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Strategies & Market Trends : The Contrarian's Corner -- Ignore unavailable to you. Want to Upgrade?

To: Mark Marcellus who wrote (98)	9/25/1998 3:43:00 PM
From: HeyRainier	Read Replies (1) \| Respond to of 113

I do remain a little skeptical though. I believe the folks at LTC claimed to have a system similar to what you describe above ;-)." You got me :o) RT

To: Mark Marcellus who wrote (98)	9/26/1998 11:28:00 PM
From: HeyRainier	Respond to of 113

Mark, To add a point, I will agree with your statement: However most TA proponents I've encountered stress the need to apply judgement, and have said that TA is as much art as science. Statistical studies were conducted by Jack Schwager as they backtested some well-recognized technical phenomena. The example I choose here had to do with some events that are considered to be fairly bullish and bearish signals in the world of Candlestick Charting. Here's a clip: "...Six patterns--each in a bullish and bearish equivalent--were tested for a sample of 10 markets, using 5 years of data (1990-1994)...these patterns were also tested with a five-day momentum filter to assure that the trade was consistent with the short term trend direction...The results were not encouraging. Only a small minority of pattern/market combinations tested showed profitability in a five-year test. Even the profitable combinations were not good enough to trade, as the drawdowns were much too large in relation to profits. It is worth noting, however, that the filter variations did better, suggestion that taking the trend into account is at least a step in the right direction...." From the above, we have unearthed a tiny bit of evidence that shows the value of applying judgment to one's technical assessment of an issue. In addition, from what the above shows, the blind application of technical analysis has been rather ineffective as a speculative tool, and contributed instead to more losses than gains. To me, fundamental analysis serves to fill a significant portion of the "judgement gap," hence the importance I placed in combining the two schools in the preamble to the thread. Regards, Rainier