re: hardman 4 ever what is a chart? Dear fellow inmates of this madhouse called stock market,
I agree that you should not bet money on a line or pattern in a chart. But a chart CAN, under certain circumstances, give you a hint what will happen in the future. (catbear: The main emphasis is placed on the examination of price action to determine changes in the supply and demand balance. ) Let's break it down to the basics.
First I assume that no fellow inmate belongs to the big players with millions of dollars (we buy one day, wait some time, and sell). Second, that the market is moved by the big players. If we would have an average volume of 2000 per day, you can have beautiful fundamentals or a pretty chart, but you can't make money with that. In reverse, a fair market price is made only by considerable volumes. So the market price depends mainly on the big players. Hope you will agree.
What happens if such a big player steps into (or out of) a stock? Will he take his 10 million and place an order to buy any share of HDR he can get at any price on ONE day?? - No – He has a price range and will be carefully watch how the other participants react when he buys in. The price has to come down before he places his next order. He even avoids to alert the other wolves. This can go on secretly for weeks (as long as he has not to report his holding to the ASX). If he wants to sell his stake, it's the same thing, just the other way round.
No one knows what he thinks, what he's doing or will do. But, if he's big enough (s.a.) he can't avoid to leave footmarks on the chart. If you find those foot marks early you CAN predict what direction the share price will probably take in the future.
(I think that's only one explanation why charts could work.)
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If you are drilling in Mauritania without seismic data, you minimise your chance to find oil. If you produce beautiful seismic charts of the Himalaya you will not find oil either.
As I see it, fundamentals come first, but charts can help.
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Cheers Oilseep
(As always: Don't take this as an advice to take any financial action. Take it as a game.)
HDR
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