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Richard's Remarks

 

When I started Dow Theory Letters in December of 1958, technical analysis was spurned and considered a version of Voodoo. Bankers who subscribed to my service felt safer using false names in their accounts. Many economists still feel that technical analysis is useless and even deceptive.

 

Question -- Of what use are charts?

 

Answer -- Charts are a road map of where a stock or an index has been. Beyond that, occasionally a pattern or a definite formation will appear on a chart. When certain patterns appear, they tend to resolve themselves in certain ways. For instance, when an ascending triangle pattern appears in a stock chart, the odds favor that stock rallying. When a so-called head-and-shoulders formation appears in a stock chart, the odds (assuming volume indications are correct) are in favor of that stock breaking down.

 

In dealing with technical considerations, one is always dealing with probabilities and odds. Of course, nothing ... Log in or subscribe to continue reading.


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