Economics, Fundamentals, Technicals

Photograph by Inti St Clair

We’ve been calling this the four-year bull market that no one likes and we still get that sense. People are fighting this move. We don’t feel people are as invested as they should be.

—Christopher Verrone, head of technical analysis, Strategas Research Partners, in Whitney Kisling’s “S&P 500 May Exceed Record by Mid-Year, Strategas Says,” Bloomberg News, March 6, 2013

I will cut to the chase.

If you care in the remotest about technical analysis, listen and re-listen to my interview with Chris Verrone. It was a tour-de-force on trend analysis, as compared to catch-the-knife-in-the-dark hope.

Just as important, if you do not care two bits about charts and their representation of the past, this audio interview is for you.

There is a school of thought that economics (where will nominal gross domestic product be in a year?), fundamental analysis (what is the TEV/EBITDA?), and charts (the ADX/DMI is not elegant) are separate beasts—two to be ignored while the investor focuses on her selected beast of burden.

I don’t agree. And I’m in good company.

John J. Murphy has addressed for decades the need to synthesize technical analysis within the continuum of economics, fundamentals, and technicals. Ed Hyman and Nancy Lazar and Jason Trennert and Chris Verrone and countless others agree.

Ignoring charts that assist in not losing money is asking for trouble. (I think I just wrote a Hobbesian triple negative!) It is equivalent to starting the day with one hand tied behind your back.

Listen to Verrone’s mint clinic, whatever your bias and weighting of economics, fundamentals, and technicals. Discuss.

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