I have been looking for a system that foretells a market turn for going on 7 years and umpteen-thousands of hours. I have said to myself many times, “I think I’m about to have this thing figured out”. But inevitably as with all systems that are “figured out”, other people see what you see and jump on board. All the “other Toms” start using the same system and before long, it’s gets weaker or even disappears.
However I have determined a few wasteful predicting methods;
1- It can’t be just about the numbers, or all the computer whiz kids would be rich. Well most of them are, or going to be. But that would remove the “market” aspect of the market. Don’t you think?
2- National and world news events play a part. But often it looks like they just cause a hiccup.
Finance news? There are so many people not watching, or can’t understand the lingo. They just buy or sell irregardless of what the “talking heads” are saying.
3- Oversold and overbought, “This rally is long in the tooth”. Which is the idea that prices are too high (or too low), and can’t go any further that way. That one has burned me more times than I can remember. May have some value in the “risk v reward’ department, I guess.
I think the secret lies within the study of human behavior. Not the smart guys, but the mob/herd mentality.
The greed/fear aspect of the market. And how the heck do you see that? Well I’m looking and I found a few. I’m using chart patterns. Now let me say “this is more an art, rather than a science”. And it takes lots of self-discipline. There-in lies the problem, have you ever seen a self-disciplined artist? I think they are called engineers or architects. Which gets back to the “whiz kid” thing.
OK, enough of the mumbo -jumbo. I present one chart of what I think interprets human behavior in the markets. See the “W” bottoms buys, it means something in the mob/herd mentality, I’m sure?
(I apologize for some diagram mistakes) http://schrts.co/WCYFbM
Oh, and for the title, has global warming and the “sell the rumor” changed “Sell in May, and go away” to “The Arch forms in March”?