Regarding trends:
for those that have online subscriptions to the FT (which should be a massive % of people on this forum), please see this:
Confused by a fair weather trend
for those without access, the comment&analysis piece by John Authers w/ the FT chronicles the problems with trading using trendlines.
2p2 i don't think would be happy if i posted copywritten material so i can't post the whole article for all.
i can, however, post the intro:
[ QUOTE ]
The trend is your friend. That is an old saw on the market, and it has made many rich. In the hurly-burly of the dealing room, clear trends or at least trends that are clear if you can look up the chart on a Bloomberg terminal give traders something to hold on to. There is an unfortunate corollary. When the trend breaks, you have nothing to hold on to. That is when panic ensues
[/ QUOTE ]
the article then goes on to explain how the peaks of each cycle have been the same or lower than the ones that preceeded it. the business cycle was thought to be ever reducing in amplitude as it relates to inflation & bond yields.
that trend analysis proved dead wrong thursday morning as the us10yr yield passed 5.05% (the trend line of demarcation). then, after a loonnngnggg time where us10yr yeilds wouldn't move by more than a few bps in a day, jumped to 5.13 and then to 5.24%.
that was a small panic caused by the holding of trends in the face of logic & data and then being forced to realize that trading strategy was wrong.
one goal imo is to never make that kind of mistake.
Barron