just procrastinating

Tuesday, January 27, 2004

That Voodoo That They Do
Via Professor Bainbridge, this article about charting. Technical analysis is one of those areas where the academics and the practicioners are at odds. The academics like to point to the long-term results of people who use technical analysis and claim that it is little more than voodoo. The traders who use it swear by it. But you have to wonder if this isn't something that is self-fulfilling, at least in the short-term. When you have herds of people watching for P&G or some stock to brake through its 200 day moving average, or selling because of a "head and shoulders" pattern, being able to spot these trends and anticipating that others will be trading on them can be profitable, or people wouldn't do it.

I used to read thestreet.com and its paysite realmoney.com religiously back in the days of the boom and followed some of what Gary Smith, their technical analyst, did with some success. Todd Harrison, who currently writes at Minyanville.com is another one who uses technical analysis and writes about it. Todd's site is very unique, a financial, educational site that uses cartoon characters.

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