Peter Davis

Why Technical Analysis is Nonsense

With all due respect, that's about the dumbest thing I've ever heard. Fundamental analysis can be very effective, but so can technical analysis. I wonder what the institutional investors who have shunned TA are saying now as they're taking a bath from myriad bad investments.

I know of many technicians who have been wildly successful and would put their records up against anyones. While the author may not find TA to be useful, that doesn't mean it is empirically invalid.

Th fundamentalists can try to bottom fish all they want and continue trying to buy value only to watch "cheap" get "far cheaper". The method I employ called for a retest of August lows in the S&P over a month and a half ago. It reasserted that forecast when the market rallied into Dec. 10th. As I write this, we're about 6 points above that low. No fundamental analysis went into this forecast.

It is my opinion that any method can be valid, provided that it is traded with discipline and consistency. It's been my experience that those who speak in absolutes are the most dangerous ones, because they fail to see alternative opinions. On the other hand, this technician doesn't mind, because such foolishness makes for great trades.