Beebs,
First I don't know much about P&F as a technical indicator.
Let me say a few words on TA. There are really two key elements in TA that one should know.
1. Knowledge - about the what's (like what are they, their mathematical models and historical result validation) and how's (like how does one use the tool, how to see strength/weakness/resistence/support etc.)
2. Skills - about the where's (like which stocks are good candidates to apply certain type of TA tools) and when's (like recognizing when is certain TA tool useful and when it is not).
Every bunny can read books and learn volume of knowledge about all sorts of TA tools.
But only those who have accumulated real-life experience in applying the TA tools and validating for himself/herself have the skills to push the right button in the right time for the right stock.
As a general rule TA is most useful in a sideway market where clear, strong resistence and support levels have been established.
In a strong uptrend or downtrend, TA becomes less useful. This is where people tend to sell-too-early (itself a very profitable principle if one can do this routinely). There are also TA tools that are more useful for longer trend (although most TA tools are geared towards short term trend) but in real life people always make mistake somewhere down the road. The trend has to turn one day, for it headfake or for real.
Now back to your deep affection for a single TA tool - P&F. Frankly I think you are in love. And there are dangers when one is in love with something, either a stock or a tool or a strategy or a piece of rock. This is not an animate relationship. Nothing works all the time. All one can hope for is it works most of the time.
LT is LT. Outside of his extreme, exagerated bearishness, his bear scenario has every reason to come true. Afterall, we are in a downtrend since the market peaked in July, make no mistake about that. There are bombs that can go off every morning when one wakes up. The key is no one knows when or how severe the Big One will hit, if it hits us at all. When something big unexpected happen, all the TA tools that predicted the opposite trend will eat shit and bleed. Yes - you heard it right - eat shit and bleed - from a long time TA advocate and practitioner. Net, we are in a period where no single TA can be trusted more than 60:40 because we are in a very uncertain time.
If you insist on wanting to live and die with P&F, then do yourself a favor and be 100% truthful to her. It's like marriage. Otherwise, fear, greed, and all those immoral things will creep into your blood and drive you mad, even to the binge of a divorce. |
