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Mr. Cramer's views are spoken in the vernacular of one who has
no concept of the difference between technical analysts and
technical traders.
Walt Downs
CIS Trading
-----Original Message-----
From: JW <abprosys@xxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Tuesday, July 28, 1998 1:58 AM
Subject: Cramer on technicians
>>From TheSteet.Com...
>
>JW
>abprosys@xxxxxxx <mailto:abprosys@xxxxxxx>
>
>
>Wrong! The Trouble with Technicians
>
>By James J. Cramer
>
>You know why I can't stand technicians? Because they have a way of
>weaseling out that just drives me crazy. Take Friday. On Ron Insana's
>excellent afternoon show, Jerry Favors gives his technical rundown of the
>outlook. He sounds terrific and forceful and confident as all technicians
>do.
>
>He mentions that he is not positive or negative on the market and that he
>expects some oversold rally, but nothing special. And what would make him
>more positive? A close above 9400, validating the move.
>
>Ah hah, not to attack Favors in particular, but it is precisely this kind
>of reasoning that costs me so much money. Let's take Favors literally. If
>we did not like the market, we might be inclined to short it or at least to
>stay out of it for the foreseeable future.
>
>After all, he pronounced the market no good, so what would be the harm in
>adopting such a stance? Maybe we should be shorting this bounce right now.
>
>But then when the market gets to 9400, he wants you to be long. He wants
>you to be out for the next 500 points but be in on top of those? Give me a
>break. I want to be in for those 500 and then sell it at 9400, which is
>pretty close to the top of the range as I see it.
>
>That's precisely the problem with technicians. They buy the market when it
>is expensive and sell it when it is cheap. They don't like the market until
>it gets so rich that they feel comfortable buying. To me that is plain
>counterintuitive.
>
>That said, why do I pay any attention to charts and charting at all?
>Because it is something that people follow. It is a pattern that I want to
>understand so I know why people are freaking out or getting more confident.
>It may not be a reason for me to do so -- in fact it never is -- but I like
>to know what levels people feel secure at and when people feel that the
>panic will go on.
>
>For example, when the market declined 5% from the high on Friday -- at a
>moment when I was taking a much-needed nap -- Jeff woke me to tell me that
>we were now down 5%. I figured that would bring in some short covering as
>those who had bet against the market might feel like taking some of that
>win off the table. It did bounce and hold; good call.
>
>But that is not the same as avoiding a market until it validates a new
>high. That kind of thinking gets you in at the top and out at the bottom.
>That, I know, is just plain wrong.
>
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