Posts filed under “Technical Analysis”
Days like today that start strong and finish weak are not particularly good for sentiment or the technicals. Especially, coming as it did when the market is so extended after its nice move up in July.
Nasdaq False Breakout — the "Bull Trap"
That may set us up for a little softness for the next few weeks.
There’s lots of support near 2100 — if we see that level (or anywhere close), I’m a buyer, looking for the last leg up of this cyclical bull run.
Don’t be fooled by the title to this piece: "Tracking the Elephants" could just have easily been named "The non Technicians Guide to Technical Analysis (in two parts)." The idea was to reveal to fundamentalists a few of the more significant ways they can use charts to improve their results.
Here’s the ubiquitous excerpt:
"Here’s an interesting question: If you could look at one and only one source before buying your next stock, which would you choose: a fundamental analyst’s report (with no charts in it), or the chart of your choosing? While I like having access to both, I cannot ever imagine buying something without first looking at the chart.
And so we wade into the ongoing battle between technical and fundamental analysts. Frankly, it’s one of the sillier debates in investing. But I’ve heard so many bad arguments and misleading theories about technical analysis that I decided to weigh in."
Before we wade too deeply into the controversy, ask yourself: "Why do I need to choose?" Why wouldn’t you use any tool that can be shown to have value? You wouldn’t build a house using only a hammer, but no drills or saws. Why limit yourself away from a tool that can assist you as an investor?
In the column, I used a chart of Ford — but it could have been just about any company , from JDSU to Lucent to World Con or Enron.
click for larger graph
Prior columns can be found here.
To keep the column a modest length, a discussion about Janus Funds
selling of AOL Time Warner was edited out. For your reading
pleasure, that section is here.
StockCharts.com’s Chief Technical Analyst, John Murphy, has created another set of trading rules: ”Ten Laws of Technical Trading:” “Which way is the market moving? How far up or down will it go? And when will it go the other way? These are the basic concerns of the technical analyst. Behind the charts and graphs and…Read More