"Technical" Trading - The stupid you'll always have with you.

Posted On: Saturday - June 23rd 2018 7:29PM MST
In Topics: 
  Websites  Global Financial Stupidity  Economics

First a note here. It's been a busy week, and I apologize for this one making it only a 5-post week. It's not like stupidity has ceased and desisted or anything. There are loads of thoughts coming, and posts ready to get into pixel form (the hardest part for me). Next week will bring a couple on the Spanish Civil War (I know! However it relates to the Lyin' Press and Communists of today), something on the "price point" as related to minor-league baseball, and immigration stupidity from the "foodies". to name just a few.

That is all stupidity for another day. Here today is a graph from ZeroHedge.com:

Y-axis not starting at zero*? It's a bogus graph from the get go!

Yeah, apparently there's a Death Cross coming and you may want to get the hell out of Dodge now, people! So says ZeroHedge. Now, wait a minute - Peak Stupidity would be the last naysayer to most forms of financial doom and gloom. Hell, that's what wakes us up in the morning, seeing as the crash coming is what will lead us through Peak Stupidity. Also, though bad-mouthing the ZeroHedge website (one of only 4 on our blogroll) multiple times for its out-of-control ads/scripts that make it unusable on lots of browser/operating system combinations, I personally learned very much about the big financial picture from that site over multiple years. The thoughts from all the reading/mulling-it-over are documented in posts with the Global Financial Stupidity Topic Key, and there are more to come.

The stuff I'm writing about this afternoon, however, is some of what Zerohedge puts up, along with 10's of thousands of pure investment sites and newsletters all over the web. As I wrote about in the post The Nonscience of Economics, even ZH commenters themselves (mostly the earlier-on ones) would concentrate too much on the investment-advice aspect of the talk about the big financial picture. A ZH post yesterday, Gold Joins The Global "Death Cross" Procession is an example of the kind of junk that is not the kind of stuff that helps us understand Global Financial Stupidity, so I'm badmouthing ZeroHedge AGAIN today, but it's really a rant about the term in the title.

"Technical Trading" is a total load of bullshit, and, believe me, that WAS putting it in a nice way. There is absolutely NOTHING TECHNICAL about technical trading. A better name for it would be "playing with graphs". Ever since the first stock numbers came ticking off on a paper tape, there have been people making graphs of it. That's fine, but there have been others trying to make predictions based on the shapes of graphs of stock values and any other kind of economic indices. That's the stupidity that has "always been with us."

It be one thing if, as in at least something resembling science or engineering, these "analysts" were connecting some theory with what they saw in the graphs. "This curve trends down when a company's sales reach this percentage of ... blah, blah...." ... probably lots of baloney, but one could do some math to relate theory and observation. No, these technical traders and advisers just look at shapes of graphs - they've got "head and shoulders" curves that mean this, "support" at various round numbers that mean something else, and in the ZH article, as an example, a DEATH CROSS that is the 50-day moving average crossing below the 200-day moving average. Yeah? What do you know about anything behind which way each of these commodities, markets and currencies will go from that?

The markets run on a small bit of sound capitalism and a much larger amount of psychology. Oh, and that's when the Feral Gov't is NOT involved! Well, it IS involved, making it even worse. One can try to think like the big guys and small guys together to understand what mindset will be involved in movement of certain stocks. Even that doesn't work well when the big guys have the whole system rigged. It doesn't even have to be technically illegal. Warren Buffett can give out advice that will make the market move the way that makes him money via whatever moves he made just before opening his mouth in the $200/year newsletter.

So yeah, lets just look at the 1st and 2nd derivatives of one curve vs another and smoothed by various amounts, with regression analysis and stuff. Heck, we can hire an engineer or mathematician, but with ZERO theory and no Big-Gov/Big-Biz connections, the only way NOT to lose your ass is to make money off of the newsletters and keep out of the market yourself!

As with even the non-technical analysis, which I believe means there MIGHT be some logic to it, there's still the question that always arises: If your theory is that accurate, why the hell are you telling the rest of us? You can make a ton of money buying, shorting, or whatever you people do. If lots of us really get wind of your idea and take it to heart, wouldn't the subsequent movements of that index screw up your prediction anyway?

Yeah, ZH writer, you can take your DEATH CROSS and shove it up your ass with a clove of garlic! I'm not buying this crap and I don't read financial sites for investment advice. You people keep saying it's rigged anyway. I'm not one of the riggers, and I'm not one of the playas. I'd just like to know how Peak Stupidity will all go down.

* Yeah, don't get me started on bad graphing technique. ZH is big on that too. More on that in a subsequent post.

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