The New Way for TA

I have lamented, no complained, no whined for years that technical analysis is just not what it used to be. I still think it works but with the Fed distorting the market like a black hole in reverse little things like momentum, sentiment, price structure and even (shudder) earnings have taken a back seat. Forget the distortions by ETFs and inverse ETFs. We really don't know if a trade is demand, supply or hedge anymore.

Charts break down and then they don't. Stocks get crushed and immediately rebound. And bad economic news is good because it will keep the Fed puking out cash projectile style. Inflation? We don't go no stinkin' inflation - because the economy blows. But all those dollars chasing fewer goods? Forget it.

Bizarro. And because supply and demand are subverted, charts just don't do what they were created to do. You want to measure the mood of the crowd? Just look at the Fed.

This is why I ended up at Stocktoberfest last week in Coronado, CA. Besides having not good, not great but perfect weather I saw the array of speakers and presentations and just had to be there. It seemed to be the way of the future in a business when everyone and their brother has access to everything all the time. Why bother with a CMT? (just kidding, Ralph)? Who needs a $2500/month data terminal when just about everything is free?  Certainly nobody needs to pay for advice (which killed the radio star for me)

So rather than trying to read a chart that is no longer being driven by what it was designed to measure, it is time to step into 2013 and learn the ways of the crowd all over again. Follow it or fade it but we can no longer ignore it.

One product trolled social media to find out what everyone loved and hated. The result? Buy Google before it gapped up and buy some more when it broke out again. There was actual chart reading involved setting objectives and understanding that there was indeed a new trend after only three data points. You cannot do that without taking the social pulse of the stock.

Another product trolled social media to find out who we should follow in the first place. It determines who is a major influencer and who has gained respect from his/her peers.

One speaker did not have a product but rather a story. He told us how he figured out what was going to be the next trend in computer hardware and bought a piece of a company that made one little, tiny yet indispensable part of that hardware. Social media can help with that.

Another speaker saw a trend in the home where everything would be wirelessly controlled. Who makes the components for that? And who makes the antidote for all the radiation we'll be bathed in?

Make your own ETF to invest in an idea. Wear technology. Think differently about crises because Detroit downgrades took top notch nearby credits with them. Or totally unrelated municipal entities that simply had Detroit in their names.

One hedge fund manager showed how he used standard TA and it did indeed still work. But then this dawned on me: We are taught that the price contains all the actions and feelings of everyone else in the market. Isn't that what social media does today? Imagine what would happen if we could crack the code of putting both together?

Maybe there is hope for this old chart reader. Who needs a consultant in their start-up?

People Data Needed

I was blogging about a conference for Barron's Online but the following was not quite suited for them. Here is what I wrote.

At the #Stocktoberfest conference by social media platform @Stocktwits, founder Howard Lindzon suggested the price and volume are changing. We need more in the analysis and that means “people” data”. What are people saying about the market or individual stocks? Who is buying and who is selling? This information can help investors decide is there is too much buzz around a stock or perhaps too much bearishness.

Lindzon added that this distributed thinking means that there is no more high profile analyst coming down from the mountaintop saying to buy or sell. With social media, investors need not be experts in all types of analysis and can access the collective wisdom of everyone in the market.

Blue Dogs and Irony

I was chatting with a blue dog democrat the other day although this person did not realize that is exactly what they believed. Of course, Obamacare came up as did the problems with radical conservatives, especially those in the media.

One political show had drifted a bit too far to the right and in my view was messing up their message. The blue dog said that they spend time  tearing down the other side and that does not help them raise themselves up. I happened to agree with that sentiment.

Then we moved on to other topics including the poor and again we agreed that there should be some sort of system in place to help those in need - true need. We also agreed that the gap between rich and poor had gotten unacceptably wide. Blue dog though taxing the rich was a good idea to help the poor.

I did not respond but thought to myself, so you want to tear them down (financially) to help close the income gap? But you just said that tearing someone down does not help raise other higher.

Yes, the income gap is bad but wouldn't it be better to raise the poor higher to close it? Tearing down the rich does not make poor people better off.

I will leave it there because this is not a political blog.  The financial implications are rather obvious, well, to me anyway.

Twitter on the Blog

As you can see, I am playing around with Blogger Templates so I can make my Twitter feed a bit more user friendly here. There has been some feedback that people just don't want to deal with Twitter and an old friend and colleague told me many firms prohibit Twitter applications on their systems. He said Twitter will indeed come through on the blog so here we are.

When I have something to say that needs more space - and I do have a comment fomenting on the how the public really does not get what they think they do - I can publish it as a traditional blog. In the meantime, my Twitter feed is just below so scroll down.

Thanks for your support,
- mk

Using Twitter instead

As you can tell, blog activity has gotten very sparse. Please follow me on Twitter, where I am far more active. @mnkahn