STA members with long memories will remember that some 10

years ago the idea of producing a distance learning course on

technical analysis was first mooted. Well, after innumerable
hiccups, long periods of dormancy and several editors later, the
STAs Home Study Course

has been launched this month. The

course is intended to prepare students for the Societys diploma
exam. It is not intended that the Home Study Course

will replace
our existing diploma course, it will just allow people who are not
able to attend these lectures for whatever reason to prepare for
what is increasingly seen to be an essential qualification to work as
a technical analyst in the City. A huge number of people have been
involved in its preparation and it would be impossible to thank
them all individually here but we are extremely grateful to all the
individuals who have contributed to this Herculean task.
Enormous credit must go to Adam Sorab for overseeing the
development of the Home Study Course

during his tenure as

chairman and, in recognition of this and all his other contributions
to the STA, Adam was awarded a fellowship of the STA at the
summer party.
We are also very grateful to Michael Feeny for the work that he has
done as librarian for many years. Michael is now stepping down from
this job and we would like to thank him for having sifted through
the vast number of technical analysis books that are published every
year and deciding which merit inclusion in our collection. John
Douce has kindly agreed to take over the role of librarian so if you
have any requests for books or CD Roms/DVDs to be included in our
library, please contact him (his details are on page two).
For the past 23 years, Anne Whitby has had some official role in the
Society. For the last eight years she has acted as secretary to the
board. But she, too, has decided it is time for her to step down. No-
one knows as much about the goings-on of the STA and its history
than Anne and we shall miss not having the benefit of her wisdom
around the board table but she has promised to be available on a
phone a friend basis. We are immensely grateful to her for her
enormous contribution to the STA over the years.
We are delighted to announce that Guido Riolo will be joining the
board. Guido works for Bloomberg and is a well-respected analyst.
Many of you will have met him when he has lectured on the
diploma course.
The Societys annual dinner will be held on September 16th. After
the most difficult year in the markets that anyone can remember,
we thought it would be a good idea to try and lift the gloom a little
so we have invited the comedian Stephen Grant to be the after-
dinner speaker. The annual dinner is an excellent opportunity to
catch up with old friends as well as make new contacts. It is also a
convivial way to entertain clients and members can book tables
for 10 people. Alternatively, members are very welcome by themselves.
IN THIS ISSUE
2 STA diploma results
3 Trend strength fat-tailed analysis K. Edgeley
5 Forecasting the FTSE with e-yield indicators T. Laduguie
6 The herd instinct M. Jones
8 Art or science? Ruminations on the
meaning of technical analysis T. Parker
FOR YOUR DIARY
15th September To be announced
16th September Annual dinner at the National Liberal Club
8-10th October 22nd annual IFTA conference, Chicago
13th October Bill Adlard
10th November Carol Osler, Associate Professor
Brandeis University
8th December Christmas party
N.B. Unless otherwise stated, the monthly meetings will
take place at the British Bankers Association, Pinners Hall,
105108 Old Broad Street, London EC2N 1EX at 6.00 p.m.
JULY 2009 www.sta-uk.org
MARKET TECHNICIAN
No. 65
THE JOURNAL OF THE STA
COPY DEADLINE FOR THE NEXT ISSUE SEPTEMBER 2009 PUBLICATION OF THE NEXT ISSUE OCTOBER 2009
Some historical comparisons
Then...
Dow 29: fell 48% rallied 48% fell 78%
Nasdaq 00: fell 40% rallied 40% fell 81%
Topix 89: fell 48% rallied 37% fell 65%
US Treasury Yields 81: fell 34% rallied 34% fell 85%
US Housebuilders 05: fell 47% rallied 45% fell 82%
Abu Dhabi 05: fell 26% rallied 26% fell 55%
Gold 80: fell 43% rallied 46% fell 65%
Silver 80: fell 67% rallied 61% fell 75%
Crude Oil 90: fell 32% rallied 29% fell 51%
Now...
Shanghai Comp 08: fell 73% rallied 70% ...
NDX 08: fell 50% rallied 48% ...
MSCI Machinery 08: fell 64% rallied 60% ...
JPY/AUD 08: fell 47% rallied 46% ...
GSCI Energy 08: fell 71% rallied 71% ...
DCI Metals 08: fell 55% rallied 55% ...
DCI AGRI 08: fell 50% rallied 46% ...
Sean Corrigan, Chief Investment Strategist
Diapason Commodities Management S.A.
STA diploma results
Issue 65 July 2009 MARKET TECHNICIAN 2
CHAIRMAN
Deborah Owen: editorial@irc100.com
TREASURER
Simon Warren: warrens@bupa.com
PROGRAMME ORGANISATION
Mark Tennyson-d'Eyncourt: mdeyncourt@csv.org.uk
Axel Rudolph: axel.rudolph@dowjones.com
LIBRARY AND LIAISON
John Douce: jdmjd@tiscali.co.uk
EDUCATION
John Cameron: jrlcameronta@tiscali.co.uk
Guido Riolo: guidoriolo@bloomberg.net
Axel Rudolph: axel.rudolph@dowjones.com
Adam Sorab: adam.sorab@cqsm.com
IFTA
Robin Griffiths: robin.griffiths@cazenovecapital.com
MARKETING
Clive Lambert: clive@futurestechs.co.uk
Karen Jones: karen.jones@ commerzbank.com
MEMBERSHIP
Simon Warren: warrens@bupa.com
Ron William: rwilliam1@bloomberg.net
REGIONAL CHAPTERS
Alasdair McKinnon: AMcKinnon@sit.co.uk
SECRETARY
Mark Tennyson dEyncourt: mdeyncourt@csv.org.uk
STA JOURNAL
Editor, Deborah Owen: editorial@irc100.com
WEBSITE
David Watts: DWattsUK@aol.com
Simon Warren: warrens@bupa.com
Deborah Owen: editorial@irc100.com
Please keep the articles coming in the success of the Journal depends on
its authors, and we would like to thank all those who have supported us
with their high standard of work. The aim is to make the Journal a valuable
showcase for members research as well as to inform and entertain
readers.
The Society is not responsible for any material published in The Market
Technician and publication of any material or expression of opinions does
not necessarily imply that the Society agrees with them. The Society is not
authorised to conduct investment business and does not provide
investment advice or recommendations.
Articles are published without responsibility on the part of the Society, the
editor or authors for loss occasioned by any person acting or refraining
from action as a result of any view expressed therein.
Networking
WHO TO CONTACT
ANY QUERIES
For any queries about joining the Society, attending one of
the STA courses on technical analysis or taking the
diploma examination, please contact:
STA Administration Services (Katie Abberton)
Dean House, Vernham Dean, Hampshire SP11 0LA
Tel: 0845 003 9549 Fax: 020 7900 2585 www.sta-uk.org
For information about advertising in the journal,
please contact: Deborah Owen
PO Box 37389, London N1 0WE Tel: 020-7278 4605
Pass with Distinction
Adrian Barton
Nicholas de Beer
Marc Fournier
Craig Macleod Inglis
Pass
Peter Andrew
Jeff Boccaccio
Robert Boll
David Carrera de Manuel
Mark Chambers
Tin Kok Chong
Thomas Cross
Julia Duquet
Michael Erskine
Brd Inge Hamre
George Hope
Razvan Iordache
Sheba Jafari
Milind Joshi
Wong Shu Kong
Martin Luke
Jed Mitchell
William R Moore
Josh Morris
Darren Mosley
Graham Neary
Wong Zheng Leah @ Nex Wong
Robert Reid
Vikas Shah
Vinay Shah
Omar Shams Eldin Mahmoud Fahmy
Vinay Sharma
Martin Teller
Louis Vallance
Thomas M Walton
Afizan Wangkee
Joe Woodbury
Christopher Wright
Bronwen Wood Memorial Award
The Bronwen Wood Memorial Award is awarded to the
candidate with the best mark in the diploma examination, and
this year the winner is Marc Fournier. Marc submitted an
exceptionally good paper and impressed the examiners with
the depth and range of his knowledge in technical analysis.
Congratulations to Marc.
MARKET TECHNICIAN Issue 65 July 2009
3
The differentiation of trend and range is critical in market analysis.
Returns are not normally distributed; range-trading dominates, but
when trends develop they often extend further than a normal
distribution would allow. Trend strength indicators identify these
fat-tailed moves.
As technical analysts, we should all have a healthy scepticism of the
Efficient Market Hypothesis (EMH). In an economically efficient
world, markets are information discounting mechanisms but, in
reality, prices do not reflect information per se, but the consensus
view of the information. Investors behavioural biases make the
traditional economic theory of efficiency unrealistic.
The failure of EMH also dispels a couple of other economic myths.
Firstly, that of rational expectations; this theory is inherently linked
to EMH and proposes that investors learn from past mistakes.
However, basic psychology would argue against this; past
behaviour is often the best predictor of future behaviour.
Rationality also assumes that individuals will base decisions on
maximization of wealth and utility. Again, emotional biases
dominate beliefs and prompt decision-making based on changes
in market price. Any wisdom of the crowd relies on independence
of thought; for example, when estimating the number of sweets in
a jar, the average of guesses is likely to be close to the true result.
This experiment assumes that an individuals guess is not
influenced by those of other participants. In a free-trading market
place this is rarely the case. Individuals may consider themselves to
be rational, but emotion can often destroy self control. The crowd
can encourage group-think, amplifying biases in a pressure to
conform. The desire not to lose money compared to ones peers
can lead to closet benchmarking and a short-termist investment
strategy.
There is a tendency to be over-confident in forecasting and
assigning too narrow a probability band to potential outcomes
over-estimating accuracy. There is also a cognitive bias to seek only
evidence in support of a current view or trading position. The
constant desire for knowledge is self-reinforcing. Investors
demand an explanation for every price move and news services
provide one, whether valid or not. More information does not
necessarily mean better information, but it will often lead to an
increase in confidence. A self-attribution bias all gains put down
to skill, all losses to bad luck can increase confidence in our ability
after a string of gains, even when the winning streak may be purely
driven by the laws of probability.
The second myth is that market returns are normally distributed
under the traditional bell-shaped or Gaussian curve. However, the
emotional biases that stem from non-efficient markets and
irrational behaviour lead to a more leptokurtic or fat-tailed
distribution. In other words, markets range-trade a lot more than a
normal distribution would suggest, but when they do trend, the
trends extend further than expected, i.e. into the fat-tails of the
distribution. The net result is an under-pricing of tail risk. This
distribution also tells us that the majority of market activity (as
much as 80%) is simply noise in the centre of the distribution.
Technical analysis shows what the crowd thinks; its relationship
with behavioural finance is very strong. Early academic tests of
technical analysis failed to find empirical support; they were often
based on moving average trading rules which are more suited to
trending environments. However, after years of scepticism,
academics are now finding evidence of a momentum effect, where
past winners can out-perform in the short to medium term, while
still reverting to the average in a long term momentum life cycle.
The Chartered Financial Analyst Institute has embraced this shift
towards behavioural finance, firstly, devoting its 2009 annual UK
conference to failures in the EMH and, secondly, polling its
members on market efficiency and rationality. More than one third
of CFA UK members no longer believe that prices reflect all
available information and 77% disagree with the notion that
investors behave rationally.
The key to technical analysis is to differentiate trend from range.
Mean reverting oscillators will work well in ranging markets,
identifying potential price extremes, but will remain overbought if
the market breaks out and starts to trend higher (oversold if it
trends lower). Moving averages smooth the price action for easier
trend recognition and are the basis for most trend following
systems. Due to the lag in their calculation they will generally
perform poorly in ranges. However, the optimal moving average is
not constant over time or across asset classes.
A trend strength indicator can be used as a filter in mechanical
trading models and to rank markets according to the intensity of
their directional moves.
Two indicators with different inputs are commonly used to identify
trend. The first, ADX, is a derivative of Welles Wilders Directional
Movement system, based on price changes.
Trend strength fat-tailed analysis
This article is a summary of a talk given to the STA on 12th May, 2009 By Kevin Edgeley
Chart 1: Trend v range
Issue 65 July 2009 MARKET TECHNICIAN 4
Directional Movement is defined as the largest portion of the days
range outside the previous days range. If the greater range is to
the upside, directional movement is positive (+DM) if below then
negative (-DM). The True Range is the largest absolute value of 1)
todays range, 2) todays high minus yesterdays close and 3) todays
low minus yesterdays close. The Directional Indicator divides
positive and negative Directional Movement independently by the
True Range.
+ DM DM
+DI = DM =
TrueRange TrueRange
The system then calculates a 14 day moving average of the positive
and negative DI. When +DI (14) is greater than -DI (14) the trend is up.
ADX evaluates the trending characteristics of a security. It
measures a 14 day moving average of
(+ DI) ( DI)
(+ DI) + ( DI)
If the trend is healthy, the spread between +DI and -DI will widen
and ADX will rise.
The second is a measure of volatility Bollinger Band Width (BBW).
This measures the difference between two volatility bands (two
standard deviation) around a 20 period moving average and
assumes mean reversion from low volatility range to high volatility
breakout and trend.
Analysis using these indicators suggests that most markets spend
70-80% of the time in a range environment and only 20-30%
trending.
It should be remembered that both indicators measure only trend
strength, not direction. ADX uses a moving average process in its
calculation; while this smoothes out short term volatility it does
lead to more of a lag in the signal. The Bollinger Band Width is
more responsive to price change due to the standard deviation
component in its calculation. This can prompt more false signals.
The volatility mean reversion assumption can identify potential
range breakouts; when the bands contract to historical narrows an
imminent trend move is likely.
To compare trend strength across different markets, normalise
ADX or BBW by plotting a ratio of the base indicator to its 200 day
moving average. This will give an index that can be used for
ranking and comparison purposes. A score below 1 would suggest
a range; a score rising above 1 indicates a confirmed trend.
Extreme lows in the indicator can suggest breakout opportunities.
As can be seen from the chart, the normalised BBW is more volatile
then the normalised ADX, responding to changes in price more
quickly but also generating more false signals.
Table 1: Interpreting normalised trend strength
Normalised score Direction of indicator Interpretation
< 0.5 Falling Range compression
>0.5 Rising Weak/unconfirmed trend
>1 Rising Confirmed trend
>1.50 Rising Strong trend
>1 Falling Trend correction
Trend Strength is not a new concept; Wilder stressed its
importance in the 1970s with his ADX measure. Now, as then,
markets are in a state of flux; a more active investment stance is
called for and trend identification is instrumental to this process.
Kevin Edgeley, CFA, MFTA
This article was written in a personal capacity. The author has since
joined Caxton Europe Asset Management.
Chart 2: Directional Movement
Chart 4: Normalising ADX and BBW
Chart 3: Bollinger Band Width
MARKET TECHNICIAN Issue 65 July 2009
5
Forecasting the FTSE 100 has always been an essential part of the
investment process for equity investors, but in recent months it has
become even more crucial to focus on the short term direction of
the FTSE 100. A buy and hold strategy is no longer favoured;
instead investors have been quick to take profits when the market
rallies. I believe that a strategy designed for the short term is key to
success in the current environment. Long ago, and before the
current crisis started, I was always keen to focus on the short term
direction of the FTSE 100, accordingly I developed some innovative
indicators to help me predict the near term direction of the index.
I am talking about trends lasting days or weeks. My analysis is
based on three analytical tools: Elliott Wave Principle, Bullish Trend
Indicator (BTI) and Top 20 Differential.
The Wave Principle is a detailed description of how groups of
people behave. It reveals that mass psychology swings from
pessimism to optimism and back in a natural sequence, creating
specific and measurable patterns. One of the easiest places to see
this phenomenon at work is in the financial markets, where
changing investor psychology is recorded in the form of price
movements. If you can identify repeating patterns in prices, and
figure out where in those repeating patterns we are today, then
you can predict where we are going in the future.
One problem with Elliott wave is that it is often late at identifying
the main trend or it can sometimes lead to errors depending on
which degree of trend we are looking at. For example a five-wave
rally may suggest that the trend is up but in reality it is more
complex than we think. A five-wave rally could be wave A or wave
C of a countertrend move in a long term bear market. Assuming
the trend is up because the rally was in five waves, in this instance,
would be a big mistake. This observation led me to develop two
directional indicators, BTI and 34-day BTI. These indicators are used
to determine market direction and to put the appropriate wave
count on the unfolding Elliott wave.
The Bullish Trend Indicator (BTI) is a sentiment indicator. This
unique indicator tells us whether investors are bullish or bearish at
a specific time, regardless of the state of the fundamental news.
This is very important because when investors are in a bullish
mood, there is a high probability that the market will rise. For
example when the daily news is positive, one would expect the
market to rise and the FTSE 100 should rise. However, a rising
market accompanied by negative news would be abnormal but
extremely bullish for stocks. The BTI measure the level of
bullishness among market participants.
Each day an analysis is made of the impact of corporate and
economic news on the FTSE 100. A daily news value is calculated,
which is a function of how good or how bad the economic and
corporate news is. The purpose of this is to determine how
investors react to the news. Important news like non-farm payrolls,
CPI, PPI, consumer spending, consumer confidence...and some
corporate news from the largest companies by market
capitalization are analysed and given a weighting. At the end of the
day the sum of the news weightings is entered in to the BTI formula
giving the value of the BTI for that day. If the BTI rises from one day
to another, sentiment is bullish and, if it goes down, sentiment is
bearish. Once we have the current sentiment we need to place it
into the context of the long term stock market trend. Let me
explain. If sentiment is bullish (rising BTI) but the long term trend is
down (bear market) then the market is probably in the process of
forming a bear market rally. If this event occurs near the beginning
of the bear market we could assume that the anticipated rally will
be a second wave, whereas if it occurs after a three-leg move down
we would classify the rally as a fourth wave. The direction of the BTI
in relation to the long term trend enables me to place the correct
Elliott wave count on the chart. But how do I know what the long
term trend is?
To determine the long term trend I calculate the 34-day moving
average of the BTI, the result is the 34-day BTI. This longer term
version of the BTI is used to define the long term trend in stocks. Its
value varies but we are only interested in one thing, whether the 34-
day BTI is positive or negative. A positive 34-day BTI means the FTSE
100 is in a bull markets while a negative value is associated with a
bear market. Once again the 34-day BTI is calculated daily and its
position is compared to that of the BTI in order to place the correct
wave count on the chart. We are now presented with four situations:
BTI = rising BTI = declining
34-day BTI = positive 34-day BTI = positive
A rally in a bull market A decline in a bull market
BTI = rising BTI = declining
34-day BTI = negative 34-day BTI = negative
A rally in a bear market A decline in a bear market
Once the near term trend is established, the next thing is to
determine when to buy or sell. I always try to get in at the best level
and to do this I use two of my favourite timing indicators, 13-day
BTI and Top 20 Differential indicators.
The 13-day BTI is calculated differently and its main purpose is to
identify when the FTSE 100 is near a high or a low. Readings are
concentrated in the range -400, 400. When the 13-day BTI is oversold
(-400 or lower) the FTSE 100 is near a low; when the 13-day BTI is
overbought (400 or higher) the FTSE 100 is near a high. Note that
these levels are short term support/resistance a strong move over a
Daily Change in FTSE News Value Outcome
Up Negative Extremely bullish
Up Nil Very bullish
Up Positive Bullish
Down Negative Bearish
Down Nil Very bearish
Down Positive Extremely bearish
Forecasting the FTSE with e-yield indicators
This is a summary to a talk given to the STA on 16th June, 2009 By Thierry Laduguie
Issue 65 July 2009 MARKET TECHNICIAN 6
If the City of London doubts that evidence for the herd instinct
exists, it just needs to look out of the window. When the Millennium
Bridge was opened in June 2000, it was heralded as an icon of
futuristic urban design then swiftly ridiculed when the structure
began to wobble dangerously as the first pedestrians crossed over.
The newspapers leapt with glee on the Wobbly Bridge story, and you
can see why. Trendy designers build a footbridge not designed for
hundreds of human feet: its a godsend of a story. But what was that
design flaw? This. The bridge was designed to cope with the weight
of thousands of individual, random footsteps. As they walked across,
however, people began, unconsciously, to synchronise with one
anothers walking patterns. It was the effects of this impromptu
marching army that the designers failed to foresee.
Lets extrapolate: as individuals we may think we are going our own
way, using our personal expertise and experience to make rational
decisions. Unconsciously, we are marching in time with an army
that has no goal, no mission and which doesnt even know it is an
army. The phrase herd instinct crops up time and time again to
describe the panic selling that had brought so many markets and
institutions low. We are talking about a group of trained, analytical,
often well-educated financial services professionals. Yet they are
accused of swinging with irrational exuberance (in Alan
Greenspans words) to blind fear in the past difficult months.
Behaviour is the buzzword. Economic and market analysis has
moved from the spreadsheets, figuratively speaking, and onto the
psychiatrists couch. The lexicon of the credit crunch is expanding
correspondingly. The language of psychology and neuroscience is
being recruited in the desperate search for answers and
explanations. Many suspects have been fingered: sub-prime
lending, the debt market, short-selling. The latest is not an
economic phenomenon but a chemical. Its called cortisol.
The hormone a form of steroid, in fact is produced by the body
during times of stress, anxiety and uncertainty. Testosterone
promotes risk taking and that key word in any market confidence.
It is no clich that a bull market produces gallons of the stuff on the
trading floor, but an empirical fact. Cortisol acts differently.
John Coates used to run a trading desk at Deutsche Bank. He is now
a senior research fellow in neuroscience at Cambridge University. He
describes the effects: In small amounts, cortisol quickens reactions
and sharpens the mind. But if elevated cortisol exposure lingers and
becomes chronic, its effects are quite different. No longer sharpening
the wits, it begins to hinder them and inhibits the urge to take risks.
Cortisol, he writes, is especially stimulated by conditions of novelty,
uncertainty and uncontrollability conditions that describe a
The herd instinct?
By Mark Jones
one-week or two-week period would be enough to push the
indicator to overbought/oversold. Because the 13-day BTI is derived
from the BTI, it measures extremes in sentiment. This is important
because an extreme in sentiment generally coincides with a market
turn. For example, when the mood is bullish the market rises. The
more the market rises, the more bullish investors become and this
process continues until investors mood reaches an extreme in
optimism, at which point the FTSE 100 peaks and turns down. This is
when the 13-day BTI is overbought. Similarly, when the FTSE 100 is
declining and the mood becomes more and more bearish, the 13-day
BTI will become oversold. This indicates that the mood is extremely
bearish and, as a result, the FTSE 100 will bottom out and turn up.
The other timing indicator which is useful is the Top 20 Differential.
This indicator measures how some of the largest stocks by market
capitalisation move in relation to the FTSE 100. A sample of 20
stocks that have an important influence on the FTSE 100 is analysed
daily. For each stock I measure the difference between the stock
percentage gain/loss and the FTSE 100 in the current Elliott wave.
The key here is knowing which kind of wave it is, for example a stock
with a high beta would probably outperform the FTSE 100 by a
large percentage in a third wave. By looking at historical data the
analyst can find out levels of outperformance/underperformance at
the end of a third wave or any other wave for that matter. These
levels or limits are levels where the stock tends to pause and
reverse. It is possible to predict when a stock will reach the end of a
wave simply by checking if the stock has reached the limit. When a
large number of big caps reach their limit in their respective Elliott
wave, the FTSE 100 is near a top or bottom. Like with the 13-day BTI,
these support/resistance levels are short term levels.
By combining all the indicators, BTI, 34-day BTI, 13-day BTI and Top
20 Differential, we have an accurate FTSE 100 short term forecast.
The following example illustrates this point:
As the FTSE 100 rallied at the end of October 2008, the 34-day BTI
was negative indicating a bear market. As a result I assumed that
the rally was a counter trend so in this case I labelled the rally wave
c (circle) of a potential expanded flat [a,b,c (circle)]. The day before
the top on 4th November, the directional indicator, BTI, was
declining indicating the short term trend was about to turn down
and the timing indicator, 13-day BTI, became overbought. This was
a signal to sell and the FTSE 100 did go down in the following days.
Thierry Laduguie www.eyield.co.uk
MARKET TECHNICIAN Issue 65 July 2009
7
traders life during a crisis. In a study, Coates took saliva samples
from a group of traders. Cortisol levels rose by as much as 500 per
cent during times of massive market volatility. The figure is bound
to vary from individual to individual. But Coates believes cortisol
may be a big factor in herd behaviour. Put simply, the stuff is highly
contagious. One animals surge in testosterone or cortisol can be
spread throughout a herd and trigger aggression or panic, he
notes. You can see where he is going with the theory. If traders
become more risk-seeking during booms and more risk-averse
during slumps, then the markets may be inherently unstable and
traders may fail to seize on profitable opportunities.
Experiments have shown that anxiety is the easiest emotion to
transmit between human animals. Think of the atmosphere on a
plane when it goes through a period of extreme turbulence or a lift
stalls between floors; how anxiety spreads as one stranger catches
anothers eye.
In a study of mass anxiety in the market for The Times, the writer John
Naish cites a Vanderbilt University study in which a dozen participants
studied photos of scared, neutral and happy faces. The volunteers
recognised fearful expressions a half-second quicker than other
images. That was the conscious reaction. Unconsciously, our response
to anxiety is even more powerful. If you asked traders to say what
drives their decision-making process, they are not likely to say its my
amygdala playing up again. It may well be the truth, however. The
amygdala is the brains anxiety centre and spots signs of fear in less
than two-hundredths of a second. As Naish puts it, the sense of fear
grows because we swap ever larger doses of worry with each other.
Adherents of the Efficient Market Hypothesis (EMH) whose
number have probably dwindled of late believe that the market is
structurally accurate; and that stocks will always find their proper
level despite the efforts of individuals to find values through
technical analysis, trend-spotting or exploiting observable investor
psychology. There are different critiques of that theory. Warren
Buffet sees himself as a living riposte: Id be a bum on the street
with a tin cup if the markets were always efficient he once said.
A more academic rebuttal comes in the emerging discipline of
socionomics. For three decades, former Merrill Lynch analyst Robert
Prechter and psychologist Wayne Parke have been gathering data
around social behaviour in times of uncertainty. In a timely paper
published in June 2007, Prechter and psychologist Wayne Parker
contend that we behave one way when we are certain about
economic value to ourselves; and very differently when we are
unsure of others future financial valuations. In the first case, they
approach value rationally and consciously, while in the second case
they unconsciously herd and then rationalise their decisions.
The subsequent crisis in inter-bank lending and the vacillations of
the LIBOR rate might be brought forward in evidence: has there
been a time in history where banking professionals have been
more unsure of others future financial valuations?
Rational economics say that if something is on offer at historically
low prices, bargain-hunters will rush in. Anyone who witnessed the
dash to Selfridges and Marks and Spencer when they announced
pre-Christmas 20%-off sales saw exactly that phenomenon at
work. But Prechter contends that the Law of Supply and Demand
gets flipped on its head in the financial markets. As a stocks price
rises, demand for it tends to increase. When prices are cheap, few
want to buy. This is exactly the opposite of what happens in the
butchers shop or the shoe store.
Behavioural finance is a thriving discipline with a growing body of
case study. But before the term was even coined the finest
economics writer of the 20th century, J. K. Galbraith, understood
that extreme market phenomena cannot be explained by
mathematical models and the close study of economic cycles. You
have to look to the human factor. After the crash of 1929, many
put the blame on the availability of cheap credit and historically
low interest rates. Galbraith said that was obvious nonsense: rates
were high in the late twenties compared to later years; and
borrowing was just as easy in non-booms. Galbraith talked instead
of a contagious euphoria that had driven the market. Speculation
on a large scale requires a pervasive sense of confidence and
optimism and conviction that ordinary people were meant to be
rich. People must also have faith in the good intentions and even
in the benevolence of others, for it is by the agency of others that
they will get rich . . . Such a feeling of trust is essential for a boom.
He goes on to describe a backlash which believers in the cortisol
theory will recognise: When people are cautious, questioning,
misanthropic, suspicious, or mean, they are immune to speculative
enthusiasms. Robert Schiller, the foremost exponent of the
behavioural school, echoed those sentiments in his book Irrational
Exuberance written, presciently, three years before the latest crash:
The stockmarket has not come down to historical levels, he
wrote. People still place too much confidence in the markets and
have too strong a belief that paying attention to the gyrations in
their investments will someday make them rich, and so they do not
make conservative preparations for possible bad outcomes.
So can human beings override their complex hormonal and
neurological impulses at times of immense stress and avoid the
contagion that spreads through the trading herd?
John Coates writes that there is some preliminary but tantalising
research showing that certain people can adapt themselves into
physiologically toughened individuals by displaying a muted cortisol
response to stress.. He speculates, not entirely seriously, you suspect,
that Olympic-style training regimes could be designed for traders.
A former equities trading head had a simpler solution for traders
who succumbed to a state the neuroscientists call learned
hopelessness, where people freeze and lose faith in their own
ability to spot an opportunity. I sent them home, he says.
There is a branch of cognitive psychology devoted to the study of
resilience: the ability of individuals to withstand stress and
catastrophe. Stress can, in fact, be an ally as well as a danger.
Studies suggests that those with complex, busy and indeed
stressful lives are better able to cope with an unexpected shock
such as the death of a relative. Physical health and stamina are
assets too so perhaps John Coatess Olympic training camp is the
right idea. Experience is a vital factor. Resilient individuals tend not
to dwell on bad experiences: they learn and accept them.
If nothing else, the credit crunch has shone a light on some
unexpected quirks of the human mind.
Mark Jones is a freelance journalist.This article first appeared in Roar, the
magazine for clients of Liontrust Asset Management PLC, Spring 2009.
Issue 65 July 2009 MARKET TECHNICIAN 8
Art or science? Ruminations on the meaning of
technical analysis
This is a summary to a talk given to the STA on 10th March, 2009 By Tim Parker
This article offers some thoughts on the philosophy of technical
analysis which have been tucked away in the back of my mind for
a number of years while Ive been making a living, day-to-day as a
technical analyst and salesman. I should declare at the outset that
philosophy is not my strong point and neither is the statistical
manipulation of data, nor the dissection of financial statements:
my educational background is in English literature as a graduate of
Cambridge University. After that, my rite of passage into adult life
was a three-year stint as a soldier, some of which was spent on the
streets of West Belfast and some on guarding Buckingham Palace.
It may seem an unlikely background to a career in technical
analysis but, after 20 years of eyeballing charts and engaging
institutional investors in the attempt to understand the dynamics
of financial markets, it is clearer to me than ever that academic
achievement does not guarantee investment success. No-one, of
course, has a monopoly on the best way to make money in the
financial markets but some people have better tools than others or,
more accurately, they use the same tools as others but more
effectively. One of these tool-sets, and the nature of the
practitioners who use it, is the subject of this article. Is technical
analysis an art or a science. Are the people who use it artists or
mechanics?
There is no art in trading. Just discipline and patience.
Roel Verheyen, Theuma NV,
The point about discipline is frequently made. It means obeying
rules and following a process of controlled behaviour after a period
of training. It is essential to master ones emotions while trading
financial assets. Technical analysis is often seen as exactly that a
system of rules that, once learnt, guards the investor against the
inconvenient influences of prejudice and emotional involvement
while trading. In behavioural jargon, discipline confronts and
negates the biases inherent in all of us. You might even argue that
the discipline of technical analysis explicitly involves a degree of
punishment because, if you disobey the rules and allow your heart
to hold sway over your mind, you will get hurt financially.
A method of evaluating securities by analysing statistics
generated by market activity, such as past prices and volume.
Technical analysts do not attempt to measure a securitys
intrinsic value, but instead use charts and other tools to identify
patterns that can suggest future activity.
www.investopoedia.com
The definition of technical analysis shown in the box above is
rather a mouthful and fairly meaningless to those not already well
versed in the subject. However, there is one word in the definition
that stands out because it challenges the whole notion of technical
analysis being an inviolable rules-based discipline and that is
suggest. The suggestion of future price activity, rather than an
unambiguous formulaic output is what shifts the whole
philosophy of technical analysis out of the realm of science and
firmly into that of art. It also casts the analyst as more of an artist
than a scientist.
There are two types of price pattern on the charts, reversal and
continuation. It is obviously important to know which is which. For
example, Chart 1 below of BAe systems could at one point have
been interpreted as a pennant, indicating a bearish continuation
pattern yet in the event it turned out to be a reversal.
Of course good analysis does not end with the recognition of a
pattern on one chart. Many other factors such as different time
periods and supporting indicators can be brought to bear, as well
as Elliot Waves, Gann, Fibonacci and inter-market analysis. A
meaning or forecast can emerge quite powerfully from such
comprehensive analyses, but the point is still that it does not
necessarily follow that it will always emerge an ambiguity will
often exist. Information derived from the study of market action
can have forecasting value but judgement may be needed to
extract the best of this value and could well make the difference
between winning and losing. The judgement of information is as
important as the information itself.
An analysts judgement is subjective and depends on his or her skill
and intuition in reading and interpreting the lines and patterns on
a chart, much like the critic of art (of which more later). An analysts
judgement is also, however, dynamic and constantly changing,
which is highly appropriate for the inherently dynamic
environment of the markets themselves.
On 29th December 2008 John Kay wrote an article in the Financial
Times which included the following paragraph:
Economic systems are also dynamic. Dynamic in the sense that
they evolve which makes the mathematics harder. But also
Chart 1: Ambiguous patterns
MARKET TECHNICIAN Issue 65 July 2009
9
dynamic in the sense that the structural relationships constantly
change. Some economists believe there is a deep underlying
structure from which laws of economic behaviour that are
universal in time and space can be deduced. I think that search is
a wild goose chase and that the best we can do is to identify
empirical regularities that apply to particular contexts. Whoever
is right, it is evident more work needs to be done in understanding
the relationships.
A technical analyst might argue that any technical approach is a
collection of laws about price behaviour that are universal in time
and space and reflect a deep underlying structure. But, if we
consider one of the most respected techniques of technical
analysis, Dow theory, it turns out to be flawed when incorporated
into mechanised trading systems that involve, for instance,
automated trend line drawing and automated trend-break trading
signals. One of the reasons for the disappointing results derived
from these systems is that, intuitively, we know that in bull markets
resistance lines do not work well and in bear markets support lines
do not contain selling pressure. In addition, a trend may end and be
followed by a sideways market of unknown duration and unknown
future direction such as the one, some would say, that hangs over
range-trading equities right now. In these instances reversal
indicators may simply fail while volume and momentum just fade
away. Overall, trend followers are usually late and contrarians are
usually early.
In all these circumstances what we need to identify early on is the
particular context, or what type of market we are in, so that we can
adopt the appropriate technical approach. In other words, if the
markets are displaying momentum characteristics, then we could
or should use Dow trend theory but, if markets are ranging, an
array of suitable oscillators would be more appropriate.
The point is that a more flexible, dynamic and intuitive response
by the analyst as market interpreter is needed to identify the
inflection points between bull and bear markets.
The study and recognition of price patterns
Patterns are at the epicentre of technical analysis. They help us
identify vital inflection points when markets are transitional or in
an intermediary phase.
The recognition of chart patterns is absolutely key to raising the
probability of successfully identifying turning points but it is
subjective as expressed by that phrase suggests future activity in
the definition of technical analysis.
Experienced practitioners recognise a small number of perfectly
formed patterns on a regular basis, such as the double top on the
S&P 500 index shown in Chart 2, with often satisfying results. But
what about the rest of the time? At any one time more than 80%
of price charts will be frustrating and confounding efforts to
define classic patterns from the data. I believe that a large
proportion of these charts are displaying partial patterns which
can prove to be very profitable. The outcome of the partial and
imperfect head and shoulders pattern shown on Chart 3 was, for
example, unambiguous.
The theory goes that a pattern raises the probability that a price is
likely to move in one direction or another after completion of the
pattern. But the process of recognition, or rather the experience of
the analyst scrutinising a partial pattern, is also a key factor in
raising the probability of success. In fact, it is true to say that
recognition of the imperfect pattern which only a handful of
market participants see and understand is better and more
fruitful than the highly visible pattern, which is more universally
recognised and therefore invalidated or arbitraged away. The BAe
Systems example shown in Chart 2 is a good example, as is the
V-reversal pattern which did not work on Carnival (Chart 4).
What I term the recognitive process relies on the experience and
intuition of the analyst from which we can infer that the analyst
has an interpretative skill which he brings to bear. He exercises
judgement as well as calculation, and therefore practises as much
Chart 2: A perfect double top?
Chart 3: Imperfect pattern
Chart 4: Imperfect result
Issue 65 July 2009 MARKET TECHNICIAN 10
as an artist as a scientist. In these cases the rules of the analysis in
other words the tool-set are more than matched by the quality of
the experience and intuitive power of the analyst.
The evolution of patterns
As John Kay and other analysts have observed, economic systems
and markets constantly evolve or, as the Latin origin of the word
would have it, constantly unroll. In any process of gradual
development there are always vestiges of a past form in the
present form. It is for this reason that we can expect to find value in
recognising certain patterns of historic data which, more often
than not, have led to predictable outcomes. Evolution, however,
does not stop in the here and now. It goes on and on, unrolling and
unravelling, constantly developing new forms. It has occurred to
me that recorded patterns of historic data do so as well; they go
on evolving. Technical analysts should, therefore, be looking for
patterns of data that have developed from earlier patterns, or for
mutations or even for completely new patterns. Partial pattern
recognition becomes new pattern recognition, with new rules and
new identifiable characteristics
The chart of Tullow Oil (Chart 5) is an example of a pattern which
we have labelled a CRAB, an acronym for Confirmed Rally After a
Base. Similar to the Cup and Handle it offers a good entry point for
a long position after the break out of a base formation. An attempt
at back-testing might help secure credibility in a new pattern, but
all too often this is self-defeating. Rather like stress-testing the
banks in the US, it would all depend on the arbitrary and subjective
selection of the rules of the back-test itself. The concrete and
standardised definition of the new pattern would be elusive,
especially if you tried to programme it in a formulaic way.
Dynamics
The concept of dynamics in pattern recognition was mentioned
earlier but it merits further examination. Dynamics is a branch of
mechanics concerned with the motion of bodies under the action
of forces; or the forces which stimulate change within a system or
process.
Since these patterns have worked well in the past it is assumed
that they will continue to work well in the future.
History repeats itself.
John J. Murphy; Technical Analysis of the Financial Markets
I would argue that the assumption that patterns will work well in
the future is misplaced. Does the idea of a dynamic market imply
that markets produce the dynamics of repetition in price
movements and, therefore, are eminently predictable or that the
dynamics of the market produce a constantly moving evolution?
The unrolling process of gradual development from one form to
the next, explicitly denies the concept of simple ongoing,
repetition.
In the real world and practical experience to some extent backs
this up patterns repeat themselves from time to time, but they
can then change as the evolving market absorbs, understands and
arbitrages away the full predicted outcome of the pattern.
In this process the role of the analyst is paramount. In trying to
define in a semantic sense what a technical analyst really is, it could
be argued, that as dynamics are a branch of mechanics (and
therefore scientific), and that as the market is a system in which
change is stimulated by the forces of dynamics so, therefore, the
analyst is truly a scientist and an expert in the systematic study of
the structure and behaviour of the physical world. However, before
the analyst can apply a technique to the empirical regularities of
what he observes, he must first recognise them and identify the
context in which they operate.
Markets are dynamic, yes; they evolve, I think so; they are repetitive,
well, Im not so sure...
Let us examine one of the three premises on which John Murphy
claimed the technical approach is based.
History repeats itself
When a young, creative and ambitious artist studies the painting
of, for example, one of the Renaissance Masters, he doesnt just
copy the work. A copy would look nice and sell for a modest sum
but would condemn the artist to a life of plagiarism. The true
artist copies first, then adapts, creates, innovates and paints
something new. In doing so he undermines the conventional
wisdom of the moment and discovers something different just
like the high-scoring technical analyst. It is no coincidence that the
artist Damien Hirst, the arch capitalist, is very, very rich; richer than
99% of technical analysts! He has discovered something, or
expressed something, very new, and has created (perhaps
incredibly) enormous value.
My contention is that markets are dynamic in an evolutionary
sense and that technical patterns are too evolving according to a
constantly adapting set of rules. The TD POQ pattern, introduced by
Trevor Neil in a talk to the STA earlier this year (see Market
Technician Issue No 64) was a perfect example a quasi-candlestick
pattern without a name.
Of course a common denominator in financial markets is the
human nature of the participants and it is the human activity, with
all its rational and irrational behavioural elements, which creates
the technical patterns that technical analysts attempt to interpret.
It follows, therefore, that a consideration of one or two aspects of
behavioural psychology might be helpful in this enquiry.
From patterns to psychology
One of the most powerful arguments against the notion that new
patterns are constantly forming in price data is that human
Chart 5: Tullow CRAB
MARKET TECHNICIAN Issue 65 July 2009
11
psychology does not really change over time, and that the investor
and the investment crowd react, time and again, in the same semi-
feral way.
Patterns, or pictures, reveal the bullish or bearish psychology of
the market They are based on the study of human psychology,
which tends not to change.
John Murphy
It is true that human psychology does not change very quickly,
indeed the process of evolution of the human brain is somewhat
slower than the evolution of technology, but the study of
psychology is always changing and evolves quite quickly. The
process of study is the effort to try and find truth, meaning, vision
or enlightenment or more prosaically in the financial world
being the first to find the answer to the question of how to
understand and beat the market, and therefore make money.
The constant effort of study means that the market has to stay one
step ahead. As conventions are studied, understood and
arbitraged, so they change because the brain has recognised new
things, such as, new patterns. Conventions change just as patterns
change.
I will concede that it is likely that some parts of our psychological
make-up do not change. As far as I understand it, there are
embedded processes in the brain which are NOT learned... fear and
flight, appetite and greed, for instance, are obvious ones derived
from our anthropological beginnings as hominids on the savannah
concerned primarily with survival and replication. These responses
to the environment are largely instinctive and emotional, and do
not originate from, or allow, the luxury of rational thought and
considered action. In this sense our psychological make-up can be
dangerous to our wallets as we sometimes get carried away by our
own emotions or the collective emotions of the crowd. Technical
analysis attempts to excise emotion from our assessment of price
action by reducing it to the so-called objective analysis of price and
volume as it is delivered by the market. But, as I have implied earlier,
I have a problem with the objectivity of the process: it is, in fact,
very subjective.
The best way of thinking about this theory is to reverse it. Instead
of saying that, as technicians, we eradicate emotion by objectively
observing and recording price and volume data, we should say
that we extract emotional output from the analysis of price and
volume data. In other words, understand the emotional output of
the market crowd. That may sound odd, but there are a number of
market players who do just that. My old colleague and friend
David Fuller, for example, calls his approach behavioural technical
analysis, closely linking the manic/depressive nature of crowd
psychology with price action itself. I think his linkage between
psychology and price action is apposite but would define it
differently. You have, on the one hand, a collection of investor
emotions which can be deduced from the price action on the
charts but, on the other, the deductive process itself involves
subjectivity and an emotional response in the analyst himself... am
I scared by the break of the short term uptrend, or am I sanguine
about the persistence of the primary trend on the longer term
chart?
Therefore, there are two levels at which information about
emotions play a part the data itself and the analyst. It is in the
assessment or judgement of these different and complex levels of
emotion that the analyst succeeds or fails and therefore it is not
a science, it is art.
Of course, the idea that technical analysis is an art can be, perhaps,
pushed too far, particularly when we consider the psychology in a
bit more detail. Is emotion the right description of what
constitutes investor and market sentiment? For example, the
embedded processes in our brain that are not learned could
perhaps be described as feral responses rather than emotions and
it is often our hardwired primitivism that shines through in the way
we behave in markets. In fact the key emotions in the market place
are probably fairly few and are more to do with fight, flight and
hunger than the finer gradations such as expressions of love,
melancholia or humour. These latter emotions are truly in the realm
of high art rather than high finance.
Our in-built responses I would characterise as innate, while our
learned responses are intuitive. As an illustration of how the brain
does both of these things at the same time consider the following.
On the innate side, or the side of embedded processes, is normal
eye perception. The human eye moves, on average, three times a
second and forgets every move. However, through a process called
confabulation the brain recognises patterns in what it sees and
creates a narrative that purveys meaning. In the same way good
technical analysts see, perceive or recognise patterns in price and
volume data which he or she will understand as a narrative with a
forecastable ending. A price chart plotting data three times a
second would appear meaningless second by second but, at some
point, the brain will make sense of it and discover narrative value.
The better analyst, of course, would have a better story to tell. To
underscore the point, the brain is constantly seeking a story by
inference and by pattern recognition. The market is a narrative, but
the narrator is elusive; the plot is largely unpredictable and the
characters are many and varied.
The simple psychological set-up is that the investor is always trying
to anticipate the response of every other investor. In this sense the
investor is being subjective, like an artist, rather than objective,
like a scientist. Cognitive scientists call this the mirror system in
the brain: a neuronal system that operates by allowing us to
understand others by what is going on in our own brain; in other
words to get inside other peoples heads.
Psychology
Another psychological function that is worth exploring is that of
the mental short cuts we make, or judgement heuristics to use the
jargon. These are the principles or methods by which we make
assessments of probability simpler. We automatically tend to make
mental short-cuts to save time and effort but these can often lead
to biases which tend to persist such as the overvaluation of
dotcom stocks in 1999. We knew they were overvalued but we
believed we would make money if we stayed in them because
prices were going up despite increasingly ludicrous valuations. The
new paradigm had arrived.
Going into a little more detail I would like to outline why heuristics
are often useful to us but sometimes lead to systematic errors. For
example, some types of judgement heuristic are as follows:
1. The representativeness heuristic an event is judged to be
probable to the extent that it represents the essential features of
Issue 65 July 2009 MARKET TECHNICIAN 12
its generating process. So, for example, we might simply
extrapolate performance of an extreme move in a share price.
This might systematically lead one to make poor judgements by
making the assumption that extreme instances are
representative of future instances. This is true in any bubble from
tulips to houses.
2. The availability heuristic ones judgement about the relative
frequency of an event often depends on the availability of
events in the process of perception, memory or construction in
the imagination. Again, the use of this heuristic can
systematically lead one to make poor judgements by
making events that easily come to mind seem more likely than
they are.
3. Adjustment and anchoring phenomena
i. Conservatism is sometimes recommended when adjusting
our beliefs or methods in the light of new information. A well
established belief/method should be overthrown only when
one has solid evidence against it. An otherwise reliable
method should be changed only when it meets significant
failure. In socio-economic terms we can think of Communism
disintegrating only when proof of its failure was beyond
doubt and American-style Capitalism now seriously
questioned but only after significant recent failures.
ii. Insufficient adjustment due to anchoring can lead to
mistakes:

Sometimes reasoners hold fast to some piece of

information and ignore the consequences of additional
information. Eg The Madoff whistleblower and the SEC.

When solving a problem involving probabilities, reasoners

may start with an initial value and adjust it to reach a final
value. The anchoring phenomenon occurs when their
results are biased toward the initial value.

Sometimes reasoners anchor to an initial problem-solving

method when a completely different approach would be
more effective.
4. Risk and loss aversion Many people are averse to taking risks.
They tend not to bet 500 on a 50% chance of winning 1,000,
even though that is the fair price. But studies show that people
would rather take a risk than suffer a loss.
Equivalent problems get different responses depending on
whether the problem is framed in terms of losses or gains.
For example:
Choose between:
a) a sure gain of 3000, and
b) an 80% chance of winning 4000 and a 20% chance of
winning nothing.
Also:
Choose between:
a) a sure loss of 3000, and
b) an 80% chance of losing 4000 and a 20% chance of
losing nothing.
The point about these examples is would you have altered your
choice based on the different ways the question was framed
despite the identical probabilities?
Technical analysis and the inter-relationships of
psychology, markets and economics
Finally, it is useful to look at how psychology interrelates with the
markets and economics. Human psychology tries to mechanise
survival in a chaotic physical environment while technical analysis
attempts to mechanise human psychology in a chaotic market
environment. In this sense it is possible to see the link between
technical analysis and a chaotic environment it is trying to create
order and extract information and meaning from it. Therefore the
mechanising process of technical analysis is similar in function to
the emotional responses of survival. Both cause action, action
causes change, and the economic effect of change is profit or loss.
If you can assess accurately the probability of how things will
change you will make money.
The economic forces of supply and demand are the changes
derived from the mechanics of human emotions, or more
accurately, the mechanics of psychology.
And the link from economics to technical analysis is through
supply and demand. Intrinsic value is based on a balance between
these forces, at which point a price is established. It then goes on to
fluctuate as the balance shifts. The purpose of technical analysis is
to suggest, through recognition of price trends and patterns, when
inflection points have been reached and therefore when the
assessment of intrinsic value may change.
Technical analysis: art or science
There is a crucial difference between the functions of analysis and
the functions of an analyst. The former derives from received
theory and the attempt to make hard and fast rules in order to
formalise or standardise the methods of the discipline. The latter,
being human, does the opposite. He or she is attempting to break
things down into their component parts in order to explain them
and it is this process of exploration and explanation that is truly
artistic. In literature this has been explicit in movements such as the
Structuralists in the early 1980s, who attempted to break down
writing and reconstruct it as a mechanical series.
The difference between artists and scientists is that artists get
people to discover the truth by means of emotional responses in
other people, that is, they influence people (or, in the financial
world, investors). He or she recognises and re-orders the emotions
in others, which is a process in which his or her own identity and
personality are central. By contrast, the scientist comes up with a
hypothesis and tries to find truths about the world independent of
the person. They find truth in the world which is out there and
objective, that is, outside the realms of peoples emotions.
Scientists are, therefore, explicitly not trying to influence other
people in the same way.
I would suggest that financial markets are both inside and outside
people and technical analysis is an attempt to bridge the gap with
both art and science playing their parts.
Tim Parker, PH Partners Ltd www.phanalysis.com