Re: [CANSLIM] Devil's Advocate: Why bother with fundamentals?

From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Re: [CANSLIM] Devil's Advocate: Why bother with fundamentals?
Date: Wed, 19 Dec 2001 14:40:20 -0600

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Good points, jans. I suppose in a market where everyone is worried that the
rally will end at any moment, the fear and greed cycle gets compressed. And
yes, I believe fund managers add to the cycles, they are, afterall, human
and they are driven by performance review objectives if they are to generate
their year-end bonuses. Too bad it'll only be $2million this year instead of
the usual $10million. Sniff, sniff, get me a Kleenex, will you?

Katherine

- ----- Original Message -----
From: <Spencer48@aol.com>
To: <canslim@lists.xmission.com>
Sent: Wednesday, December 19, 2001 11:54 AM
Subject: Re: [CANSLIM] Devil's Advocate: Why bother with fundamentals?


> Katherine:
>
>      You put it in a nutshell:  Technicals are a proxy for human
psychology.
> Overbought/Oversold indicators imply that.  But then, one can wonder: why
do
> OB/OS work one time but not another.  Because , I believe, human action is
> based, at least in the stock market, on two things:  Greed and Fear.  So,
why
> the parabolic going up: Because stock pickers are greedy.  And why the
> parabolic going down:  Because no one wants to be left holding the bag.
>
>      Thus when INVN made it's explosive parabolic assault to the top, it
was
> logical:  Pickers didn't want to be left lingering on the ground (even
those
> who don't know what "tomography technology" is).  They were greedy, thus,
the
> rise.  As a matter of fact, Tom's alert that once an LLUR changes angles
one
> should be wary of holding that stock suggests that.  As does one of WON's
> selling points, when he advises to sell if the stock makes a Very
Prominent
> one day move (ie, it moves more-percentage wise-in one day than it has in
1
> month).
>
>      What would be interesting would be to see if fund managers are also
> caught up in the Greed/Fear dichotomy.  And are they actually caught up in
> those two emotions, or are they just trying to exploit them?
>
> jans
>
>
> In a message dated 12/19/2001 11:55:46 AM Eastern Standard Time,
> kmalm@earthlink.net writes:
>
> << My gut feel on this is that technicals are a
>  proxies for human action and reaction. In *most* cases, we can assume
that
>  people will react a certain way in a given circumstance. For example,
when a
>  stock in an underlying uptrend moves away from the intermediate term
trend
>  and starts to go too far too fast, we assume that there will be some
people
>  who will perceive it as "going too far too fast" and sell it or short it.
>  That action brings the stock back to the underlying intermediate term
trend.
>  But nothing has changed fundamentally about the company in this short
time
>  period. It's just perception about price and the resulting supply/demand.
>
>  But every once and a while, these things confound us. Just look at INVN
>  recently. Did it make sense that it went parabolic? I don't think so. Did
it
>  continue to go up in price *despite* the fact that early in that
parabolic
>  rise we thought the probability that it could continue the move for
another
>  week was very low? >>
>
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