Hysteresis, from Jim Sogi

March 19, 2008 |

Edwards & MageeWith today's big reversal off yesterday's big run, it looks like an expanding range, the worst of all possible worlds for most, especially the TA guys. I regret throwing out my Edwards and Magee as there was some work on expanding ranges, diamonds and the like which might be good to look at. It is hysteresis with everyone piling in on either the bid or ask each day. It's the situation with the thermostat either full on or full off with the temperature starting to swing wildly. All the other commodities are starting to slosh in the tub as well. The problem is we have monkeys at the controls, and the readings are being printed by monkeys as well making things difficult. It's like the red/black ball problem with the monkeys changing the balls in the tub, making it hard to compute stats with that kind of shenanigans going on. Looking back it seems so obvious but hard while it's happening to make the judgment and to predict when we are out in the fat tails of the distributions. Keeping it real simple seems to be the way to go. Gold is down hard, (just as I was about to try sell my hoard of course) along with what others have pointed out as reversals as well. With the MZM rocketing up its like driving a 400 HP hot rod out there in the market. The Bataille de la Ronde will be interesting tomorrow.


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