[BarkingMad]

Dan,

You have stated the classical argument favoring technical analysis. It has been around for as long as investors and traders have looked at charts to help guide their decisions.

If you crafted the words yourself, then I applaud you on a well written argument favoring technical analysis. However, the argument as you stated it has a slightly familiar ring to me. May I ask what books you have read that convinced you to regard technical analysis so highly?

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Even "fundamental" analysts MUST resort to the very "technical" study of "trends" in sales, earnings, earnings growth, etc. These "analysts" are actually technical trend followers, in drag.

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It can also be argued that technical analysts MUST resort to fundamental studies as well. For example, it is foolish to trade widely followed stocks without considering where the stock is in relation to its earnings date, and how it has behaved around previous earnings dates (some stocks have a tendency to rally into their earnings announcements).

Markets are forward looking. The bond market "worries" about upcoming FED reports. The stock market worries about the bond market.

The fact is that there are fundamental forces constantly looming on the horizon that are not reflected in the charts.

"Wait just a minute", you say, "If those forces really matter, and the market really worries about them, then that influence will be reflected in the charts".

This is only partially true. Consider this; if the markets perfectly reflected all known information in their price charts, then the markets would be perfectly efficient, and no profit potential would exist in them.

The reality is that the markets are very efficient, but they are not perfectly efficient. It is possible to profit from statistical price action analysis done with a program like TradeStation or WealthLab. It is also possible to profit by looking at fundamentals. A great approach is to integrate the two concepts.

My .02