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Awwww commmonnn ... the facts are getting fuzzy as hell.
"Technical are derivates of price and can not therefore drive price. They are calculated on past prices so how can they lead future price?"
Rubbish (to Horus too). Price can drive price (and thus so can derivatives of price) ... see the typical overreaction in the marketplace ... that's not just driven by fundamentals and news, its frequently driven by peoples reactions to what's happening to price.
"This is especially evedent in the indecies, where no contract is made until a buyer and seller come together."
Presumably you mean in futures contracts based on the future value of indexes. Still wrong really. Sure you need a buyer and seller (of kinds) to create the contracts in the first place but most day to day trading doesn't require the creation of new contracts.
"We ask 10 people if they are bullish. They all say yes and they are long. Well, there is a bear on the other side of the trade (the seller). Therefore the amount of bulls and bears is equal."
Here we go again. Frequently in a market move up the buyers are bulls but the sellers are not bears ... they are people who went long at a price they perceived as value and are now unloading positions for a profit. So they are hardly bears and in fact after a pull back and the re-establishment of value may be active bulls again. Come to think of it, substantial elements of an up move are driven by bears who sold too early and are thus buying back contracts as cascading stops are smashed. They may still be bears, just bears in pain.
There's more but that's enough from me. |
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And the
sun doesn't actually rise: the
earth rotates. lol
True, during a day you can have one new bull enter the market and the seller can be already long, but liquidating. BUT THAT TRANSACTION HAS ONE BUYER AND ONE SELLER.
The market will bring them together at a point where their disagreement on value is at an agreed upon price. Therefore every price will be valid and has two sides. Hence No overbought or oversold condition can exist.
Since all prices are valid, as each party in a two side transaction are willing to do business at that level, markets can not overract.
Anybody that says the market is overreacting (to the upside) is saying "price has move further than I thought it would". Or, "I am short and getting my a** handed to me".
Like you said , a new contract is not necessarily created on every transaction. But every transaction has two sides and so a new buyer still has to be let in by a seller. Now if the seller is not a "bear" as you posit, then you only further prove that Bullish/Bearish consensus does not exist as it is would not correctly reflect market reality. That is: two bulls here, but only 1trade made so the market is still equal from the standpoint of 1 buyer and 1 seller.