Przemyslaw Radomski, CFA

Przemyslaw Radomski, CFA
Contributor since: 2009
Company: Sunshine Profits
I'm glad to read that.
Well, actually there is a phenomenon called "autocorrelation" (statistical models should be "autocorrelation-free"), but I don't think this is the place to discuss it.
Fundamentals ARE key to long term (!) investment, but I already wrote about it in my previous comment. Self-fulfilling prophecies and other mechanism that are often used to "explain" technical analysis (survivorship bias etc.) are one thing - but - without getting into more detailed discussion - just take a look at a trend line that holds several times (it will be easy to find one) and try to explain that it's not there. It is and it works.

I realize that there is a large assymetry between rates of return that traders achieve (not many people gain enormous amounts of capital, and many lose), but that is no proof that the technical analysis does not work - "if you can't dance, don't blame the dancefloor".

Getting back to statistics - when applying statistical tools to any market (including precious metals market), one needs to be careful, as almost all popular models assume the normal distribution of returns - which is not true. I've developed several models that are available on my website, and I always emphasize which parts can be used directly, and which rather only on a comparative basis. You will find them in the tools section:

On Jun 09 02:40 PM Spartacuss wrote:
> In statistical analysis, one finds that a
> thing cannot be a function of itself, period.
Fundamentals are the thing that matters the most in the long term and I couldn't agree more that they are favorable for the precious metals sector.

Still, in the short run, fundamentals will not help you to determine the best time/price level for your trades in any market. Short run is determined by investors'/speculators' emotions and this is where technicals become useful.

Of course, one should use the methodology that best suits them and their risk preferences, however my research indicates that using both: long- and short-term approach leads to best resutls. Please refer to this essay for details.
On Jun 09 10:51 AM DONE_SONZ wrote:
> Fundamentals trump technicals.Inflation,debt defaults,0% interest
> rates,debt monetizing,currency crisis looming,gold hoarding,gold
> cartel playing with fire, to name a few.Yeah,go ahead and bet on
> the dollar .Nice try.
You're right, that's why it's especially important to check each tool's / indicator's efficiency on a particular market / sector / stock - and even customize each indicator's parameters accordingly.
On Jun 04 12:26 PM silverwood wrote:
> You point out in your silver chart on the RSI where silver poked
> above 70 entering overbought condition. This is generally a good
> place to take some profits. I have seen many times thought, in other
> markets, where RSI stayed overbought for quite some time and if you
> were to have sold early you would have missed the best part of the
> move.
Naturally, it has legs - after all, PMs have been moving along with their secular trend, which I believe is up. However, nothing moves straight up, or straight down.

The USD Index has moved about 10% lower in just 6 weeks (rather temporarily oversold) and has just moved much higher intra-day, which may indicate that a local (!) bottom is already in.