This morning, after we mentioned our belief that technical analysis is bullsh**, Registered Investment Adviser Richard Dever was kind enough to write to tell us we were wrong.
Technical analysis works, Richard says. You just have to do it right:
The real start to a period of shorting technically was about the 16th of October to October 21st..My own brand of analysis uses the tools of times series forecasting and exponentially configured moving averages in a certain combination, plus bollingers.Typical tools, yet not a lot like anyone else’s from a routines standpoint. It is in how you employ everything. Analysis is on a one by one basis. Preliminary examination of a 250 stock files takes about 1.5 hours, the, alerts are set up from there. Every single stock traded in the main U.S. markets [eg. attached] is covered [over 6,000 ], but due to the constraints of time only a certain number of files are reviewed. However what you have here is the full Smallcap 600, 1/12 of the russell3000, the Dow30 plus a bunch of ETFs a ‘finance’ file [I have others], a file of ETFs ‘etfNew’, a ‘midcap’, ‘transport’, and the 2nd half of the ‘sp500’. Everything except one of two were shorts and most are in gear. Entry points are key. It is important for lowest risk. And each and every selection is determined from a standardized set of criteria. The sole attention to fundamentals is the date of EPS. The results depend on early entry. Looking at the figures closely from your own charts you will see real precision. Exit point is determined from just calculating an annulaized amount and/or from a turn up of a very short term average of an average. Only, available time would have prevented me from more than doubling these selections.Production is quite high. For instance in the falloff of around Sept 18-23 there were 230 winners. I define a winner as anything over 2%. Given a trade time of less than 5-10 days that seems OK. Summary: while you may not pay much heed to a single chart as with your contributor, there are other kinds of technical analysis. If one can look at the whole range of ETFs with the same methods, then it is hard to dismiss such enterprise as bogus or simply a lucky series of calls.
We appreciate the feedback. Alas, we remain unconvinced.