You must be a very old man. Maybe back in the 1970's TA was used to time entries, but this went out the window a long time ago Hampton
right, fib levels, retracements, support and resistance levels (as if anyone today cares what the high and low yesterday was), Elliot waves (giggle), moon phases, what else was there that I omitted? Please fill in the missing parts. (sorry I could not resist)
Yep. Well, I have friends who today are writing TA reports at brokers and giving timing advice to clients.
FWIW... Here's an article from an "expert"(?) Russell Wayne http://www.feeonlynetwork.com/Russell-Wayne _______________________ Stock Picking - The Flaws of Technical Analysis Among Wall Street researchers, there are two main approaches to stock picking: fundamental analysis and technical analysis. Fundamental analysis subscribes to the belief that the shares of companies will reflect changes in forward progress and financial health. In contrast, technical analysis concentrates on stock price action and how such changes reflect shifts in investor psychology. Technical analysis is totally indifferent to underlying company developments. Therein lies its fatal flaw. As one might suspect, there are different approaches to technical analysis and there is what purports to be an academic treatise on the subject: Technical Analysis of Stock Trends, the ninth edition of which devotes nearly 800 pages to the subject. Devotees worship this tome much as fundamental analysts pay homage to Security Analysis, by Graham & Dodd. The book is filled with all kinds of lines, shapes, and other graphic devices in a comprehensive attempt to convince the reader that charts of prior price action foretell the future. Given the gravity of the portrayal and the extensive examples provided, the authors present an impressive case. This, however, is not the first time that the presentation of an impressive case has borne no fruit. Point-and-Figure Approach One of the more interesting, though perhaps simplistic, technical strategies is what is known as the point-and-figure approach. The basic ledger of point and figure is graph paper on which the technician enters either an X (up indicator) or an O (down indicator), depending on the direction of prices. The number of entries depends on the extent of the price movement. So the chartist may decide, for example, that an individual X or O will be entered only after a price change of one, two or even more points. Once that data is entered, the point-and-figure technician enters a complex world of evaluating formations and calculating potential movements. It is a fascinating world not unlike the Land of Oz. In my early years at Value Line, there was a young analyst who had become intrigued by point-and-figure charts, to the point where he spent most of his free time keeping up with the daily entries. Despite the fact that his ledgers developed a noticeable resemblance to the designs on the covers of tin boxes used for Whitman’s Sampler chocolates, I am not aware that any of this fellow’s charting efforts ever provided a meaningful reward other than whatever satisfaction he got from making Xs and Os. I suspect, however, that he may have become particularly adept at tic-tac-toe. Popular Formations Technical analysis has all kinds of names for interesting price action formations. Some of the more popular formations are known as head and shoulders and double or triple tops – there are corresponding labels for the reciprocals of these patterns. And there are such old standbys as support and resistance levels. According to the theory, a support level is one where buying is supposed to come in and keep prices up after periods of weakness. To my recollection, the key phrase is “supposed to.” In the same vein, resistance levels are what develop when stocks are moving up to toward prior peaks, which may be difficult to penetrate. At best, these ostensible barriers have a short-term effect. Over the longer term, they are of no significance. Rather than a further discourse on technical analysis, I offer the following excerpt from The Money Masters by John Train: "The study of value is the basis of stock investment. There are no shortcuts. The “technician,” however, tries to predict stock movement through the shapes on a stock’s chart, without reference to value. It is not knowable from what a stock did last month, or last year, how it will do next month or next year. Brokers' pronouncements on this subject are tea-leaf reading, fakery. Imagine a bookstore in which the salesman didn’t know what was between the covers, and instead offered guesses on next year’s prices for the merchandise! What a broker can and should do is establish facts and values, so the customer can decide if he wants to buy what has been described. This involves legwork, study, interviews with a company and its competition, consultation with industry experts, and the whole then to be presented in a form which permits an investment valuation, but also where errors will stand out. Personally, I do not think that the SEC should allow any registered investment advisor to put out advice on stocks based on technical analysis. I consider it unprofessional. Brokerage firms that I know have spent millions of dollars (literally) on computer programs for technical stock analysis and then quietly scuttled them.” I agree with Train’s take on technical analysis, but suggest two cases in which price charts may have some value when viewed together with the relevant fundamental information. In the case of individual stocks, however extensive the fundamental analysis, it is essential to view the concurrent price action. Although in most cases, there will be a correlation between the two, there may be exceptional situations where there is a marked divergence of direction. If the fundamentals appear strong while the price is eroding slowly, that may not be a problem. But when the price is plummeting, more likely than not some significant factor has not been properly appraised in the fundamental evaluation. With mutual funds it is also worthwhile to be aware of the price charts since, unlike those of equities, they are direct reflections of the value of underlying holdings. There is, of course, a paradox here since over the long-term stock price charts tend to correlate with changes in fundamentals. But in the short term, changes in investor psychology may be of greater importance. To the extent that mutual funds diversify over wide ranges of holdings, the impact of psychology will be diminished. It is, therefore, often worthwhile to compare price charts of mutual funds with similar objectives to assess the relative value added by the investment manager’s approach. Now why was astrology invented? So that stock market technical analysis could be called an accurate science.
seriously, it is sad that we cannot have a meaningful exchange. A bit of banter here and there is fine and spices things up. But you asked me to provide a TA based strategy that consistently does not work, where is your example of something that apparently works? Or anything really meaningful to understand where we (non believers) are missing the point? Otherwise what is your whole point of participating here? Why not adding something of value? Ignore my cynicism in between the lines if it upsets you, and let's have a basic exchange of thoughts. I honestly and wholeheartedly plead with you to add something that shows me I am either right or shows me that I completely missed out on something and have been ignorant.
Let's be clear. As far as the markets are concerned, the frequency distribution of the past is not a probability distribution of the future. You simply cannot account for all of the possible variables going forward because it is not a closed system like a casino. The more heavily and doggedly you rely on "probability," the more likely you are to hurt yourself by placing more confidence where it is not due. It has already been proven that a normal distribution does not apply to market behavior, but people use it because it allows for more "confidence" of probabilities. Sort of like looking for a lost item not where you misplaced it, but where the lighting is good. It's convenient. While some people may play such "probabilities" better than others, I think you need to give these numbers a much wider berth than the numbers themselves would suggest. I think the term "balance of probability" is more apropos than "probability." As I recall, John Meriwether of LTCM relied a bit too heavily on the probabilities. And remember what William Eckhardt said: "Trading size is one aspect you don't want to optimize. The optimum comes just before the precipice." That's in part because you can't rely too heavily on probability when you are in fact operating in an environment of uncertainty. You don't really know the true probabilities, and they keep changing anyway. That's uncertainty. And uncertainty demands much more respect than probability.
Come on. Now you're resorting to straw man arguments and generic TA and mumbo jumbo. Relying on past market data falls within the purview of TA, as compared to FA. The problem stems from your conflating junk TA with valid TA. The problem is further exacerbated because there is a lot of junk out there and we all seem to disagree on where the point of demarcation is between the two.
As I said, you are basing your opinion on an example of what you think TA is, being indicators. I, and many others like me who have been eating this stuff up for 40 years do not believe in the value of indicators. They were mostly designed as an add on to sell software. So, what you are missing out on is the TA that began with Dow Theory, and the old school TA that was built on Dow Theory. So before you make judgement, you owe it to yourself to look into that area of TA. You will find that it is as true as it was 100 years ago, and more dependable than most of the newfangled stuff of recent years. Bedtime...