Hi Cheeky- I am a firm believer in TA. I have used Candlesticks, PnF, "conventional" TA, and even dabbled a bit in Elliot wave and cycle analysis. Sometimes it works, sometimes it doesn't. Most of the time when it doesn't it's because I overlook some variable or am trying to force a trade. In general however, I do believe it gives someone an edge. Your point about TALENT though is RIGHT ON !!!
My weather analysis based on various charts isn't always right. (Just usually). That doesn't make the charts wrong. The problem with both types of analysis is that there are a huge number of variables. In weather everyone gets the exact same maps to analyze and make a prediction, yet the forecasts are often wildly different. That's because one forecaster might decide that the high humidity today doesn't mean cloud formation, but instead higher humidities near the ground, because some other variable like subsidence (sinking air) is going to override it. IT's the same thing with stock TA. Sometimes stochastics might point to a stock being oversold, like in the case of many Naz stocks lately, so everyone calls for a bounce. When the bounce doesn't happen they think TA is bogus. Well, many times they disregarded some other factor. Maybe even the same variable just with a different time scale. For example, at the same time that the daily stochastics were oversold lately, most of weekly stochastics were still closer to overbought. That meant that stocks didn't have to bounce because the daily values were oversold. They could simply hold steady, or even drop at a slower rate, and then head still lower. Then there are all the other variables that need to get factored in as well. Most people don't realize how difficult it is to get the experience and maintain the objectivity required to be good at TA. (when you lose objectivity you overlook things you shouldn't based on factors like GREED, etc).
So you are RIGHT. TA is BOGUS-for some
For many others that have the TALENT, it is something that gives them an edge and works very well.
just my 2 cents- from a very successful professional forecaster that understands it's not the data that shouldn't be believed, but the analysis of that data by less talented people.
Jeff |
