Technical analysis may experience a revival now that
corporate accounts - the fundament of fundamental analysis - have been
rendered moot by seemingly inexhaustible scandals.
The field is the progeny of Charles Dow of Dow Jones fame and the
founder of the "Wall Street Journal". He devised a method to discern
cyclical patterns in share prices. Other sages - such as Elliott - put
forth complex "wave theories". Technical analysts now regularly employ
dozens of geometric configurations in their divinations.
Technical analysis is defined thus in "The Econometrics of Financial
Markets", a 1997 textbook authored by John Campbell, Andrew Lo, and
Craig MacKinlay:
"An approach to investment management based on the belief that
historical price series, trading volume, and other market statistics
exhibit regularities - often ... in the form of geometric patterns ...
that can be profitably exploited to extrapolate future price movements."
A less fanciful definition may be the one offered by Edwards and Magee
in "Technical Analysis of Stock Trends":
"The science of recording, usually in graphic form, the actual history
of trading (price changes, volume of transactions, etc.
Pages:
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41