Talk:Technical analysis/Archive 2

message: Unfortunately this page has been subjected to what could be described as vandalism by anonymous "contributers" - large scale deletions of material without justification. For example, a reference to the important historical fact that Japanese candlestick methods were used hundreds of years ago was deleted. Technical analysis is a field where some people have very strong, blinkered views. Wikipedia is not the place to attempt to impose those views on others. This article should be a balanced, NPOV introduction to a broad, and very varied field. If anyone disagrees with this, they should at least have the courtesy to say so using a registered handle. Elroch 13:47, 15 February 2006 (UTC)
thread_title:  Anonymous deletions 

message: I clarified the part about Buffett and Lynch because it seemed that introducing them as opponents of technical analysis is a bit biased because they are exceedingly well known and very successful without using technical analysis.  I thought it was best to mention that they are fundamental analysts and as such are often in disagreement with technical analysis.  
Also, I removed the portion about economists for two reasons.  First, as someone else wrote earlier in the article, technical analysis and fundamental analysis are the two major schools of thought regarding stock market investing/trading.  Economists are not in the business of stock picking, investing, etc.  Secondly, I could make a reasonable case that economists actually do use principles of technical analysis.  For instance, US Weekly Jobless Claims are a notoriously fickle number.  Most economists do not look at weekly changes in the reading as much as they look at its 4 week moving average, a technical analysis concept.  Moreover, economists look at trends all the time.  For instance, as of March 2000, it is safe to say we are in a rising interest rate environment.  I.e., interest rates are trending upward.  Moreover, any economist would agree that the economy is cyclical.  It moves from expansion to deceleration to recession to recovery back to expansion.  History tends to repeat itself.  Sounds like a technical analysis concept! co94
I'm a physicist, an experimental physicist, with only a recent interest in stock-markets.
I found the article useful [as at March 14th], and informative. Analysis of empirical trends and patterns in data is certainly science, and covers a broad range of techniques. Of course it is crucial to ascertain whether the pattern found is statistically-significant. Without actually specifying a very specific methodology or approach I don't see that TA as a whole can be proved or disproved. Different TA indicators could give contrary predictions for the future, but since the market is non-deterministic, indicators will only lead to a certain probability of a given outcome, based on the data (and time-period) used to formulate the hypothesis. For a particular TA strategy to work, all that is required is for the past characteristic of the market to continue to apply over the duration of your future investment, and not be dwarfed by other statistical fluctuations, or a deeper shift of fundamentals. It seems perfectly reasonable to me that a hybrid of TA and a general awareness of fundamentals is a good approach.
Given that you will be trying to return above-market returns in a timeframe shorter than your historical analysis, I guess a large part of the 'art' is choosing which TA indicators will be most likely to apply significantly over the foreseen investment period... which sounds like a gut-instinct based to some degree on ones interpretation of fundamentals!
57.66.65.38 17:55, 14 March 2006 (UTC)
thread_title: March changes

message: Frankly, the article at the moment, and perhaps particularly the "theory" section, is over-simplistic and suggests that the techniques of technical analysis are a lot narrower that they really are. I personally know many people who make a living from technical analysis, and am familiar with the approaches of many others that I have not personally met. It is true that the identification of trends is a common factor to many systems, but contrarian approaches (virtually ignored by the article at present) are used successfully by a substantial number of traders. One popular category of methods identifies when a market appears to be ranging and looks for trades back into the range when the price is near the boundaries - this is ignored by the article at present. I personally know a small number of successful traders who are happy to look for trades directly against a trend near to an extreme (or even in some cases at an extreme) when they believe that the trend is about to fail (don't try this at home, guys :-). Dow theory may be historically significant, but it is hardly the mainstay of 21st century trading, which is based more on time series analysis using computers. For example regression analysis techniques that can take into account higher derivatives than the first (which might be associated with the trend) can better predict the likely movement of the market, and will sometimes predict reversals, while falling almost entirely outside the scope of the article. 
Hence, would people agree there is a need for a considerable broadening of the scope of this article? Elroch 23:26, 6 April 2006 (UTC)
thread_title: Techniques of technical analysis

message: I deleted this section from the introduction as it seems out of place
::A mathematical proof of the existence of technical analysis helps explain how fundamental and technical analysis work together. The well-known equation M = P/E, multiple equals price divided by earnings, while true is miscast. It states Multiple is the dependent variable, dependent on judgements made by investors over what the E (earnings, dividends, products, etc.) is and what the actual price is. M is the arena of the technician, the psych, the supply/demand situation. But the value of M is a judgement, as is E. Price is a given, you can look it up in the newspaper.
::Therefore, price is the dependent variable, dependent on what we believe E to be and how much (M) we care to pay for it. In bullish times people pay excessive amounts (M), in bearish times, low M's. You cannot look up visions of E or M in the newspaper. Therefore we recast the same formula to become P = E x M (multiply both sides by E). Price is now shown to be the dependent variable, as it actually is.
::Now one can see how fundamentals and technicals are dependent on each other. At times, fundamentals are more important to investors, at others the technicals, and every variation in between. But it is certain that unless P goes to zero, M must exist. Therefore technical analysis (M) must exist and must be examined to get the full picture of a stock market investment. Sometimes it has more weight than at others (tops and bottoms).
::Technicians have many tools to examine each of these two areas, none 100% accurate, but it would be foolhardy NOT to look. What if ALL the technical indicators were bearish?  Bullish?
Artbristol 23:44, 28 June 2006 (UTC)
replies: text: You also deleted the neural net section without an explanation, so I'm inserting it back in. (It certainly isn't original research as you can see by the references) --Denoir 09:55, 30 June 2006 (UTC)

text: Sorry, I misread the revision history. --Denoir 10:08, 30 June 2006 (UTC)
thread_title:  Original research? 

message: Am I the only one feeling that this is a promotion for a book? AFAIK, this "3D TA" term is introduced by a book published one month ago. Does it already deserve to be mention twice in the history section?
Regardless if it is good or not, I do not beleive that this book and its new "3D TA" term has pass the test of time (never heard of it before). In my humble opinion, it is not yet notable.
mfortier November 10, 2006
Update: The (3D TA) section is now removed.
:The same old story:
:
:"Three-dimensional technical analysis" involves the analysis of price movements over time in multiple stocks simultaneously. It is thus a descendant of Dow Theory, as it focuses on the aggregate or relative, rather than the individual, movements of stocks.
:In three dimensional technical analysis, traders need to consider not only price and time in a single stock, but they should expand their focus to similar information in multiple stocks simultaneously."
:
:Better read Jesse Livermore's book published in 1940 and books about him: 1, 2, 3, 4, 5 Vugluskr 21:36, 30 March 2007 (UTC)
replies: text:  Thanks for the info. I am fine with adding back a reference to 3D TA, as long it it not done for book promotion (like it was before). Mfortier 23:39, 31 March 2007 (UTC)
thread_title: Three-Dimensional Technical Analysis

message: I'm only a beginner with this topic, so please excuse any misconception or odd terminology... but it seems to me that a vital feature of the moving average analysis is the lag. The article says if a share closes below the 200-day average then some will decide the run is over. It's important to know that the 200-day average lags the non-averaged data by 100 days (for uniform weighting)... so if a share closes below it, it actually closes below what the trend says the share should have been doing 100 days ago. This is a lot more significant than simply closing below the value predicted by the 200-day linear trend, which probably happens one day in two. As the article stands, a non-expert may misinterpret it saying that the latter is taken as a trigger to sell.--Russell E 00:33, 14 December 2006 (UTC)
replies: text: Nothing is predicted, nothing is protected. Insiders will buy their stocks back near the year moving average also known as EMA51Wk. Or maybe not :-) Vugluskr 04:52, 3 February 2007 (UTC)
thread_title:  Moving average - significance of lag 

message: Perhaps this external link may be useful Tracking the Trends in Technical Analysis, an interview with the founder and first president of the Market Technicians Association, Bob Farrell.  Some insight into how the field has developed.  Have Gun, Will Travel 00:54, 11 January 2007 (UTC)
thread_title: External link

message: I have deleted this from the introduction because I don't think it adds anything:
on the basis that history repeats itself more often than not
As a "basis" this doesn't work, because it's just a restatement of the central hypothesis - a useful explanation of what is meant by "history repeats itself more often than not" would probably end up as a full explanation of technical analysis. In other words, it is dangerously close to circular reasoning: "technical analysis works because technical analysis works".
I don't think anything's really lost by leaving the sentence as "Technical analysis assumes that non-random price patterns and trends exist in markets, and that these patterns can be identified and exploited."
Mswake 15:29, 5 March 2007 (UTC)
thread_title:  History repeating itself 

message: I spent some days trying to understand why price and volume are multiplied in such indicators:
* Money Flow
* On-balance Volume
* Price and Volume Trend
* Accumulation/distribution index
I answered myself: "Maybe, it is better to divide them? Why not divided?" Finally, Dimensional analysis gave an answer to my question. 
Please, check my contributions in these articles, especially language.
Vugluskr 07:31, 23 March 2007 (UTC)
thread_title:  Price × Volume indicators 

message: I have removed the quote Greenspan quote because, despite the superficial connection between his reference to the behavior of prices and technical analysis, he is not asserting, as technicians do, that the future direction of price movements can be predicted from past price movements, but rather that prices fluctuate, and will continue to do so.  --Benna 22:16, 3 April 2007 (UTC)
replies: text: It’s completely clear that Greenspan is not a technical analyst- see below for his own words, as reported by the Fed.  You think that some of his ideas support the concepts of TA – but that is original research on your part, and doesn’t belong in Wikipedia.  See  WP:OR.  To get Greenspan in here as supporting TA, you need to find him saying (in some reputable source) “I support TA” or “I use head & shoulders all the time.”Smallbones 16:15, 5 April 2007 (UTC)

text: It's not "original research" to say that Greenspan refers to market behaviors that technical analysts recognize; it's a statement of fact that is relevant to this article. What's more, the Fed not only uses technical analysis, it publishes technical analysis. This should be (and now is) mentioned in the article. Rgfolsom 17:18, 5 April 2007 (UTC)
replies: text: The Boston Fed explicitly states: "The Stock Market Report is in no way an endorsement of any one mode of study or source of advice on which one should base investment decisions. While most of the technical indicators chosen are frequently used, and the goal is to portray a set of charts and outlook consistent with Wall Street, the indicators are selected based on our ability to interpret and explain them to investment professionals, policymakers from other fields, and the general public. Therefore, the viewpoint portrayed and any predictions presented as to future market performance imitate, but never replicate, those of any one private or public financial institution. They do not reflect the views of the Federal Reserve System, and they are published to improve public knowledge but are not validated with regard to accuracy of data or analysis and cannot be used for professional purposes."  Yet you continue to assert that the report legitimizes technical analysis in some way. --Benna 00:56, 6 April 2007 (UTC)
replies: text: First, I did not "allege" that the Fed's publication "legitimizes technical analysis." Second, the disclaimer in that publication does not change what I actually did say, namely that the Fed uses and publishes technical analysis. I also said these facts belong in this article about technical analysis. Third, I put back the mention of the Fed as the source of the study regarding fx support/resistance levels. The source should be named, whether it's the Fed, Harvard, or Podunk U. Rgfolsom 17:57, 9 April 2007 (UTC)
thread_title:  Greenspan 

message: Saying "technicians 'try to' identify patterns" is to use a weasel phrase that implies skepticism of the method. You could say "try to" about anything a person does that could succeed or fail -- meteorologists "try to" forecast the weather, etc. -- but that's stilted prose.
As for "many" academic studies, this also implicitly sides with the skeptics -- unless the second half of the sentence also says "many" other studies say it may produce…, at which point it reads like a debate. The "some" vs. "other" construction is more neutral and natural.
Rgfolsom 20:07, 11 May 2007 (UTC)
replies: text: Saying "technicians identify patterns" is certainly not a weasel phrase - it's a statement of fact.  Except that the 'fact' in this case is just plain wrong.  Give me a weasel rather than a marketeer or a sockpuppet any day (and no, that's not intended personally).  Pleclech 20:33, 11 May 2007 (UTC)
thread_title:  Stilted language and skepticsim 

message: I've edited for readability, and to remove redundant language. Also used quotes from sources with appropriate formatting. Rgfolsom 19:27, 18 May 2007 (UTC)
thread_title:  Extensive edits