Loading ...A Mind of it’s Own
in 1997 in Physica A., a publication of the European Physical Society:
“Stock markets are fascinating structures with analogies to what is arguably the most complex dynamical system found in natural sciences, i.e., the human mind. Instead of the usual interpretation of the Efficient Market Hypothesis in which traders extract and incorporate consciously (by their action) all information contained in market prices, we propose that the market as a whole can exhibit an “emergent” behavior not shared by any of its constituents. In other words, we have in mind the process of the emergence of intelligent behavior at a macroscopic scale that individuals at the microscopic scales have no idea of. This process has been discussed in biology for instance in the animal populations such as ant colonies or in connection with the emergence of consciousness.”
In plain English “Chaos”
This might explain the incredible precision of trend lines. Prices bouncing off a diagonal line whose intercept values could not possibly be known or calculated by anyone and yet we see the phenomenon every day in the markets. Horizontal levels of support and resistance formed by previous price action can easily be remembered and become expected places for prices to reverse, but trend lines are ratios (slopes) and change continuously with time –always new, but still straight and predictable.
A real mystery to me is why –sometimes– trend lines follow a linear scale and sometimes the follow a logarithmic scale. No one has ever really answered the question of whether log or linear is the best scale to use and the conventional wisdom seems to be to toggle between the two and see which one the market is responding to.
Exactly…there is a code the market speaks in…our job is to discover it on a daily basis