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StockBlade May 29th, 2008 Revisited: June Will be Down

June 24, 2008 1:19 AM

Charts do not matter. I simply guess. Lucky again, obviously. On May 29th I said “June will be flat to negative” and we would have to rally big to close the month to change my view. It didn’t. The SP gave a mixed signal, the Dow was clearly bearish coming into the month. If both had been bearish, I would have said the market WOULD be negative, not flat to negative. My bad. I have also mentioned that we “likely have seen the highs in June”.

The reason charts matter is two. One, they become a self fulfilling prophecy. This is always the criticism of charts “we make them come true”.  My thought on that would be “so”. Who cares. People are in the market to make money, why should you care why? Secondly, and more important, and generally overlooked in technical analysis criticisms, they are a reflection of supply/demand at various price points at specific times. This is what I have never understood about criticisms of “chartists”. Do people not understand that the charts represent supply/demand unless the dynamics change? Everyone alive would agree that prices are determined by supply/demand, but when you mention charts they believe it is hocus pocus. You cannot have it both ways.

Written by Tom@StockBlade.com · Filed Under General Investing/Trading Commentary 

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