A question about the actions of Large Players

[Ellis Wyatt]

Pascal,

The current equities range obviously has us independent amateurs confused. I'm wondering if you have ever given any thought to intervals in which the large players act similarly confused? The below image reminded me of the book's IMAX example:



FITB is a regional US bank, not special in any particular way. They paid back the TARP, but nothing material has changed since the last earnings, which missed @ $0.10 v. expected $0.26 and lower revenues, on April 21.


The IMAX example was a case of false-positive, where value investors rush in, turn out to have mis-timed, and are then followed by bottom feeders (who may also turn out to be early). Have you, or anyone, seen this double-clutch pattern before in a case where there is no news of significance?

(I'm not buying, nor do I hold this name. But I've seen a couple of these double head-bumps lately, and they seem new. Unless it's just that I'm relatively new with EV and haven't seen enough permutations yet.)

[Pascal]

Pascal,

The current equities range obviously has us independent amateurs confused. I'm wondering if you have ever given any thought to intervals in which the large players act similarly confused? The below image reminded me of the book's IMAX example:

Attachment 8592

FITB is a regional US bank, not special in any particular way. They paid back the TARP, but nothing material has changed since the last earnings, which missed @ $0.10 v. expected $0.26 and lower revenues, on April 21.


The IMAX example was a case of false-positive, where value investors rush in, turn out to have mis-timed, and are then followed by bottom feeders (who may also turn out to be early). Have you, or anyone, seen this double-clutch pattern before in a case where there is no news of significance?

(I'm not buying, nor do I hold this name. But I've seen a couple of these double head-bumps lately, and they seem new. Unless it's just that I'm relatively new with EV and haven't seen enough permutations yet.)

This is a good question for which there is no good answer.
Statistically, if you buy in the direction of an increasing 3D EV and sell X-days later, the returns are lower than a Buy/Hold strategy. This means that EV has no predictive value when taken independently. (That observation was published in the VIT book). What is important is to use EV at the right timing: where the market/sector or stock hesitates, such as in a trading range or at a support/resistance level, or at an Active Boundaries limit.

FITB is really heavily traded. So we might have some funds buying and other funds selling, which means "no clear view" from large players.