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Pastimes : All Clowns Must Be Destroyed -- Ignore unavailable to you. Want to Upgrade?

To: BGR who wrote (18564)	3/21/2000 10:18:00 AM
From: Oblomov	Read Replies (1) \| Respond to of 42523

BGR, I regret the delay in this response. I've been taking a little "SI Vacation." I find that an occasional respite from discussing the market allows me to clear my mind of questionable assumptions and biases. To answer your question, I am not convinced that TA can work for the investing public in the long run. There are certainly short-term disequlibria in the capital markets, but IMO only the most skilled traders can consistently identify and act to profit from these circumstances. Note that the key word is "consistently". Nonetheless, I think that TA is occasionally useful for predicting short-term price movements insofar as it identifies extremes in investor psychology. For example, understanding the concept of exhaustion has improved my own trading greatly. Such events are limited, however, and it takes an iron gut to take a position in a stock that runs against the direction that the herd is going. And obviously the herd can't take a position contrary to that of the herd, so a contrarian stance is needed to profit from trading exhaustion tops and bottoms. The problem with TA is that outside of identifying psychological extremes, TA generates many false conclusions. If TA were structured as a statistical inference, the power of the inference would be very small. Its primary use appears to be for putting a pseudo-scientific polish on rather mundane ideas.