--- Doug Henwood <dhenwood at panix.com> wrote: > Bob Morris
wrote:
>
> > >>>EWT founder Robert Prechter argues that you can analyze
> the stock
> >>>>market by following cultural trends. Punk is bearish.
> Girl groups are
> >>>>popular during corrections.
> >
> >Victor Neiderhoffer, in Education of a Speculator, explains
> cogently why
> >mapping two stock charts together and discovering
> "similarities" is often
> >just looking at random noise
Just to point out that the phenomenon of "spurious regression" guarantees that even if you wheel in the linear regression model on two stock charts, unless you're very careful, you're going to get meaningless results.
> Hmm, well, I think Prechter may have a point. If you accept
> the point
> that stock markets reflect popular moods, and you accept the
> fact
> that pop culture has something to do with popular moods, then
> you
> can't dismiss the possibility that stock markets and pop
> culture
> would show some correlation.
It is fair to say, however, that Prechter's views connecting quantitative and non-quantitative data (can there be non-quantitative data? my pedant's instint momentarily deserts me) are fairly controversial even in the Elliott Wave community. Orthodox Elliotitians of the sort who aspire to appear on CNBC tend toward the view that Elliot Waves are a statistical phenomenon of numbers rather than a universal law of human behaviour.
>Stock markets thrive on euphoria
> and
> optimism - in contrast with commodity markets, as Prechter's
> also
> argued, which peak on fear (of shortage, etc.). Punk thrives
> on anger
> and something like nihilism ("No future for you!"). Of course
> it's
> sometimes ironized, and usually marginal, but it flourished
> in the
> 1970s, receded in the 1980s (sure there was hardcore and all,
> but it
> was a lot more obscure), and had a renaissance in the
> gloomy/anxious
> early 1990s in grunge, riot grrrl, other indie bands, and
> then
> receded as the Clintonian bull rose. Maybe Bush and the bear
> will
> bring it back again.
Would be interesting to do some work on Granger-causation to see whether punk is a leading or lagging indicator. What we need is a validated time series of the deadness or otherwise of punk rock to put on the left hand side of the equation. Sounds like a job for prominent financial commentator with an interest in punk ..... index construction is a surprisingly lucrative business ...
>
> Charts are another story. Burton Malkiel exposed some
> technicians to
> some charts he'd randomly generated, and they found their
> usual
> pennants, double bottoms, and rising wedges anyway.
Hrrm .... the state of the art has moved quite a bit beyond Malkiel (enough that there's now a book out called "A Non-Random Walk Down Wall Street"), and some of these patterns are now thought to reflect real phenomena in the market. But that's one for another day ...
dd
>
> Doug
===== ... in countries which do not enjoy Mediterranean sunshine idleness is more difficult, and a great public propaganda will be required to inaugurate it. -- Bertrand Russell
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