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4.3¢ lucapa diamond company limited

The T/A V Fa debate is as old as Methuselah - This is clearly...

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46,789 Posts.

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16/02/16

21:39

Post #: 17036267
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Originally posted by zippy1 ↑

VoiceofReason,

That's the best (or most understandable to me) post on the LOM Chart thread.

Obviously, I am not a chartist (although I did research it a little many many years ago), but am quite mathematical and associate (possible incorrectly) charting with trying to predict probability.

Could a chart expert refer to the charting bibles and check whether charting concepts and theories can be applied to low volume illiquid shares (which is predominantly what LOM has been ...except for the last few days). I suspect that low volume and hence volatility (i.e. share price can be easily influenced by decision (for whatever reason) of a few individuals / holders) would make charting concepts ineffective for illiquid / low volume shares in predicting future share proce movement.

For example (albeit exaggerated) ... I'm sure charting concepts and theories would not effectively work on the very low liquidity LOMOA options (which have a big gaps between the buy and sell bids).

In other words, I would conclude that the less liquid a share is the less effective charting tools are ... and everyone must admit that LOM shares are (generally speaking) not that liquid and have quite low volume.

Modern trading also impacts charting ... let's use this morning as an example. Let's say investors assumed that LOM share price would appreciate due to news and announcements last night re great announcement, but they did not have funds to invest. They could place a buy order this morning and simple need to seel before close today ... to try and make a gain (using brokers funds temporarily). The fact that the share price did not appreciate (as they anticipated) and they are then forced to sell before close ... and a lower price and placing downward pressure on the share price at the close. This end of day downward movement provides a certain signal the chartists which could be totally wrong, when you consider the underlying reason it happened for a illiquid share by a handful of investors.

It should also be noted that charting is an old concept that were determined when:

(a) mum and dad investors could not easily invest online / or via computers;
(b) only serious / "full on" investors use to invest and most for longer terms, based on research and fundamentals;
(c) there was very little short term / day trader investors as there are today with technological devices facilitating this;

For these reasons, in my opinion, traditional charting concepts and theories can not be applied to low volume illiquid shares, which I consider LOM is.

For example, on a low volume day, say before 28 February 2016, a few investors sell their LOM shares to pay for their ATO tax liabilities, would put downward pressure on the LOM share price and give a completely incorrect signal the chartists ... notwithstanding that these seller may re-buy in the next few weeks when cash flow improves.

The LOM share price is too easily influenced by in essence low volume / value sales, which impact the chart results ... and hence makes charting LOM unreliable.

LOM is also a small cap company, which is making regular and significant announcement (based on capitalisation) ... charting concepts and theories can not allow for these unknown factors / announcements.

I personally believe that charting applied to illiquid LOM shares in invalid and ineffective ... not saying that this will always be the case. When LOM has a much larger capitalisation and volume / value of daily shares traded then it may work ... but I do not think it works now.

Happy to be corrected by any chartist that can provide substantiation and evidence that the above is incorrect.

Hope all LOM investors do well ... chartist and (long term) non chartists (which is my preferred investment style for LOM).

Zippy1

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The T/A V Fa debate is as old as Methuselah - This is clearly the chart forum to post charts and technical analysis - I am continually amazed why people who find no value in charting or believe it to be voodoo even bother reading the chart threads - You wont convince anybody who uses them to change their opinion so why not just stick to the fundamental threads.

nothing stock specific to LOM but here is an example of one of many people who can use charting to make money.

LOM Price at posting: 41.0¢ Sentiment: None Disclosure: Not Held
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(20min delay)
Last 4.3¢		Change 0.002(4.88%)		Mkt cap ! $12.47M

Open	High	Low	Value	Volume
4.3¢	4.3¢	3.9¢	$46.91K	1.168M

Buyers (Bids)

No.	Vol.	Price($)
1	15000	4.0¢

Sellers (Offers)

Price($)	Vol.	No.
4.3¢	98857	1

View Market Depth

No.	Vol.	Price($)
1	15000	0.040
1	77958	0.039
1	45446	0.038
1	13000	0.037
1	83360	0.036

Price($)	Vol.	No.
0.043	98857	1
0.044	59148	1
0.045	125700	3
0.046	180000	1
0.047	24900	1

Last trade - 16.10pm 28/10/2024 (20 minute delay)

LOM (ASX) Chart