Replies to post #19677 on Advanced Micro Devices Inc (AMD)

[yourbankruptcy]

sgolds, The aforementioned book presents the percentage retracements as an observation of market behavior, and does not give an explanation of why

It's clear why. Because many traders are trading based on TA, and they form the market. Market is not based on company financial prospects, market is based on how people trade.

In AMD case, the company is always at least 10% out of consensus estimates and often over 30% out. Up or down.

How can anyone trade based on consensus if it is essentially garbage? They trade just on TA.

Only Kumar is good predicting AMD, but I don't have any access to his estimates.

[dougSF30]

sgolds, I think you're missing the point. Even your own research is showing you that these "experts" can't agree on which numbers are the magic points that indicate something important. Making "ranges" is no better. Why 33-38%? Why not 34.5-40%?

Are there general psychological pressures which affect the stock price? Sure. It's when these folks who want to sell you books attempt to build fancy "systems" with overly precise "pullback points" based on arbitrary percentages, that things go wrong. And finally, does past performance predict future results? As the mutual fund warnings tell you (a joke), NO!

So some poor sap may sell because you told him that a 27% pullback implies we're going to quickly fall to a (49.2 - pi^2)% of the orignial price. Unfortunately, that night, AMD announces that HP is shipping Opteron servers, and the next day, AMD is up 50%.

"Well, it doesn't work all the time."

Yes, and my question is, does it really work better than random, blind chance? Has anyone done RIGOROUS analysis (do you understand experimental design methodology?) of any of these techniques? I doubt it. They usually cite a few examples of where it worked, and ignore the mountain of cases where it would fail.

Doug