False Signal

  

Categories: Trading, Charts

Braxton Hicks. Look it up. Same idea.

The term is common among chartists. The stock looked like it was in a breakout pattern all set to pop from $43 to $52, but no...it receeded like our hairlines around the Shmoop shop and faded back to $35 where it sits today, shopping for wigs.

Related or Semi-related Video

Finance: What is a Chartist?26 Views

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Finance allah shmoop What is a chartist Well here's a

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chart and here's a chart and here's a chart All

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right Well these are pages from the investing bible of

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a chartist A chartist is an investor really a traitor

00:19

as they tend to own stocks for a much shorter

00:22

period of time than a longer term Really invest or

00:26

type person a chartist relies solely on the patterns The

00:31

pattern's right there These are all patterns imputed by the

00:34

charts that they you know sitting poor threw for hours

00:38

and hours So check out this chart see how the

00:40

plotted data closely follows the characteristic line there The characteristic

00:46

line basically is plodded through all those dots Yes So

00:48

they're going to stare at that try to figure out

00:50

where that line is going in the future right Get

00:52

the crystal ball or all right Well let's look at

00:54

this one where the data forms what looks like Well

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the head and shoulders of someone who you know doesn't

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have a neck that's Just common pattern in trading And

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you know if you stopped looking at it and two

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thirds of the way through there it's heading down Well

01:08

Maybe you'd be short the stock for a few days

01:10

and then you see it bottoming and then you'd be

01:13

long and try to make money that way Good luck

01:16

All right len look at this chart Where is right

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here where the data appears to We'll break away from

01:21

the established pattern which was all just kind of boring

01:24

Lee along down here And then suddenly everything goes up

01:26

Yeah start doing its own thing Well maybe the company

01:29

reported a good quarter or ah you know the government

01:31

cut taxes again Everything went up So these were the

01:34

tools of the chartist The chart's a chartist is the

01:38

opposite of a fundamental investor meaning that she doesn't know

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or care what the company does for a living Really

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she doesn't care about their p e ratio nor their

01:47

profit margins nor their debt levels on their balance sheet

01:51

nor much of anything fundamental about how their business runs

01:55

Chartist just care about the pattern they glean from the

01:59

charts and all the charts always work until they don't

02:03

And what happens when the meteor hits that is that 00:02:06.0 --> [endTime] predictable on a chart Ah

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