No matter what “technical indicators”, “technical studies”, or whatever equations you wish to throw at a financial instrument, they are all derived from the same information: price. You can take indicators of indicators, constantly bludgeoning the data into some kind of form that seems to tell us something that the price movement hasn't told us already, but that's useless if there is blind faith involved.

There are many, many kinds of moving averages out there. All of them suffer from one kind of weakness or another, much like any sort of parameter does. The Weighted Moving Average and the Exponential Moving Average both try to address lag in the Simple Moving Average by placing emphasis in the calculation in the more recent minutes. I recommend going to Investopedia for calculations of the basic set of technical indicators. For the readers sake with regards to moving averages, an SMA is simply plotted as the average of the past 'n' periods. (usually the closing prices of said periods) General interpretations involve a faster (smaller 'n') MA crossing over a slower MA to indicate a trend. I prefer price action relative to the usual set of MA's, myself, rather than MA's relative to each other.

A new year is upon us, and with it a new President and many, many new questions for the average investor to ask him or herself or their local MP or Congressman. There are many people out there, politicians not the least of them, that point to the present financial crisis and recession and cry “see THIS is proof that capitalism is the wrong way to go.” I say that's a silly thing to use as evidence.

The volatility is at a record high, and for active traders, that can either be very good or very bad. Of course, for active traders, direction of the markets doesn't matter all that much because you can short stocks, currencies, ETFs, and also exercise calls and puts on options and so on. (actually the calls and puts part is a whole other can of worms altogether because they can be in the money one day, and out the next, thanks to the huge swings) Anyway, what makes the present market situation either very good or very bad what makes volatility such a double-edged sword – it'll make some systems brilliant and others useless. Sometimes technicals and their parameters seem to be the crystal ball everyone wants, and others that worked last week got shaken to bits. (lingo: shaken in and out of positions because of false or too-late signals) And there's no way of knowing ahead of time what parameters will suit the market conditions ahead of time, or what types of technical studies. There, as they say, lies the rub.

Well shut my mouth. The market did tank right after the FOMC announcement, (took them long enough to get it out today) but from positive territory, and bounced back out of negative where it remained at a modest gain until the coolest double top ever formed and in the last ten minutes the markets became negative. What a ride!

For those of you that don't know, a mugpunters would be referring to any little-guy market participants, who get fooled en mass to the benefit of someone bigger and smarter. Ever seen the market drop right before it took off? Attracting sellers, baby.

“Bottoms are a lot better to watch than try to catch.” - I believe that was the lovely Becky Quick of CNBC that said that. I might have the exact wording wrong and welcome a correction. Anyway, a stock market bottom seems to be all anyone really wants to talk about. Today's lesson: picking a market turnaround on a candlestick chart.