I am responding to questions and comments that David presented to me in response to my analysis.I hope that this will be helpful to others who may have ambiguous feelings about TA.
Your question "Yes or no question: Do you feel that knowing it's recent past, that you can predict when the market will stop falling and reverse?"
Simple answer. no Unfortunately its not that simple.
Your comment After reading your analysis, it seems what you said could be reduced to something like: "The market has been going down, which is bad. Because it has been going down, it remains highly possible it will continue to go down. However, keep an eye out for signs ] that it is stabilizing, and if those stabilizing trends take root, we should start to increase thereafter. But if it doesn't, then it will continue to decline, unless...etc..."
Your question Am I missing something? Simple answer: yes
The words in your question that are most important deal with signs and probabilities. TECHNICAL ANALYSIS refers to signs derived from mathematical formulas that seek to interpret patterns in past security prices in order to identify the probability of the possible direction of a security or indices in the future.
I understand peoples frustration with TA [Technical analysis] . It is not an exact science. The wide variety of formulas that make up TA are the signs...They deal in probabilities not exact/definite results. If the results were exact we could turn on our investment desks put in our buys and sells ... and go play....dang that sounds GOOD. I attempt to give insight into what the TA [signs] seem to be indicating without trying to exclusively indicate that its my way or the highway.... I choose not to be that presumptuous. I always appreciate reading the different perspectives and interpretations of the moment.
[SOME SIGNS VOLUME MOVING AVERAGES SUPPORT LEVELS RESISTANCE LEVELS MOMENTUM CURRENT MARKET CONDITIONS CHART PATTERNS MACD RSI STO ETC.
Analogy: A car driver appears as if he is going to hit a pedestrian while traveling down a hill ...... car driver =investors pedestrian =the market
A car is heading down a hill directly toward a pedestrian [ "you can see--the market has been going down, which is bad."]The driver of the car continues toward the pedestrian hoping he will change direction {"Because it has been going down, it remains highly possible it will continue to go down"} . It is highly possible the driver will continue toward the pedestrian UNTIL SUCH TIME that he believes the he must change his direction in order to avoid getting into a catastrophic accident with the pedestrian. Keep your eyes open [ keep an eye out for signs ] to see if the driver begins to react to the pedestrian by moving out of his way on his way down the hill ...Thus trying to avoid the pedestrian.["signs that it is stabilizing "SELLING /CAPITULATION AT BOTTOM] If the driver is able to respond in a timely manner [ if those stabilizing trends take root /]. The driver reduces his speed [volume] avoids hitting the pedestrian [selling at the bottom] even better...BUYING AT THE BOTTOM.. The pedestrian is safe for the moment and able to continue forward on his path [ we should start to increase thereafter].
But if the driver is not paying attention he will continue on the same path down the hill unless ... etc. [But if it doesn't, then it will continue to decline, unless...etc."]
I am not a professional writer ... so if some of my posts are unclear or to long...I apologize ... just adding my 2 cents when I can and when it seems relevant.
Hope that answers your questions....if not ...I encourage anyone [with my blessings] to give it a shot.
As always I appreciate your thoughts comments and questions....Alley
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