This is a blog based on technical analysis, using statistical data to measure the movement of price and volume. You won’t see many references to P/E ratios or free cash flow, I leave that to the CFAs of the world.
It is my belief that information can be gleaned from the data retrieved from price and volume movement. But there is no single answer, method, or belief that is the secret key to unlocking Wall Street. There are too many forces at work and emotions involved to have something that works 100% of the time. If it’s your endeavor to prove this theory wrong, I wish you the best of luck.
The Federal Reserve has more money than you, has a louder voice than you, and is better at shifting the tides of the market than you. You are the paddle boat to the Fed’s battle ship. To fight the Fed is a losing battle most of the time, depending on your time frame. We’ve already seen in past years that it just takes Bernanke to whisper the notion of add’l easing to send your paddle boat sailing through the water, whether it’s the direction you intended to head or not. You can shout your opinion of where things are suppose to go and what XYZ stock is fairly priced at. None of it matters. Would you rather be right or make money?
I could show you chart after chart of why I don’t feel this rally has legs to continue, why momentum isn’t mirroring price action, and why buying pressure isn’t anywhere to be found. None of this matters when Bernanke takes to the microphone. You’re not bigger or better than the government, and unless your George Soros taking on the Bank of England, it’s a losing battle.
This is nothing to complain about and it’s not a reason to give up on technical analysis but it is something to recognize and respect. We have Jackson Hole at the end of this month, where we will get another glimpse at what (if any) action the Fed will take. If this aligns with what price and volume are showing us, great. If not, respect it so you may live to see another day.
Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+.
so you’re a technical analyst following the Fed? can you write an article whenever technical analysis does give hints again?
When you look at the market impact Fed action has had, it’s be ignorant to ignore signs of future action. I still feel TA can give insight, but I wrote this post as a reminder that there are greater forces (i.e. the Fed) that can continue to pump up the market (in this case) even though certain charts may disagree.
I appreciate your comment and don’t worry, I’ll continue to post my insight into technical analysis going forward.