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Post by uncleharley on Mar 3, 2023 12:42:58 GMT
Just wondering? With Thursday's upward stock market movement ... Are we set for a little upward rally? Or, do we continue downward? With earnings in a decline and with anticipated continued rising rates ... I am thinking we go lower. For now, I continue to sit. However, I remain fully invested within the confines of my asset allocation of 20% cash, 40% bonds, and 40% stocks. In view of the current investing landscape cash remains my pick. In time, I will begin to buy equity around S&P 500 in the 3800 range. This is based upon forward estimates remaining in the $220.00 range. Time will tell but the weekly chart for the S&P 500 indicates that a correction to an upward trend has been completed and we should continue up from here to 4150, possibly 4500. stockcharts.com/h-sc/ui?s=$SPX&p=W&b=3&g=0&id=p93931188158&a=524485138&listNum=86
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Post by oldskeet on Mar 3, 2023 12:43:41 GMT
Chahta, Yes, I agree on the disconnect between foreign and domestic. That is one of the reasons I increased my foreign holdings from about 20% to 35% within equities.
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Post by oldskeet on Mar 3, 2023 13:01:36 GMT
Hi uncleharley ,. You are a much better chartist than me. I was looking at the landscape and determined that around 3800 represented one of the support lines. With recent forward earnings projected to be in the $220.00 range, this factored to a P/E Ratio of a little better than 17. Sounds reasonable. Thus, 3800 became my new money buy mark (near term). We all have our ways and see things from different perspectives. This, for me, is what makes investing great as there is no one right way (or wrong way) to enjoy success (or failure). Should equities continue their upward movement, I have enough invested to enjoy the ride up the slippery slope. If not, then I will do a little buying (near term) around the 3800 range. Thanks for making comment. I always enjoy reading them. Please keep them coming.
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Post by Fearchar on Mar 3, 2023 13:15:28 GMT
Just wondering? With Thursday's upward stock market movement ... Are we set for a little upward rally? Or, do we continue downward? With earnings in a decline and with anticipated continued rising rates ... I am thinking we go lower. For now, I continue to sit. However, I remain fully invested within the confines of my asset allocation of 20% cash, 40% bonds, and 40% stocks. In view of the current investing landscape cash remains my pick. In time, I will begin to buy equity around S&P 500 in the 3800 range. This is based upon forward estimates remaining in the $220.00 range. I've got a couple models. One simply compares the forward earnings estimate for the S&P to the 90 day T-Bill. Forward S&P estimates are currently about 5.8%. 90 day T-Bills are about 4.9% There is some slop in the model; but it's allocating between -6% to 8% into the S&P
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Post by Fearchar on Mar 3, 2023 13:19:33 GMT
and I should add that the FED futures market is fairly confident that rate on FED funds will rise until the June meeting. 61% probably it will be between 525 to 550 by then.
It's only after the June meeting that the futures market lacks consensus.
FED funds are currently 450-475
So, that doesn't spell much near term relief for my simple S&P model.
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Post by steelpony10 on Mar 3, 2023 15:46:54 GMT
But there normally seems to be a disconnect between US and European stocks. I’ll take your word for normally but… You think any retirees are cashing in anything now or in skinflint mode for an indeterminate time while their arteries continue to harden? Anyone actually switching things around or afraid to lose those fantasy values? I vote skinflint and frozen with indecision or feeling they have to do something so just shuffle the cards. All I see is our VTI waving in the breeze for over a year now and read about worse economic and political conditions oversees plus dealing with some fool fighting for the motherland. So for younger open minded investors then this has worked well in past lulls that I’ve had experience actually living through, 1968-1982, 1999-2010, 2020 (my number) -.
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Post by mozart522 on Mar 3, 2023 15:55:53 GMT
I'm not a TA guy or a FA guy, more of a big picture guy. I am currently out of the market and all in t-bills and cash. FOR ME, the headwinds far outbalance any possible tailwinds for the next 6 to 8 months minimum. Everything screams recession to me: sticky inflation, inverted yield curve, continued increase in rates by the FED, continued lower guidance by corporations, consumer debt, national debt, debt ceiling impasse, the war in Ukraine, and a possible major break with China leading to supply chain problems. All that without even figuring in the unknown unknowns, black swans, and so on.
I may well take advantage of SPDN long before investing in VOO, but will probably stay in bonds and cash until the big pivot.
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Post by Deleted on Mar 3, 2023 19:57:18 GMT
and I should add that the FED futures market is fairly confident that rate on FED funds will rise until the June meeting. 61% probably it will be between 525 to 550 by then. It's only after the June meeting that the futures market lacks consensus. FED funds are currently 450-475 So, that doesn't spell much near term relief for my simple S&P model. I'm thinking that a terminal rate of 525 should be baked in by this point. The Fed has all but guaranteed it. Beyond that, we are going to have to wait on inflation numbers and see if January is suggestive of an uptrend or not.
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Post by Fearchar on Mar 3, 2023 20:14:00 GMT
and I should add that the FED futures market is fairly confident that rate on FED funds will rise until the June meeting. 61% probably it will be between 525 to 550 by then. It's only after the June meeting that the futures market lacks consensus. FED funds are currently 450-475 So, that doesn't spell much near term relief for my simple S&P model. I'm thinking that a terminal rate of 525 should be baked in by this point. The Fed has all but guaranteed it. Beyond that, we are going to have to wait on inflation numbers and see if January is suggestive of an uptrend or not. Baked in? Oh my God no! It changes all the time. I just checked. The probability of the 525 to 550 range has fallen to 56.3%. So, it's still a consensus since that's over 50%. Most of the shift was towards the next lower range (500-525), but now there are people way up in the 575-600 range too, where as there were none that high up yesterday. Appears that today, overall the markets are up since we had some news suggesting the FED won't hike that much, but even the totality of the news has people actually spreading out more than they were yesterday.
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Post by Deleted on Mar 3, 2023 21:20:03 GMT
I think that anyone who expects the Fed to not go through with at least two more quarter point hikes is not listening carefully. Everything after that will depend on the monthly numbers. Of course, I say "should be", because some rely more on hope, than data.
The Fed Fund Futures are based on predictions and expectations and interpretations. I am more interested in what the FED says directly. "Powell signaled that if inflation follows the course officials expect, the Fed is on track to push the Fed's key rate to the 5% to 5.25% range and then pause. That would require two more quarter point hikes -- in March and May. "We're talking about a couple more rate hikes to get to that level that is sufficiently restrictive," Powell said.
After that, everything hinges on metrics/data that do not exist yet.
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Post by FD1000 on Mar 3, 2023 22:00:51 GMT
I'm not a TA guy or a FA guy, more of a big picture guy. I am currently out of the market and all in t-bills and cash. FOR ME, the headwinds far outbalance any possible tailwinds for the next 6 to 8 months minimum. Everything screams recession to me: sticky inflation, inverted yield curve, continued increase in rates by the FED, continued lower guidance by corporations, consumer debt, national debt, debt ceiling impasse, the war in Ukraine, and a possible major break with China leading to supply chain problems. All that without even figuring in the unknown unknowns, black swans, and so on. I may well take advantage of SPDN long before investing in VOO, but will probably stay in bonds and cash until the big pivot. I'm close. several weeks at 99+% in MM, making 4.63% in SNAXX, and waiting for an uptrend. I may go in next week or weeks from now. It resemble 2022. I was out very early, made 2 roundtrip trades several days in May and July. In 11/2022 went in for several weeks. It's pretty likely the Fed will raise 0.25 in March 23rd(70%) + in May 23rd(62%).
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Post by steadyeddy on Mar 4, 2023 0:38:37 GMT
I'm not a TA guy or a FA guy, more of a big picture guy. I am currently out of the market and all in t-bills and cash. FOR ME, the headwinds far outbalance any possible tailwinds for the next 6 to 8 months minimum. Everything screams recession to me: sticky inflation, inverted yield curve, continued increase in rates by the FED, continued lower guidance by corporations, consumer debt, national debt, debt ceiling impasse, the war in Ukraine, and a possible major break with China leading to supply chain problems. All that without even figuring in the unknown unknowns, black swans, and so on. I may well take advantage of SPDN long before investing in VOO, but will probably stay in bonds and cash until the big pivot. Bonds have a more compelling valuation than stocks at the moment... and you keep clipping respectable coupons. So is cash.
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Post by Fearchar on Mar 4, 2023 1:37:16 GMT
I think that anyone who expects the Fed to not go through with at least two more quarter point hikes is not listening carefully. Everything after that will depend on the monthly numbers. Of course, I say "should be", because some rely more on hope, than data. The Fed Fund Futures are based on predictions and expectations and interpretations. I am more interested in what the FED says directly. "Powell signaled that if inflation follows the course officials expect, the Fed is on track to push the Fed's key rate to the 5% to 5.25% range and then pause. That would require two more quarter point hikes -- in March and May. "We're talking about a couple more rate hikes to get to that level that is sufficiently restrictive," Powell said. After that, everything hinges on metrics/data that do not exist yet. I agree... hikes are coming. Size though is not as clear. Bigger hikes sooner could result in smaller or fewer hikes later on. Hence a range of probabilities with the finer details.
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Post by FD1000 on Mar 4, 2023 3:16:28 GMT
The CME is a very good predictor of the future, and will change accordingly very fast if things change. This is why I pay attention to it, and not estimation that can be off by months.
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Post by retiredat48 on Mar 4, 2023 3:19:59 GMT
I'm not a TA guy or a FA guy, more of a big picture guy. I am currently out of the market and all in t-bills and cash. FOR ME, the headwinds far outbalance any possible tailwinds for the next 6 to 8 months minimum. Everything screams recession to me: sticky inflation, inverted yield curve, continued increase in rates by the FED, continued lower guidance by corporations, consumer debt, national debt, debt ceiling impasse, the war in Ukraine, and a possible major break with China leading to supply chain problems. All that without even figuring in the unknown unknowns, black swans, and so on. I may well take advantage of SPDN long before investing in VOO, but will probably stay in bonds and cash until the big pivot. I'm close. several weeks at 99+% in MM, making 4.63% in SNAXX, and waiting for an uptrend. I may go in next week or weeks from now. It resemble 2022. I was out very early, made 2 roundtrip trades several days in May and July. In 11/2022 went in for several weeks. It's pretty likely the Fed will raise 0.25 in March 23rd(70%) + in May 23rd(62%). R48 reply: FD and I are very similar in outlook, if I correctly interpret his "I'm close" words.I am currently buying stock funds such as schd and VIG for my recently retired brother's conversion from a 100% growth stock fund portfolio 14 months ago (selling started Jan 22), to a value/dividend oriented one, with fixed income funds also part of the allocation. Goal was to get to 3% portfolio yield and that has been exceeded. I am also "close" to retaking some stock fund positions as I consider the outlook is good going forward, despite the record breaking bearishness that abounds us. We'll tally up in December!! R48
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Post by FD1000 on Mar 4, 2023 4:50:09 GMT
I'm close. several weeks at 99+% in MM, making 4.63% in SNAXX, and waiting for an uptrend. I may go in next week or weeks from now. It resemble 2022. I was out very early, made 2 roundtrip trades several days in May and July. In 11/2022 went in for several weeks. It's pretty likely the Fed will raise 0.25 in March 23rd(70%) + in May 23rd(62%). R48 reply: FD and I are very similar in outlook, if I correctly interpret his "I'm close" words.I am currently buying stock funds such as schd and VIG for my recently retired brother's conversion from a 100% growth stock fund portfolio 14 months ago (selling started Jan 22), to a value/dividend oriented one, with fixed income funds also part of the allocation. Goal was to get to 3% portfolio yield and that has been exceeded. I am also "close" to retaking some stock fund positions as I consider the outlook is good going forward, despite the record breaking bearishness that abounds us. We'll tally up in December!! R48 Close = stay out of the markets. Switching to SCHD+VIG is good but in 2022, both still lost money. Fixed income lost even more. As usual, I care about positive risk-adjusted performance every year. Yield always comes after that. In my world there are only 2 switches: mostly in or mostly out. Soon, it's going to be much harder decision than 2022. In 2022, my big picture screamed high risk = stay out until 11/2022, only ST roundtrip allowed. 2023 risk is lower, but rates must stabilize first + a Fed signal. But, at the end, there is nothing more powerful than a simple uptrend+T/A which supersede all "experts", models and opinions.
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Post by richardsok on Mar 4, 2023 14:52:37 GMT
The CME is a very good predictor of the future, and will change accordingly very fast if things change. This is why I pay attention to it, and not estimation that can be off by months. FD -- why don't you post more about CME and the specifics of how you use it?
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Post by uncleharley on Mar 5, 2023 17:09:20 GMT
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Post by oldskeet on Mar 5, 2023 20:25:47 GMT
Hi UH. The link you provided requires both a sign in and a password. Ugh.
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Post by uncleharley on Mar 5, 2023 20:47:21 GMT
Nuts. Stockcharts has tightened up on what I can link to public forums. Anyway a rainbow or ribbon indicator is just a price chart with a lot of moving averages for an overlay. Usually those moving averages are in 5 or day increments. When they are all running in one direction, you have a strong trend. When the short term averages begin to cross over the long term averages, you have a changing or unstable market. The chart I was referring to is currently indicating that the NYSE has begun a strong trend up.
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Post by bb2 on Mar 5, 2023 21:01:58 GMT
Do any TA users know of studies whether TA works best for certain markets - various countries for example or asset type, or certain types of stocks within developed country markets - growth, high growth/low profit, etc? I've looked and found some. For example: jfin-swufe.springeropen.com/articles/10.1186/s40854-018-0087-z"Scholars have tested the efficiency of the tools of technical analysis frequently, for example, in the studies of Allen and Taylor (1990), Jegadeesh (2000), and Kuang et al. (2014). The main reasons for this continued research, as discussed in Zhu and Zhou (2009), were that previous studies of the profitability of technical analysis obtained inconclusive results and lacked a scientific basis. Consequently, more consistent hypotheses to justify TA were needed. For example, Allen and Taylor (1990), Frankel and Froot (1986), Shiller (1989), and others pointed out the irrationality of TA. According to Allen and Taylor (1990), the subjectivity of this approach prevents it from acquiring a scientific character. Frankel and Froot (1986) and Shiller (1989) held that the use of technical indicators leads to overvaluation of asset prices, thereby heating up the demand for some assets without good reason." "...without good reason", they say but that's the point: TA is designed to ignore reason, right? I think. It's all about the data - who cares about reason. The data is what it is."Technical Analysis Explaind, by Pring is my go to but I only refer to it for fun, on the side, at this point. I'm a half empty guy so I always go with that when looking at the setup. Financials, macro and valuations serve me better.
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Post by habsui on Mar 6, 2023 5:51:08 GMT
Getting the popcorn ready..
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Post by Norbert on Mar 6, 2023 11:16:15 GMT
Do any TA users know of studies whether TA works best for certain markets - various countries for example or asset type, or certain types of stocks within developed country markets - growth, high growth/low profit, etc? I've looked and found some. For example: jfin-swufe.springeropen.com/articles/10.1186/s40854-018-0087-z"Scholars have tested the efficiency of the tools of technical analysis frequently, for example, in the studies of Allen and Taylor (1990), Jegadeesh (2000), and Kuang et al. (2014). The main reasons for this continued research, as discussed in Zhu and Zhou (2009), were that previous studies of the profitability of technical analysis obtained inconclusive results and lacked a scientific basis. Consequently, more consistent hypotheses to justify TA were needed. For example, Allen and Taylor (1990), Frankel and Froot (1986), Shiller (1989), and others pointed out the irrationality of TA. According to Allen and Taylor (1990), the subjectivity of this approach prevents it from acquiring a scientific character. Frankel and Froot (1986) and Shiller (1989) held that the use of technical indicators leads to overvaluation of asset prices, thereby heating up the demand for some assets without good reason." "...without good reason", they say but that's the point: TA is designed to ignore reason, right? I think. It's all about the data - who cares about reason. The data is what it is."Technical Analysis Explaind, by Pring is my go to but I only refer to it for fun, on the side, at this point. I'm a half empty guy so I always go with that when looking at the setup. Financials, macro and valuations serve me better. IMHO Technical Analysis never works consistently for any sector, asset class, or market when used mechanically as a stand-alone tool. However, when used in conjunction with other insight by a good trader like richardsok, it's a different story. I'm not a hotshot trader by any stretch of the imagination, but I pay attention to technicals to see if they confirm the other stuff I watch. For example, early 2022 looked like big trouble because it was clear that (1) the Fed would raise rates, and (2) growthy stocks were very overpriced. The sour technical reads confirmed that trouble was indeed upon us. (Do I get free popcorn for this post?)
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Post by Chahta on Mar 6, 2023 15:23:31 GMT
Thanks UH. I know little about TA and my question was because I really didn’t know about gaps. Now I do. I apologize for what must seem like a flippant answer. I believe you have mentioned before that you are a T A novice, but it just didn't register with me. If you want to learn more about charts etc, try going to the Chart School at Stockcharts.com. Put momentum into their search engine and read all you want. When you have finished with momentum you may want to try market breadth in the search engine. Those should keep you busy for a couple of years. Not taken at all that way. Cheers.
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Post by newtecher on Mar 6, 2023 16:05:14 GMT
Do any TA users know of studies whether TA works best for certain markets - various countries for example or asset type, or certain types of stocks within developed country markets - growth, high growth/low profit, etc? I've looked and found some. For example: jfin-swufe.springeropen.com/articles/10.1186/s40854-018-0087-z"Scholars have tested the efficiency of the tools of technical analysis frequently, for example, in the studies of Allen and Taylor (1990), Jegadeesh (2000), and Kuang et al. (2014). The main reasons for this continued research, as discussed in Zhu and Zhou (2009), were that previous studies of the profitability of technical analysis obtained inconclusive results and lacked a scientific basis. Consequently, more consistent hypotheses to justify TA were needed. For example, Allen and Taylor (1990), Frankel and Froot (1986), Shiller (1989), and others pointed out the irrationality of TA. According to Allen and Taylor (1990), the subjectivity of this approach prevents it from acquiring a scientific character. Frankel and Froot (1986) and Shiller (1989) held that the use of technical indicators leads to overvaluation of asset prices, thereby heating up the demand for some assets without good reason." "...without good reason", they say but that's the point: TA is designed to ignore reason, right? I think. It's all about the data - who cares about reason. The data is what it is."Technical Analysis Explaind, by Pring is my go to but I only refer to it for fun, on the side, at this point. I'm a half empty guy so I always go with that when looking at the setup. Financials, macro and valuations serve me better. IMHO Technical Analysis never works consistently for any sector, asset class, or market when used mechanically as a stand-alone tool. However, when used in conjunction with other insight by a good trader like richardsok , it's a different story. I'm not a hotshot trader by any stretch of the imagination, but I pay attention to technicals to see if they confirm the other stuff I watch. For example, early 2022 looked like big trouble because it was clear that (1) the Fed would raise rates, and (2) growthy stocks were very overpriced. The sour technical reads confirmed that trouble was indeed upon us. (Do I get free popcorn for this post?) The only book I have read on TA is Evidence-Based Technical Analysis by David Aronson. It shows that NONE of the commonly used TA indicators produce outperformance statistically distinguishable from noise when used to time S&P500 purchases and sales. Of course, that does not mean that more complex combinations of TA indicators or TA indicators combined with other considerations like macro-environment do not work. However, any simple/algorithmic approach is very unlikely to work for any of the commonly used markets. If it did at some point in the past, it is arbitraged away by now by quant hedge funds.
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Post by richardsok on Mar 6, 2023 17:24:56 GMT
newtecher --
In recent months, uncleharley has been a real-time challenge to two of my long-held assumptions about technical analysis. First, that TA works more effectively (if it works at all) with the lowest volatility trading assets you can find. Secondly, the more sophisticated one becomes in applying sundry TA patterns, the more poorly you will do -- because any trader forever looking for cup-and-handles or heads-and-shoulders or flags and engulfing vectors of all sorts is apt to stumble upon exactly what s/he wants to see -- and TA devolves into a sort of confirmation bias akin to palm reading or astrology.
And therein is my problem. If Harley routinely uses the sort of highly sophisticated TA tools that I avoid -- evidently with little/no concern about volatility -- how is it he's doing so well trading the market?
Is a puzzlement.
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Post by uncleharley on Mar 6, 2023 17:57:00 GMT
newtecher -- In recent months, uncleharley has been a real-time challenge to two of my long-held assumptions about technical analysis. First, that TA works more effectively (if it works at all) with the lowest volatility trading assets you can find. Secondly, the more sophisticated one becomes in applying sundry TA patterns, the more poorly you will do -- because any trader forever looking for cup-and-handles or heads-and-shoulders or flags and engulfing vectors of all sorts is apt to stumble upon exactly what s/he wants to see -- and TA devolves into a sort of confirmation bias akin to palm reading or astrology. And therein is my problem. If Harley routinely uses the sort of highly sophisticated TA tools that I avoid -- evidently with little/no concern about volatility -- how is it he's doing so well trading the market? Is a puzzlement. That is a fair question. Rule #1 is first be on the right side of the market. I use weekly charts & moving averages to filter out the noise and determine the trend. Then use other tools and indicators to time buys or sells. Leverage increases returns. Rule #2 is If you are losing money, see rule #1.
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Post by newtecher on Mar 6, 2023 18:35:57 GMT
Sounds like UH is trading based on intuition rather than something that can be easily formalized or taught to other people.
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Post by richardsok on Mar 6, 2023 19:04:15 GMT
Sounds like UH is trading based on intuition rather than something that can be easily formalized or taught to other people. He's never spelled out a particular method, but his trades appear to be well reasoned out. I'm doubtful intuition can result in consistent success.
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Post by racqueteer on Mar 6, 2023 19:21:20 GMT
Sounds like UH is trading based on intuition rather than something that can be easily formalized or taught to other people. He's never spelled out a particular method, but his trades appear to be well reasoned out. I'm doubtful intuition can result in consistent success. It boils down to terminology and interpretation, I think. 'Intuition' is a funny word; often conflated with 'guessing'. Otoh, combine observation with reasoning, and your feelings become 'experience' or 'skill'. The distinction between the two things is down to how much data and introspection is involved, imho. Anyway, in the vernacular, no, I don't think intuition is the right word choice.
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