Ask Colin

The last issue (15 December 2001) of Shares Weekly Trendlines indicated on analysis, that the All Ords recent run up was a bear trap and would probably end in a nasty downturn. I accepted your interpretation and started watching for signs that would confirm your analysis, you seem to get it right so many times. However, when I read your column Trend Trader in the January Shares magazine, I got the impression that the signs were now showing that a climb off the floor, led by the Nasdaq was a distinct possibility. So, one article saying down and the other saying up. Have I got it wrong? I realise that the magazine is based on prices up to 30 November, and of course the weekly is more recent. Are the 2 possibilities incompatible, or has one replaced the other?

The last issue (15 December 2001) of Shares Weekly Trendlines indicated on analysis, that the All Ords recent run up was a bear trap and would probably end in a nasty downturn. I accepted your interpretation and started watching for signs that would confirm your analysis, you seem to get it right so many times. However, when I read your column Trend Trader in the January Shares magazine, I got the impression that the signs were now showing that a climb off the floor, led by the Nasdaq was a distinct possibility. So, one article saying down and the other saying up. Have I got it wrong? I realise that the magazine is based on prices up to 30 November, and of course the weekly is more recent. Are the 2 possibilities incompatible, or has one replaced the other?

One of the problems I have is that there are always space limitations in the columns and articles I write. I also write for a great number of readers who have varying time frames over which they are concerned to know what the market is doing. The editor also likes me to cover a wide range of stocks and markets. The end result is often a lack of cohesion in the end result with gaps in the coverage. I am not surprised that you have found it a little difficult to relate two columns written about different markets at different times and about trends in different time frames.

Shares Weekly tends to have a short term focus, though I do my best to cover the needs of longer term investors. However, a short term bias is inevitable in a weekly publication.

Shares magazine columns have to be written a couple of weeks before publication and tend to have a longer term focus.

This really explains the difference in outlook between the two columns you cite.

In the Nasdaq article I point out that a long term signal has been given. I discuss the concerns that I have about the likely reliability of the signal. However, the time frame for those comments is what may happen over many months, rather than the immediate short term. It is of primary interest to long term investors, rather than traders, for whom it is only useful background.

The Shares Weekly column is focussed on the local market and far more short term. I was concerned to indicate a signal for the next few weeks to months at the most, rather than a long term time frame.

It should also be borne in mind that no matter how good my record, it is not easy to consistently pick market direction. As I write each column, I tell you how I see it. However, signals we get are only based on probabilities. They fail some of the time and this is the nature of the game. I try to tell you when this happens, but sometimes there is not another issue of the column in time before the move has gone some distance.

I therefore hope that my columns are part of your learning process. Please do not rely on me as a guru. Rather, take my opinion, which always has reasons, as one of your inputs to forming your own view. I try to say where the pressure points are that I would be wrong, but there is not always the space to do so.

So, my columns that you refer to were taking the view that a qualified signal had flashed on the Nasdaq, but closer to home and in the short term there were danger signs.

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