Market Anthropology: Technical Difficulties

Monday, August 15, 2011

Technical Difficulties

Anyone that has been reading my notes since March understands that I don’t follow orthodox technical analysis. I have tremendous respect for the framework and school of thought that makes TA a very powerful market timing tool, but I also take considerable liberties in my own interpretations of these rigid analytics. My approach to TA is very much the contradiction of perspective that I have always worked from. I don’t use it as much for its precision – more for its philosophical slant on price. The same logic that brought me to questioning an otherwise healthy performing market in April (see Here), is brought to the table today with most charts looking as though they are headed towards the basement after a few weeks in the gauntlet. It would be wise to keep in mind that many of the very best technicians never gave the March 2009 low much significance. For them it was a resting place on the way to a final move lower. 
I like to keep one foot in each camp of thought – the one that can read a map and the one that can follow their instincts. 

As a postscript, Louise Yamada was one of the first technicians to accurately signal that the equity markets were on their way to historic losses in late 2007. I have tremendous respect for her work, hence my inclination to show that from one of the best technicians in the business, the market can always audible from the charts. 

This is especially the case when they are severely broken – as they were in 2002 and 1998.