article/b1k2fymby99nj0/Famed-Medallion-Fund-Stretches-Explanation-to-the-Limit-Professor-Claims

 

According to The Man Who Solved the Market, Medallion’s strategy involves holding thousands of short-term positions, both long and short, at any given time. The fund makes high-frequency trades, but has also held positions for up to one or two weeks, per Zuckerman’s description. Robert Mercer, the former co–chief executive of Renaissance Technologies, allegedly told a friend that Medallion was right 50.75 percent of the time when it came to its millions of trades — adding that “you can make billions that way.”

[Luca]

10 hours ago, Parsad said:

 

TA works in hindsight.  It has no useful benefit in predicting what will happen next.  I didn't care that Fairfax was at $400...I looked at price to book...it was at 0.55-0.6.  That's all I cared about.  Just like I don't use TA to predict when to sell.  If FFH gets to 1.5 times book, I'm completely out.  In between, I average in and average out.  Simple and it works!  Nothing to do with TA.  Cheers!

+1

[HubbadaPow]

A friend showed me something interesting several years back that basically overlays TA over fundamental value to avoid value traps.  You basically wait for positive momentum on something cheap before buying.  I've never spent much time on TA but I think about my friend every time I find myself in a value trap.

[Parsad]

3 hours ago, HubbadaPow said:

A friend showed me something interesting several years back that basically overlays TA over fundamental value to avoid value traps.  You basically wait for positive momentum on something cheap before buying.  I've never spent much time on TA but I think about my friend every time I find myself in a value trap.

 

I don't know where some of these terms come from...value trap...woke!   

 

There's no such thing as a value trap.  Markets always recognize undervalued assets over time.  Money flows to those undervalued assets.  If you bought something that the market never recognizes as undervalued...check the analysis. 

 

Either there is something fundamentally wrong with the growth of the business or errors in judgement in what true liquidation value is.  Money will always seek out undervalued assets...it's like gravity.

 

Cheers!

[D33pV4lue]

Quiet the first post lol... 

 

I don't use TA for individual stocks or the basis for any investment decisions but I do think there is value in TA of the markets for helping to determine opportunities to buy. I have a TA that I've followed for many years. Start every morning with it takes me 5 minutes. Helps to form a view of the market, sectors I may want to look at, when I might have a buying opportunity etc...

 

Side note: Renaissance operates more like a casino than anything else. They found correlations between the market and seemingly unrelated events, like if it was raining on a Friday the market would close down. Noone will be able to replicate that and if/when someone does the opportunity will be gone.  

[HubbadaPow]

Point taken, Parsad.  OTOH Sometimes things get a lot cheaper and look like a bargain only to fall considerably farther.  That doesn't mean the first potential entry point wasn't "cheap", it just means you cost yourself a better opportunity.  My friend observed that many investors who identify as "fundamental value" would avoid many analytical mistakes if they overlaid TA thereby lessening draw downs. 

 

Trying to throw OP a bone here!

[Gregmal]

There is also a psychological element to charts which can tell you things. And also an overlap with fundamentals. For instance the $400 on Fairfax represents a function of its price to book. If folks tends to buy at .6x book then whatever the shares outstanding correlates to will show that. A lot of this stuff overlaps but simply on its own, such as the people who day trade SPY or something, it’s stupid. 

[Saluki]

With the proliferation of algorithmic trading, including some strategies that require super computers and fiber optic transmission lines to transmit orders that are millionths of a second faster than the competition, the short end of the execution curve is very crowded. Since any portfolio manager who underperforms for two years in a row will likely be fired, they use strategies that hug the index. Therefore, by inverting, if you can find things that aren't in the common indices and that are doing things now that will pay off in 3 years, then I think as an individual investor, you have a wide open field with not much between you and the goal post. The inefficiencies in the shorter end of the curve are probably easilly competed away unless you are focusing on names that are so small that a fund can't take a meaningful position.  If you go 3 or 4 years out, even big names can pay off for you. 

 

I don't want to talk my book, but container ships were overordered during covid to compensate for supply disruptions. Since shipyards are building those, then in a year or two, container ship rates should suffer and the rates for drybulk, crude carriers, and product tankers should look good, unless we have a recession which destroys demand and will lessen the demand for those ships. 

 

I think part of Buffett's thesis on OXY and Chevron is that we've underinvested in oil for a decade and that prices may inflect back to triple digits based on supply constraints and how much oil is used in commerce (reminds me of his silver bet). Uranium may turn around one day too. Russian gas disruption forced the Germans to switch to Coal generation. Nuclear has some flaws, but its cleaner than Coal, and more consistent than solar and wind.  And Uranium production and enrichment has not kept up with the rate at which stores are being used up.  So if things don't change, then one day it will inflect. But I'm not smart enough to call it. The earth is entering a cyclical dry spell (I am told). In a few years, places with reliable water may be worth more than now.  I don't know how to play it, but I'm sure other people do, and they aren't the quarter-to-quarter crowd. 

[vaibhav]

First, I am not offended. In fact I like the discussion and love the fact the people still believe that TA is useless.

I started the post as I did not find any thread on TA or anyone discussing the charts. I now know the reasons.

Many big names in the industry have used TA for their benefit. Like new high or a cup with handle are very common point of discussion in William O’Neil books.

 

[Malmqky]

11 minutes ago, vaibhav said:

First, I am not offended. In fact I like the discussion and love the fact the people still believe that TA is useless.

I started the post as I did not find any thread on TA or anyone discussing the charts. I now know the reasons.

Many big names in the industry have used TA for their benefit. Like new high or a cup with handle are very common point of discussion in William O’Neil books.

 

 

 "I realized that technical analysis didn't work when I turned the chart upside down and didn't get a different answer."

[Parsad]

5 hours ago, HubbadaPow said:

Point taken, Parsad.  OTOH Sometimes things get a lot cheaper and look like a bargain only to fall considerably farther.  That doesn't mean the first potential entry point wasn't "cheap", it just means you cost yourself a better opportunity.  My friend observed that many investors who identify as "fundamental value" would avoid many analytical mistakes if they overlaid TA thereby lessening draw downs. 

 

Trying to throw OP a bone here!

 

Fair enough!  Cheers!

[Parsad]

4 hours ago, Malmqky said:

 

 "I realized that technical analysis didn't work when I turned the chart upside down and didn't get a different answer."

 

ROTFL!  That was f**king funny!  Did you make that up or was that a Buffett or Munger quote?

 

Cheers!

[Malmqky]

Just now, Parsad said:

 

ROTFL!  That was f**king funny!  Did you make that up or was that a Buffett or Munger quote?

 

Cheers!

It’s a Buffett quote - good guess!

[Parsad]

4 hours ago, vaibhav said:

First, I am not offended. In fact I like the discussion and love the fact the people still believe that TA is useless.

I started the post as I did not find any thread on TA or anyone discussing the charts. I now know the reasons.

Many big names in the industry have used TA for their benefit. Like new high or a cup with handle are very common point of discussion in William O’Neil books.

 

 

 

Completely familiar with the terminology, as I read a few TA books early when I started investing.

 

There are two things that I think are a massive waste of time for fundamental investors who do their own research...analyst reports and TA!  They are utterly useless for the most part.  

 

If you don't mind getting rich slowly, avoid those two things!  Cheers!

[Parsad]

3 minutes ago, Malmqky said:

It’s a Buffett quote - good guess!

 

Had a feeling.  He's one of the funniest people around...not just in investing!  Cheers!