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Technical Analysis Fallacy

  • #10,781
  • Oct 2, 2009 5:41am Oct 2, 2009 5:41am
Quoting auxesis
Whisper numbers yesterday are worse than expected, will probably be a wild ride, stay nimble everyone.

@ Mash, be safe hope you and yours are fairing well.
yup not trading heavily if im outside my room , so in the ultradefensive side ...
good luck to all
To Live is the rarest thing in the world , Most people exist , that is all
  • #10,782
  • Oct 2, 2009 5:41am Oct 2, 2009 5:41am
made 70 pips in 5 sec...
  • #10,783
  • Oct 2, 2009 6:51am Oct 2, 2009 6:51am
Quoting M-H Trader
made 70 pips in 5 sec...
Nice, but... what ever you do, don't crash the ambulance...

Rgs,

Textor.
  • #10,784
  • Oct 2, 2009 7:10am Oct 2, 2009 7:10am
Quoting textor
Nice, but... what ever you do, don't crash the ambulance...

Rgs,

Textor.
Yes in and out very quickly..
  • #10,785
  • Oct 2, 2009 8:15am Oct 2, 2009 8:15am
lots of usd sell now lots of buying... what is it!
  • #10,786
  • Oct 3, 2009 1:03am Oct 3, 2009 1:03am
Quoting M-H Trader
lots of usd sell now lots of buying... what is it!
imbeciles
thats the word you may be looking for.

When these run the monetary policies, what can you expect?

Imagine this.
A whole world of investors sees a technical major strength in recovery. They go long, all holding their breath awaiting confirmation of their expectations thru economic figs release. Then wahla the release , its bad. Its a mirage.
Yhe market makers refuses to quote and shades away quickly, followed by an exodus of buyers all scrambling to exit their shorts.And unable to find prices to liquidate, because the pain in the behinds, are not there to provide liquidity, prices thin down making exit difficult.
Gone are the days when honourable, tough people make the markets,and honourable consistent and goal directed people dictated policies.
Now policies are in stealth mode, they behave unstable and subjective.Market is taken over by pip stealing middle men and good access is not available. Thieves stand in where true market makers used to stand.

this happens , when traditional honourable practices are being superceded by imbeciles who are unable to carry their responsibilities in an honourable and consistent manner. This the new world order. People are not accountable to their task anymore. They just warm the seats, enjoying only perks from their positions. if the perks were not there, no one would.

maybe honour is the word.

Expect more of the same.

regards
  • #10,787
  • Edited 6:04am Oct 3, 2009 5:20am | Edited 6:04am
I just wanted to add a small opinion about the NFP . If you were to take the ADP Forecast from the current month and then take the ADP Actual that came out the Wednesday before the NFP and the divide that current actual ADP by the current month's forecast ADP, you would come up with a percentage number of how much to multiply the last month's NFP and I have found that number is fairly close to the actual current NFP to be released. Not exact , but then you could look at the projected NFP number and know fairly well if the current NFP number is going to be much worse than expected or not.

An interesting thing I have noticed of late on NFPs is that they react a little differently than they traditionally have in the past. The reason in my opinion is because when the number is worse than expected, in the past USD would decline, but now because everyone is so risk adverse, there is a knee jerk flight to safety mode and everyone starts buying US Treasuries and bonds, which in turn over rides the Dollar weakness and strengthens the USD and thereby forces any cross of it to decline.

This was seen yesterday easily in the heavy Treasury buying that started hours before the NFP scheduled release.

Then of course after the risk is known and the number is out there for a while, the natural rhythm of the market takes over and the USD declines on the worse than expected release. I had forecast the number to be -228.6 which was better than what actually was released, but was more than enough negative, to tell me from Wednesday, that the number was going to be much worse than the consensus forecast that had it at about -180 .

IMO, It really pays to pay attention to what the Treasury market is doing in the hours before the NFP.

Regards, Scott

EDIT: I wrote the formula wrong when posting this earlier and have corrected it. The correction is bolded
  • #10,788
  • Oct 3, 2009 5:37am Oct 3, 2009 5:37am
Quoting smjones
I just wanted to add a small opinion about the NFP . If you were to take the ADP actual from the previous month and then take the ADP Actual that came out the Wednesday before the NFP and the divide that current actual ADP by the previous month's actual ADP, you would come up with a percentage number of how much to multiply the last month's NFP and I have found that number is fairly close to the actual current NFP to be released....
Thank you Scott for this eye opening post.
Enter Signature
  • #10,789
  • Oct 3, 2009 6:43am Oct 3, 2009 6:43am
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  • #10,790
  • Oct 3, 2009 7:11am Oct 3, 2009 7:11am
Happy weekend to everyone. Just read smjones and fti's comments. NFP announcements have become too difficult to trade around, so I have been sitting on the sidelines for an hour before and after the announcements. Too much speculation going on, and I do not like to guess so much in my trading. Once things settle down after the announcement and you see treasuries and/or equities start to move, then trade - imho.

Allow me one moment to rant. The NFP number was a horrible number for the US economy. However, we also need to consider the fact that NFP does not do a good job of tracking employment gains/losses in small businesses in the US. Small businesses account for 50% of employment in the US, so if you want to fix the employement problem in the US, you first target small businesses. Nothing that the Obama administration has done targets small businesses, and in fact, nearly everything they have done has raised the level of uncertainty for small business owners. Small business owners are not able to get financing from banks, and in a recent survey, many small business owners are running out of cash reserves. But don't worry about any of that, our president found time to fly to Denmark to make a pitch for the Olympics in Chicago -- ooop that did not work for him either.

I loved listening to CNBC talking heads finally admitting that things are not as rosy as they had predicted (could it be that Obama's stimulus was not working after all??? oh my!!!).

Thanks for letting me blow off some steam.
  • #10,791
  • Oct 3, 2009 8:43am Oct 3, 2009 8:43am
Quoting fti
imbeciles
thats the word you may be looking for.

When these run the monetary policies, what can you expect?

Imagine this.
A whole world of investors sees a technical major strength in recovery. They go long, all holding their breath awaiting confirmation of their expectations thru economic figs release. Then wahla the release , its bad. Its a mirage.
Yhe market makers refuses to quote and shades away quickly, followed by an exodus of buyers all scrambling to exit their shorts.And unable to find prices to liquidate, because the pain in the behinds,...
aww thanks for the heads up... will be more nimble now
  • #10,792
  • Oct 3, 2009 7:40pm Oct 3, 2009 7:40pm
Quoting smjones
I just wanted to add a small opinion about the NFP . If you were to take the ADP Forecast from the current month and then take the ADP Actual that came out the Wednesday before the NFP and the divide that current actual ADP by the current month's forecast ADP,...

... I had forecast the number to be -228.6
this month forecast ADP -200K
actual -254K

(-254) / (-200) = 1.27

previous NFP -201K

(-201) * 1.27 = -255.27

i can`t get the -228.6.


sorry, problably this is a super stupid question.
  • #10,793
  • Oct 3, 2009 8:11pm Oct 3, 2009 8:11pm
Quoting giraia_br
this month forecast ADP -200K
actual -254K

(-254) / (-200) = 1.27

previous NFP -201K

(-201) * 1.27 = -255.27

i can`t get the -228.6.


sorry, problably this is a super stupid question.
Well, you are correct, and that is because I divided by the forecast of 180k instead of the actual like I was suppose to. LOL even so, the number was more than enough negative to know that it was going to be much worse than expected, and that is the point I am trying to make. If I had divided it correctly, and not made the mistake of using the forecast number, the number would have been within 1k of the actual number that came out, so that seems pretty close to me.
  • #10,794
  • Oct 3, 2009 8:27pm Oct 3, 2009 8:27pm
Quoting giraia_br
this month forecast ADP -200K
actual -254K

(-254) / (-200) = 1.27

previous NFP -201K

(-201) * 1.27 = -255.27

i can`t get the -228.6.


sorry, problably this is a super stupid question.
Below are the ADP figures ----------------- -- (Actual vs Expected)
Sep 2, 2009
-298K
-250K

Aug 5, 2009
-371K
-351K

Jul 1, 2009
-473K
-388K

Jun 3, 2009
-532K
-525K

May 6, 2009
-491K
-644K

Apr 1, 2009
-742K
-660K



These reveal an error range of

September 298/254 = 1.17 = 17% error variance
August 371/351 = 1.06 = 6% error variance
July 473/388 = 1.22 = 22% error variance
June 532/525 = 1.013 = 1.3 error variance
May 644/491 = 1.31 = 31% error variance
April 742/660 = 1.12 = 12% error variance

Just goes toward telling us that ADP predictions/expectations are so wrong that they are of no real value in predictive analysis.

Also the huge revisions each month make it even worse.
  • #10,795
  • Oct 3, 2009 9:08pm Oct 3, 2009 9:08pm
Quoting smjones
Well, you are correct, and that is because I divided by the forecast of 180k instead of the actual like I was suppose to. LOL even so, the number was more than enough negative to know that it was going to be much worse than expected, and that is the point I am trying to make. If I had divided it correctly, and not made the mistake of using the forecast number, the number would have been within 1k of the actual number that came out, so that seems pretty close to me.
ok Scott, many thanks for clarifying. And many thanks for sharing it of course.
  • #10,796
  • Oct 3, 2009 9:30pm Oct 3, 2009 9:30pm
Quoting smjones
I just wanted to add a small opinion about the NFP .[b]
Thanks, Scott. I've been waiting a year for you to let this cat out of the bag.
  • #10,797
  • Oct 3, 2009 10:03pm Oct 3, 2009 10:03pm
Quoting billflet
Thanks, Scott. I've been waiting a year for you to let this cat out of the bag.
me too. Since the prediction news thread, right? :nerd:

i am aways trying to catch these slippery cats
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  • #10,798
  • Edited 4:37am Oct 4, 2009 3:46am | Edited 4:37am
Well enjoy it, but that will probably be the last time, LOL. I finished my answer from a year and a half ago. It has seemed to upset people, though. LOL. I saw a post on another thread saying I had invented a new terminology to explain the past and then the post above that shows the variance of this method and that ADP had no value. LOL. I have been trading this for 2 years, as some people know. It is not the number that is important, it is the expectation relationship. I have no need to defend what I have done for so long. Just trying to help, but if it is more confusing than helpful, that is my fault and I certainly do not want to confuse anyone.
  • #10,799
  • Oct 4, 2009 7:06am Oct 4, 2009 7:06am
Hi smjones, giraia_br, capitalx, and billflet, welcome to the TAF thread. Not sure I have seen you participate here before, but thanks for your posts on NFP. The host of this thread, fti, has provided many treasures for forex traders to discover, but you must start by reading and then re-reading the first 200 pages of this thread. Not everyone here follows the approach exactly, but we are respectful of the ideas presented. Good luck and hope to see you again soon.
  • #10,800
  • Oct 4, 2009 7:25am Oct 4, 2009 7:25am
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