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Technical Analysis - The proof is in the Pudding

 Over the past two weeks I have been learning about technical analysis. Mark the head trader on the Day Trade Well desk has said to me on numerous occasions, “the market likes too test levels.” And on numerous occasions I have witnessed this statement hold true. During our morning strategy session I asked Mark, “what do you think the market will do today?” His response was, “I think we test the 1300 level on the spooz.” Sure enough we tested that level today making a low of 1297.5 on the spooz. For me what validates technical analysis is with or without news, such as the Middle East crisis, the market finds a way to test their levels. Case in point, last week Mark had a short target on Apple around 363, noting this was a level of resistance. Then the news about Steve Jobs being seen at Stanford’s Cancer Clinic was released and the selloff began. Since then, the stock has fallen 20 points right into an optimum buying level which was 338.75 which it reached today(low of the day was 338.61). This level was Mark’s buy target for Apple. Coincidence, or do the markets truly respect their technical levels?

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.