Taking a line for a walk

Timothy McMahon at FinTrend reckons we should be looking to buy into US stocks this summer, using the rate of return graph above.

How far should we heed the chartists? Like cardsharps fleecing marks on a sinking Mississippi paddlewheeler, are they better at short-term plays, but inattentive to catastrophe?


Wreck of the "Sultana" off Memphis, Tennessee, April 27, 1865

Riding the waves

Eric Chevrette shows how the chartists can read the same pattern in radically different ways. His view is that the US market is due to go up, not down - though the declining dollar still makes other regions and assets look more attractive.

To what extent can one sensibly make predictions from the line alone, instead of interpreting it in the light of theorized underlying causes?

Reading the signs

I have often wondered about chartists - investment analysts who look for patterns in trading to predict future developments. Here's a video posted on YouTube by Inthemoneystocks.com, an outfit set up this year. The report comments on yesterday's dramatic drop in the Dow.

Sometimes I think it's like astrology; but there may be a grain of truth in it. If relevant market information is already known, then (barring catastrophic surprises) some change happens because of the variable mood of the investors and their predictions of each others' behaviour. Perhaps this chart-reading is less a science and more a pragmatic art related to mass psychology and game-playing strategies.