Goose Bumps from Our EBV Lines
August 21, 2012
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Fifteen years. Yes, fifteen years I have seen and witnessed model price math. And I still get goose bumps. Man, look at this Groupon (GRPN) chart from last night’s computer run. Look where the price of GRPN stopped and paused. Amazing EBV+5. Think about this, EBV+5 was predetermined and computed before the stock price arrived and stopped falling. I have seen this over and over again for 15 years and I still get a thrill every time I see this. It’s magical. Tens of thousands maybe millions of people trading shares – the invisible hands – and share prices conform to our EBV math.
Groupon with weekly price bars, EBV Lines (colored lines) and model price (dashed line)
How is this possible?
These mathematical points, the EBV lines, come from natural phenomena observed from nature. What, are you kidding me! No, I’m not. The financial press and investors can worry about high frequency trading, and the like however longer term I’m suggesting days and weeks this frantic day trading stuff doesn’t really matter. That’s why we look at weekly and monthly price bars. Plus stock prices can move within an EBV zone without any meaning, however once a transit occurs on one of our EBV lines, this is meaningful information. Some securities can spend years in the same zone, others like GRPN slices through 5 zones in 10 months.
I get the question all the time, how do you now these EBV work? My answer, most of the time is “they just do!” Very unsatisfying answer both for the questioner and myself. This is one of the many reasons I started this blog, I can now document these situations and hopefully give more satisfying answers for those who want to follow this work.
Hope this gives you goose bumps as well!