June 16th, 2009
It looks like everyone is becoming a chartist or, more specifically, a technician. For example, last night Cramer joined the camp of chartists because it suited his purposes (was it to cover up the fact that over the previous week he was trumpeting that a new bull market was about to begin). Each of his previous references to chart has been disparaging and condescending. In this one, he gave charts credit for alerting him that the market may have been ahead of itself.
Good for the market but not good for individual stocks? Furthermore, why hadn’t he been looking at those same charts daily so he could alerted you to the same fact at least a week earlier …. like I warned you to stay cautious and nimble …. and saved you some money.
A new financial content and publishing site, Greenfaucet, even got themselves listed mentioned in one of my daily reads, Abnormal Returns, by capping off an article lamenting about how the markets have become more complex, asset valuations more difficult, markets becoming worldwide with the catching title “We’re All Technicians Now“.
“Assets will continue to correlate sharply according to their risk and non-risk status, creating political risks as volatility sweeps markets for food, energy and credit. Fundamentals will remain more or less meaningless. After all, fundamentalists always speak of how an asset “should be valued,” but never answer “valued by whom?”
A final indication of the new primacy of markets is the rising popularity of technical analysis. When the S&P 500 broke through its 200-day moving average in April 2003 or in October 1998, did you hear anyone mention it on CNBC? But, when it happened on June 1, it seemed like the only thing anyone could talk about. (A Google news search returned over 700 related stories since then.)….As the times change, a new religion is sweeping Wall Street. We’re all technicians now.”
The other morning, in a near panic attack, I shuddered at the thought of what I might do, how I could survive [financially], how rudderless I would feel if I lost my charts and the scanning and research off the software. My earlier previous career experience taught me the benefits of a fall-back position, of redundant systems, of contingency plans.
But the other day, I had a glimpse of what I would endure because I didn’t have one. My cable internet connection went down for 6 hours during the day and, yesterday, I struggled and played for the first two hours the market was open with trying to get my computer to boot up.
I’m need a contingency plan: regularly back up the hard-drive, have a backup computer (even if it’s a slower, older model that runs the bare minimum of software and has an internet connection), have alternative wireless internet access.
But here’s the hardest redundancy requirement: alternative software and data source. Worden Bros. Telechart has served all my needs for over 10 years but I don’t have an alternative for it and without it I would be helpless. Worden Bros. appears to be migrating to a new dynamic system called StockFinder from their legacy Telechart system. If I don’t want to risk finding myself without charting tools I’m going to have to at least test the new system.
If you depend on charts and technology, you also should make sure you have contingency backup plans.