David Forjan

Trade Apple Like a Fool

Mr. Bass,

I beg to differ. A support level is still an historical line in the sand. If so-called support exists for Apple at $79, then that level should allow support. But as Apple may drift toward that level, today's economy can throw wrenches in that analysis, at any time. Approaching $79, we could easily get news of a huge $800B stimulus package, and the market soars. Does that mean that the $79 was support? No. Or we could get news that China's economy contracted by 10%. Would that magic $79 provide any support? No. My point is that the markets today are subject to a huge effect at any time. So, to rely on some historical line in the sand is like putting your head in the sand.

And I might remind you that you called a market bottom some months back. That wasn't correct, as evidenced by your projection now. Then you were recommending to buy Apple. Now you're in a cash position. Why? Because we all don't know what to expect in this economy in the near term, technical analysis, or not.

As they say, your guess is as good as mine.

david forjan

On Jan 12 01:30 PM Zach Bass wrote:

> You assertion that TA relies on past events is completely off mark.
> TA uses patterns and various other tools to determine mob behavior.
> The measurement of this behavior has nothing to do with the types
> of behavior, or what influenced it, or what specific events happened.
> TA is simply an objective read on the limits to which that behavior
> was exerted.
>
> What you are describing is like saying that I can no longer measure
> that line with a ruler, because the line has been made with something
> not previously seen. Well, I don't care what made the line, I can
> still use the ruler to measure it.

Trade Apple Like a Fool

Mr. Bass,

You may be right with your opinion, but your rationale is flawed. It's been flawed for some time now. Time to rethink.

Our current economic situation is so different than anything seen in the last 40 years, that technical analysis is not a viable tool. Technical analysis relies on interpreting current market trends in light of how past trends occurred and how they were reacted to. In other words, technical analysis interprets today in relation to history.

Since today's economy is one of only 2 or 3 similar situations going back to the Great Depression, all the past trends and market reactions you refer to and rely on are irrelevant.

There's too many unknowns in our economy to rely on things like support level. I'll bet the accuracy of your predictions relating to support level since mid-2008 were equivalent to a coin toss.

Time to realize that we cannot predict anything with any level of accuracy in our current economic situation.