“Just before I started trading on the floor of the Philadelphia Stock Exchange, I spent some time at an old Philadelphia boutique investment firm,” Jared Levy writes for StreetAuthority. “The experts at the firm were some of the best in America, and I learned a great deal from all of them. But it was our in-house technical expert, Andy, who I really bonded with.”
“Andy taught me the importance of charts and demonstrated just how powerful technical analysis could be. As an ‘options guy’ who loved numbers and fundamentals, this was a bit of a stretch for me at first. I couldn’t believe that some lines on a screen could dictate how a stock behaves,” Levy writes. “Boy, was I wrong.”
“Major moving averages can have dramatic influences on the price of a stock. They can act as support or resistance and serve as propellants when a stock breaks above or below one. Aside from the relationship that moving averages have on the stock itself, the relationship between the averages can create even more powerful shifts in stock trends, especially in the popular 50-day and 200-day averages,” Levy writes. “And that’s exactly what we’re seeing in one of America’s favorite stocks, Apple.”
Much more in the full article here.
MacDailyNews Take: Golden Cross!
And just how often were those charts and graphs correct for Apple in the last 5 years. I’m guessing 50% or less, based on past performance and the fact that seemingly no analyst has been consistently correct or beaten the odds.
Smoke and mirrors. Don’t fall for it.
From the standpoint of logic, attempting to predict future performance from past data is fraught with potential error. It is not a coincidence that mutual funds have to inform their customers that past performance is no guarantee of future returns.
Now, it is certainly possible that patterns exist for certain stocks – seasonal, event related, etc. – that can be exploited, although a rational market is supposed to deal with those since they are “known.” And it is obvious that the market is far from rational – buying on momentum, panic selling, etc. The big guys manipulate public opinion and emotions to influence the market in the short term. But I just can’t buy into this charting thing with support levels and double-this and cross-that. I suppose that it is possible that, in the aggregate, investor behavior can follow certain patterns. But I remain highly skeptical that anyone can consistently beat the indices over the long run.
If some people believe in a particular market analysis/investment approach, then it can work if it tends to be self-fulfilling. If enough people begin to believe in a particular approach, then it no longer works because the spread of knowledge tends to price it out (theoretically).
Statistically, index funds “outthink” any analyst.
I agree most Apple analysts have been consistently wrong about Apple.
Analyst’s job is generally to create an environment to get people to buy or sell stock.
There is usually an ulterior motive for their recommendations
Sounds like fancy tea leaves to me.
I wonder if anyone has ever done a study to see how often these “signals” actually every predict subsequent stock movements. It shouldn’t be that difficult to verify.
Each investment company with an investment algorithm undoubtedly benchmarks it against decades of data. And they must also take into account unusual events – wars, serious droughts or floods, earthquakes, recessions, etc. – that had a temporary effect. In addition, changes in investment or tax laws can affect the economy and the stock market, or just sectors of each. Whether or not the end product ends up having any validity for planning future investments is debatable, in my opinion.
Is this science? If it is, it’s a science of human behavior. What’s affecting that behavior is left out of the analysis, which is silly and UNscientific.
What’s most amusing here is that this analysis of human behavior ITSELF affects human behavior, as demonstrated by the ‘BUY’ recommendation, which no doubt will affect actual buying.
As for the REAL Apple? That’s of tenuous importance in this analysis, which is also silly. 📉📈📉📈