pa, several things I consider off the top of my head are (in no...

pa, several things I consider off the top of my head are
(in no particular order)

1. identify clear trends in peaks and troughs (up, down, sideways); sometimes there is an intersection of differing intentions (these can be particularly strong)
2. the number of times a trend line intersects peaks and troughs and the more often the trend line is validated
3. milestone events that might have occured to cause a particular trough or peak
4. it's clearly eveident in many charts that the market 'tests' values (as peaks and troughs) - some values become historical benchmarks for a reason; so too some trends become historical for a reason
5. fundamental (fiscal, accounting, reality) reasons why prices go up and down
6. possible reasons to why events might permit trends to be broken (break out up or down) as one off type events or for a period of time
7. Ignoring what is noise from an underlying direction in price; looking for the stream if you will, and not the eddies
8. Repeats of cycles (this is a huge subject on it's own) and one I rarely emply but probably should - short, seasonal and long cycles
9. Ignore weak correlations, or weak trends
10. Simple is best; keep it uncluttered
11. Always, don't assume that the whole of the market is going in the same direction, and is in continuous agreement.

I didn't arrive at these lines by accident, nor did I force these lines onto the chart. But trying them out in several positions once the 'strong' lines became obvious, and the picture formulated into a story, and the story made sense (to me anyhow).

I always try to imagine the deliberate intent behind eveything a chart tells me - because EVERY trade is a deliberate action and leaves its mark on a chart. What was the market thinking or doing at the time? Momentum can be seen in a chart (virtually every chart in late 2008 had lots of downward momentum).

Momentum reflects the opinion of the croud. Assuming always (in the first instance anyway) that the croud is educated (i.e. an efficient market) and the price is fair, then ask yourself why it was fair ... and is it fair histroically (which we are seeing now) as opposed to times of boom and flooding of liquidity (which explains the period 1996 onwards). Think google, amazon, microsoft, apple etc.

I don't believe it's coincidence that 1000 traders around the world on a particular day turn a stocks price around without some fundamental belief that they are doing so at the right price. Indexes are far more complex, and the fact that they pattern at all is remarkable, but still believable IMO.

IMO, there is never any guesswork into interpreting a chart, there is only misunderstanding. Sometimes, the misunderstanding is the dynamics of the market not knowing what the heck it was doing (mixed signals from elsewhere).

... and liquidity is the only thing that keeps the market doors open and the lights on (it IS the market cap). It's the balance of liquidity you might be referring to that places the markets position relative to fair value on any given day.

The same principle applies for everything paid for in cash money. "Inflation" can affect the stockmarket as can "deflation" - the mechanics of it are only slightly different to sovereign governance in that their is no governor except the market itself.

Almost anything from WD Gann is worth reading if you have the time. So too is Clif Droke on support and resistance. Books like "State of Play" (my favorite, Australian) give you an understanding on the policies of government and how to read the bnoise out of the news.

I now firmly believe that eventually, things will return to a place of common value. Sometimes this is up, and sometimes this is down. This is what these charts are telling me.

Others might form a different view, or arrive at the same solution via different means. But don't impress your opinion on the chart, but let the chart give you it's opinion.

(will end on that little phylosophical ditty)
regards,
pw