cd_vision ([info]cd_vision) wrote,
@ 2009-07-10 09:16:00
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The market has dandruff
So I guess the people who use charts to guess price movements are concerned about a pattern that's developed in the S&P 500 over the last 3 months. they call it a head and shoulders pattern, and believe that the market is about to head downward. You can see it on this chart:

http://finance.yahoo.com/q/ta?s=SPY&t=3m

Since people will sell stocks believing this, the thing tends to become a self-fulfilling prophecy. There might be some good buying opportunities coming soon.

I've got some charts people in my friends list, anyone care to comment on this?

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[info]alanna_liadon
2009-07-10 04:26 pm UTC (link)
Sometimes I wonder whether the analysts make "predictions" in the hope that people listen to them and they can make money. I agree with your self-fulfilling prophecy comment. The market in general seems pretty easy to manipulate like that.

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[info]cd_vision
2009-07-10 05:07 pm UTC (link)
I can assure you in a most assured way that they do. If you want a really great read on it, check out "Full of Bull":
http://www.amazon.com/Full-Bull-Street-Money-Market/dp/013236011X/ref=sr_1_1?ie=UTF8&s=books&qid=1247245495&sr=8-1

Basically, ignore analysts because they are there to sell their products to institutions. Their reports can be useful but don't rely on buy or sell signals, they're frequently meaningless.

Thing about these patterns too, is yeah, they might very well be right, but how do you know when to start buying? By the time the pattern changes, you may have already lost your bargain.

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[info]aurorastar420
2009-07-10 07:01 pm UTC (link)
I looked at it on longer and shorter time frames, and it looks like more of a consolidation pattern to me. I'm out of practice, though, I could be wrong.

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