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Author: ChDW One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 129  
Subject: Re: Day of Terror Date: 5/6/2005 2:22 AM
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Dave,

Speaking frankly, I haven't been terribly impressed by the technical analysis so far... you've made some incorrect calls (CORI, TACT (so far)), but I do think there is something to be said for thinking about the psychology of the market, and you touch upon that in your analysis. To the extent that investors do not like to take a loss, I can see why there may be certain price points at which a great number of early holders might sell so as to escape with a (meager) profit and the rest will hold so as to keep a potential loss on paper. My main beef with technical analysis is that it attempts to explain phenomena whose nature is not named, nor is this nature a subject that chartists care to consider. I think the only phenomena that could be at work derives from the psychology of the individual investors, such as the example I gave above. But this depends so much on the demographic make-up of these investors in terms of investing styles, which the technicals don't reveal and therefore must assume. Anyway, I would love to hear your thoughts on the whys/hows behind charting, because you seem to fervently believe in it. Personally, I think charting can only work by making liberal use of psychological heuristics such as the one I gave above and, as such, is more probability proposition than science. But then again, maybe once you round up a good number of people, the group will invariably start behaving the same way.

Respectfully,
Chris
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