Strategesis

Chart of the S&P 500 US Stock Index [Quarterly bars (each bar is 3 months of price action)]

(Click on image for larger view)

Trends and momentup both go up and down in cycles. However, at any point in time, the current trend and momentum are more likely to continue than to reverse.

Also, the trend and momentum can be different than each other (trend can be up but the momentum can be down.) And they both can be different at different time scales. Strong uptrends as seen on a monthly or quarterly chart can and do experience days, even weeks, with net downward price movement.

Future direction of market prices cannot be predicted deterministically or mechanically, only probabilistically. It’s biology and psychology, not differential equations and mechanical engineering.

This entry was posted on 2011-02-26 at 13:14 and is filed under education, price chart, technical analysis. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.