Voodoo analysis of prediction market contracts
Mike Linksvayer June 28th, 2008
I wonder if the following is a joke:
Events these past few weeks make an airstrike on Iran more likely. The Intrade contract reinforces this view. While the probability remains moderate at 32%, the chart shows a market that is strengthening.
Here is stock-type technical analysis applied to this contract. There is a large “cup” going back to the contract’s inception. The low was 10 in January of this year. Since then, there is an unmistakeable rise. Following standard technical analysis, the drop from 50 to 10 was 40 points. That gives a calculated resistance level at 30. That level was broken this past week on high volume. This confirms the strength. The 40 level presents the next resistance level.
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The last post mentioning technical analysis at Midas Oracle contains a joke.
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- Comments(8)
I hope it is. Fibonacci levels don’t test well unless you overoptimize.
I would still be long though if only to take advantage of one of those semi-manipulative spikes. (Probably caused by guys who are long crude and think it might be cute.)
Hahaha, Voodoo analysis! Stats arent pragmatic
@Jason Ruspini: Problem with being long is that the Israeli bombings could take place in early January, before Barack Obama takes office.
http://www.youtube.com/watch?v=ktBDj8VogPo
The Iran situation comes up in the third part of the video.
I don’t like Max’s analysis, though, but they show the chart.
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Transcript:
http://www.dailykos.com/story/.....883/542189
There was little liquidity at the beginning of the life of this prediction market. The early prices should not be taken into analysis.
A former head of Mossad has warned that Israel has 12 months in which to destroy Iran’s nuclear programme or risk coming under nuclear attack itself. He also hinted that Israel might have to act sooner if Barack Obama wins the US presidential election.
http://www.telegraph.co.uk/new.....x-spy.html
Being long doesn’t require an attack for profits, just the increased perception of attack likelihood, or one of those spikes. I was just suggesting a long position with a sell limit in the 40s.
OK.