2/21/06 Opinions: Everybody's Got One, Including Me

...This is a particularly interesting time in the markets, imo. The bulls and bears are both confident and convinced. In the past couple of weeks I have read articles from people whose opinions I respect. These people are looking at the same data sets and the same charts, and seeing entirely different futures for the markets.
...I don't use technical indicators nearly as much as I used to, and when I do I use them more as confirmations to support my decisions, not as key determinants in making those decisions. The longer I trade, it seems the simpler my systems become. I think the main reason for that is that program trading dominates the markets to such an extent nowadays. Computerized trading programs are often set up to reverse direction at key support and resistance lines on charts without regard to the fundamental prospects of the market or stock in question, imo. I also believe the markets are more openly manipulated than they have ever been by the PTB. And that big firms with fast computers and some of the brightest minds in the country on their payrolls, paint false pictures on charts sometimes through strategic buys and sells. They know what the amateur technical analysts are looking at, and how to buy and sell at just the right time to make the charts paint the technical patterns that the small fry traders are looking for.
...The intra-day market action has become stranger than ever, imo. I cannot tell you how many days I sit and watch a 10 minute chart on a stock go straight up for the first half of a trading session, then straight down the second half, or vice versa. There are probably a lot of reasons that can happen, though I don't know how those folks who want us to think that rational investment decisions are behind every move would explain it. To me, it is manipulation, pure and simple. For instance, there are thousands of hedge funds out there now, all populated with deep pocketed big guys who are used to winning in their businesses, not losing. And all with minimum buy-ins large enough that if you have to ask how much it is, you can't get in anyway. And with the decreased volatility in the markets, those funds scalp much the same as daytraders a lot of days, imo, trying to make a little here and there. I think on some days those firms throw money at a group of stocks or an index to run it one way, then pick a point to pull the rug out and take it the other direction for no other reason other than they can do whatever they want.
...So I keep it simple. The one thing that the big players have the most trouble doing is covering their tracks, if you close your ears so you can't hear their siren song, and you avoid the disinformation campaigns designed to relieve you of your hard earned money. If you just watch the price and volume figures of the markets and the stocks you are interested in, you can stay ahead of the game. When I see a stock going up at a decent angle, and the volumes on its up days are overall bigger than the volumes on its down days, that's what I'm looking for. In addition, I like to use candlestick charts. I look for shadows below the bottom of the body, showing that there was buying interest in the stock, that somebody stepped in and supported it. The key is to try and do what the big guys do. They are the ones who move the markets. You need to be on the same side of the trade they are.