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BAC Closes @ High of Day (Only Second Time Since March 2011)


moore_capital54
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As far as technical indicators go a high of day close has been pretty reliable for me. I am not a technical analyst but when buying my third of fourth tranches in a stock, I like to see some reversal in the technical indicators to go along with the fundamentals.

 

In the case of BAC it closed @ 6.73 today which was the high of day, the last time this happened was September 26 and before that March 8, 2011.

 

A high of day close indicates that there was a lot of net buying intraday which culminated with asks being taken out. A very good sign.

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As far as technical indicators go a high of day close has been pretty reliable for me. I am not a technical analyst but when buying my third of fourth tranches in a stock, I like to see some reversal in the technical indicators to go along with the fundamentals.

 

In the case of BAC it closed @ 6.73 today which was the high of day, the last time this happened was September 26 and before that March 8, 2011.

 

A high of day close indicates that there was a lot of net buying intraday which culminated with asks being taken out. A very good sign.

 

Ppphhhhttt!  ;D  Sorry Moore.  I only give out raspberries to any technical analysis answers.  Cheers!

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You guys are both right, TA does not necessarily mean anything and technically the close was 6.72 although the last print was in fact 6.74 @ 4:01:50

 

Anyhow its just an indicator I use when adding to a position and I thought I would share. I added BAC after the earnings as well, as it confirmed our thesis.

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You guys are both right, TA does not necessarily mean anything and technically the close was 6.72 although the last print was in fact 6.74 @ 4:01:50

 

Anyhow its just an indicator I use when adding to a position and I thought I would share. I added BAC after the earnings as well, as it confirmed our thesis.

 

I do like BAC, and think it will trade at tangible book next year, and a multiple of that within 3 years.  I just think TA is akin to voodoo or psychic readings.  Cheers!

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Butter production in Bangladesh...

 

I really liked the book Your Money and You Brain by Jason Zweig (revised the most resent editions of The Intelligent Investor). The cover looks a little trendy and  hypes how the study of neuroeconomics can make you rich (I imagine to sell the book), but the book does a great job of detailing how humans make decisions. A portion of the book explains how humans are hardwired to make order and assign patterns to events even when events are truly random or so complex they cannot be understood. One of the experiments demonstrated how a pigeon beat a person nearly every time at a probability game because the person was crippled by the belief they could outsmart the pattern. The book throws some cold water on technical analysis.

 

 

An excerpt from the amazon reviewer James East:

 

As the research continues to mount that we are indeed more hardwired like our animal ancestors than we care to admit, it helps to know these hardwired systems in ourselves to more understand our response mechanisms that can and do trigger our emotions and ultimately our actions. To assist in this effort, the book highlights and goes into some detail of the more recognized emotions like Greed, Fear, Regret, and Confidence of which all play on our performance in life, as well, and even more so in optimizing our wealth in the investing process. Since the investment world and markets themselves are full of triggers that fool our brains into taking actions that in the end are not good for wealth optimization, this book will help you understand some of these triggers and hopefully avoid some of the actions they promote.

 

It was a treat to read this very well written (read as not too technical) on the pitfalls of our decision making and how we sometimes unknowingly do things that are against our own best interests. To illustrate with one of the topics of Confidence, we are hardwired to be confident because if we weren't we would more often then not be paralyzed to never be able to make a decision. However; when it comes to investments, we are mostly too confident in our own abilities which itself leads to overconfidence. For example, we believe that our own selected lottery ticket has a better chance of winning than someone else's selected ticket even though all of us know that the odds are the same for everyone. But when asked to give your ticket up for someone else's, the response is usually -- no way. This fact has been tested over and over with the same conclusion that we believe our own cognitive skills or luck is better than someone other than ourselves. In the investment world, the path to ruin is full of disasters where investors were overconfident. Let us just be reminded of the ".com" boom or Long Term Capital Management episode.

 

http://www.amazon.com/Your-Money-Brain-Science-Neuroeconomics/dp/0743276698/ref=sr_1_1?s=books&ie=UTF8&qid=1319488595&sr=1-1

 

I own BAC too though  ;)

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TA just has to be taken for what it is which is a mathematical interpretation over a certain period of time.

 

I dont even think the metric I used is even TA per se (nice rhyme to it)

 

It's just a really nice indicator when a stock that has been punished heavily for nearly 3 months trades near the high of day all day and then closes strong at or near the high of day. It means there will be more spillover and that it was a net buying day. When applying this small almost insignificant indicator to what has gone on with BAC since July, it merely confirms that for some reason today more buyers than sellers emerged, and it this has been a rare occurrence.

 

As I am not finished buying BAC I like seeing such indicators as I continue to average down.

 

 

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TA just has to be taken for what it is which is a mathematical interpretation over a certain period of time.

 

I dont even think the metric I used is even TA per se (nice rhyme to it)

 

It's just a really nice indicator when a stock that has been punished heavily for nearly 3 months trades near the high of day all day and then closes strong at or near the high of day. It means there will be more spillover and that it was a net buying day. When applying this small almost insignificant indicator to what has gone on with BAC since July, it merely confirms that for some reason today more buyers than sellers emerged, and it this has been a rare occurrence.

 

As I am not finished buying BAC I like seeing such indicators as I continue to average down.

 

I politely disagree.  I don't think it really has anything to do with mathematics whatsoever.  All it does is tell you what has happened, but not what is going to happen. 

 

Kind of like taking a look at a meteorolgy chart of what the temperature has been for the last 30 days, and then coming to a conclusion about what the next 30 or 60 days may look like.  Would any of us ever bet on the weather report with hard earned cash?  Nope! 

 

The only thing I care about is the discount to net asset value, or the discount to the future cash cash flow stream.  That's it.  Cheers!

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Guest valueInv

You guys are both right, TA does not necessarily mean anything and technically the close was 6.72 although the last print was in fact 6.74 @ 4:01:50

 

Anyhow its just an indicator I use when adding to a position and I thought I would share. I added BAC after the earnings as well, as it confirmed our thesis.

 

I do like BAC, and think it will trade at tangible book next year, and a multiple of that within 3 years.  I just think TA is akin to voodoo or psychic readings.  Cheers!

 

Not having looked at TA, I would tend to agree with you. But aren't there a bunch of hedge funds using TA that have made money over the long term? How would you explain their returns?

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Seem to me TA is much more useful as a shorting tool than a buying tool.  When going long something, you hope you've made the right judgement, and value will be realized one way or another, reading technicals is secondary to the decision.  But going short, in its nature, is about front running a big sell order.  In that situation, TA is almost the only tool available, however inaccurate, since you don't have anything else.

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If the stock market closed at 2 PM instead of 4 PM would BAC have closed at it's daily highs?  Why should we even use 4 PM as the closing price?  What about after hours?  What about overseas where BAC trades?

 

In short, whether a stock closed at its daily high or low is totally irrelevant.  If it was relevant, a computer would arb the shit out of it and always take advantage of the statistical gains or losses that were likely to follow the next day or week or month.

 

 

 

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As far as technical indicators go a high of day close has been pretty reliable for me. I am not a technical analyst but when buying my third of fourth tranches in a stock, I like to see some reversal in the technical indicators to go along with the fundamentals.

 

In the case of BAC it closed @ 6.73 today which was the high of day, the last time this happened was September 26 and before that March 8, 2011.

 

A high of day close indicates that there was a lot of net buying intraday which culminated with asks being taken out. A very good sign.

 

 

Quote from twacowfca

 

We're all deep value guys who don't care a thing about which way the market is going or the trend of a stock, right?  However, my evil twin says this may be a good technical sign. 

 

Good relative strength after a stock has been beaten into the ground is positive for outperformance in the near future.  It's possible that closing at the high may help filter out false positive signals caused by nothing more than short covering.  Short covering is often associated with higher volume in contrast to yesterday's modest volume. 

 

If accompanied by improving f-score type fundamentals, it's a great sign for a strong and long rebound off the bottom.  However, I don't know how BAC's more important fundamentals are trending.

 

 

 

 

 

Quote from Parsad

 

 

Ppphhhhttt!  ;D  Sorry Moore.  I only give out raspberries to any technical analysis answers.  Cheers!

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A somewhat funny anecdote, is that I once lived in Texas and ‘my twang’ was foreign to the local twang so all the old Texan's I worked with called me a Yankee as they thought I was from Oklahoma.

 

For full disclosure, I owe the twang to the ovarian lottery which was conceived in southern Virginia and perfected in central North Carolina  :)

 

 

Cheers

JEast

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A somewhat funny anecdote, is that I once lived in Texas and ‘my twang’ was foreign to the local twang so all the old Texan's I worked with called me a Yankee as they thought I was from Oklahoma.

 

That's pretty funny!  I guess your twang is somewhat of a mutt, and a mixture of North Carolina and Virginia.  Cheers!

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I had no idea James East was on this board. I owe him a thank you for a good book recommendation! His review is pretty eloquent for a Texan  ;)

 

You should check out his other book reviews on Amazon - very high quality and informative. (Thanks, James! :))

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