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Long Term, Technical Analysis Is 'Hogwash'

Published 04/23/2015, 03:50 PM
Updated 07/09/2023, 06:31 AM

Technical trading means being able to let different views wash over your back, like water flowing by. Many don't believe that technical analysis (TA) actually works. “It's a self-fulfilling prophesy...shapes and patterns...baloney, horse feathers, hogwash”. Perhaps they don't get the concepts.

But even those that embrace TA in their short-run trading decisions tend to toss it out the window when it comes to long-run implications. Why? Do the behavioral aspects of supply and demand not hold in the long run? Are there magic powers that exist on a smaller timescale, like the subatomic forces at work in the universe that don't impact the larger day-to-day world? Those that embrace technical analysis for the long run are a much smaller bunch.

The Nasdaq

Despite that bias, there continue to be long-term charts of price action that defy that logic. The Nasdaq's 20-year chart is one of them. On a long-term basis, it seems perfectly happy to let the TAs have their technical way with it. The bearish Bat harmonic has been playing out and may be completing; the Elliott Wave pattern fitting in as well with a Wave IV due -- and expected to be a more flat corrective wave -- before another push higher. But I guess there's nothing to see here.

Yes, those that embrace technical analysis for the long run are a much smaller bunch.

I'm proud to be one of them.

Latest comments

who cares what trading club you're a member of. The only that matters is if you can make money at it. Good luck with trying to call a correction in the NASDAQ. It's a lot easier drawing lines than actually trading.
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