Tarun

More on Technical Analysis

Would you count Black-Scholes as technical analysis? Some might and they would most likely dispute your last point ("Meanwhile, the technical-analysis crew seems to think that they're dealing with immutable, permanent, semi-scientific probabilistic laws. In the markets, there's no such thing."). That's not completely true; we know for sure (i.e. via mathematical proof) that implied volatility is dependent on various characteristics of options trading (assuming the existence of: 1. the ability to short sell 2. no better arbitrage opportunities 3. Continuous trading, which in and of itself is a very unrealistic idea, since there must be some discrete time in which a trade is made and has an effect on option chain pricing 4. No taxes 5. 0% Interest Rate 6. No Dividend 7. Fractional Shares). Surely, Brownian motion (found within most Stochastic models) can be disproved as an always valid methodology (a Universal-Existential proof); however we do know that Ito calculus holds and that there are set scientific rules for technical (option) analysis. Therefore, you may want to be a little more specific in your definition of technical analysis and it's "voodoo" like qualities...because there is some serious mathematical philosophy (this is not experimental proof...this is logical proof which always must hold using the basic axioms of various forms of logic) behind options modelling.