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[sharechat] LEARNING TO INVEST >>>>>> TRENDS

From: "silverfox 101" <>
Date: Wed, 27 Jun 2001 18:06:10 +1200

Phaedrus, thinking out loud here. Starting from your TLS chart and working 
backwards, would the trendline be an indication of the value given to a 
share if it operated in a truly efficient market (ie. that all information 
about the share is reflected in its price)? So, for a constant 'up-slope', 
the company has a steady rate of growth in its intrinsic value. Any change 
in slope indicates a fundamental change in the value of the company's future 
prospects, and the oscillations around the trendline are the short-term 
market doing its thing. Is an acceptance of efficient market theory a hidden 
requisite of technical analysis?

As an aside, have you come across many shares that have a large curvature in 
one direction or the other over a long period such that a straight trendline 
differs significantly from the curve except for where it bisects at the 
beginning and end? (I'll try and draw one later if what I'm saying is not 
clear). If so, how is that dealt with?

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