I am not into Technical Analysis, nor do I care to be. My financial thesis is based on valuations and statistics. Timing the daily or weekly movement is not something I am equipped to do. This means that although I believe the direction of the indexes will go down this year, I do not know what path it will take to get there or how long it will take.

If I had any long positions, I would use short-term rallies to sell and move into fixed income. That is me. This market is not honest and the rules are changing daily. I am not a certified financial guy and nothing on this blog should be considered investment advice. Do your homework.

I have a lot of respect for those who do technical analysis. I don’t have the constitution for it. Occasionally, I find myself following the TA guys and getting nervous about some rally. Then I remind myself that I am not out to make money today, this week, or even this month. My thesis may take months or a year to unfold. And when new macro-level data appears, I can alter that thesis.

Comments

Jim

January 30 at 2009 at 6:26 AM

Though I don’t really disagree with any of your comments, TA can be applied to any timeframe (not just day trading or swing trading).

I consider the economy, fundamentals and TA as three different data points that can be used for triangulation purpose.

If they are all pointing the same direction …and potentially the same target …then I think you are more likely to make money.

MAS

January 30 at 2009 at 2:52 PM

The take away lesson I got from Confessions of a Stock Operator was that I didn’t want to do that type of trading.

Maybe some day I’ll get more into TA. I guess I just have trouble going long into mini-rallies when valuations are still so high.

Jim

January 30 at 2009 at 4:20 PM

You are missing my point MAS …I am just talking about TA as a tool (not time-frame).

TA tells (or told) me the following:

  • The head and shoulders break around 1200 targeted ~800 (which it hit already).
  • The current M pattern in the S&P started back in 1994 and targets ~450.
  • The current plunge from Oct last year is setting up a pennant. If it breaks below 800 imminently then the target is around 200 (as per Karl in last nights video).

This supports your thesis to hold your shorts.

MAS

January 30 at 2009 at 4:43 PM

Thanks for the heads up. I missed last night’s video. Was too busy playing around with photo stitching. I’m going to go watch it now. 200!