The authors analyzed moving averages and trading range breaks on the Dow Jones Industrial Index from 1897 to 1985. The technical rules addressed in the study were the following. Moving Averages . Buy and sell signal were generated by a long and short moving average crossing. A buy signal was generated when the price penetrated the resistance level and a sell signal was generated when the price penetrated the support level.
Technical analysts believe that investors sell at the resistance level and buy at the support level.
The results for both buy and sell signals supported the technical viewpoint. It is quite possible that technical rules pick some of the hidden patterns. We would like to emphasize that our analysis focuses on the simplest trading rules. Data-Snooping, Technical Trading Rule Performance, and the Bootstrap is an article that revisits the BLL paper and will appear in the October 1999 Edition of Journal of Finance . They also use data collected from the period following the original study in order to provide an out of sample test.