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It is kind of funny, since I am a technical analyst, but I still
consider economics quite important. Why is that?
Well, first of all, most technicians understand that fundamentals are
the driving force behind overall price movement. The problem is, much
like the sub-atomic particles left over from the Big Bang, it is often
not apparent or easily measurable.
As an Elliottician, I tend to make sure that my long term projections
make sense in terms of the fundamentals as I see it (or some reasonable
set of fundamentals). For example, if I saw the Dow going to 15,000 next
year, I better have a fundamental reason for that, much as I better have
a good reason to think that the Dow is going to 4,000 over the next few
years (I see neither, by the way).
But surprises in the fundamental data can and do change prices and thus
the technical picture. I will never forget one time I was so bearish
bonds, I could not see straight. I was sure bonds would drop five points
in a few days. Well, it was payroll day that day too. The consensus was
for +250,000 and the number came in -2,000. Believe, if I had the
number, I would have been long no matter what the charts said. So, bonds
rallied 1/2 and ended the day down a point. I thought I was a genius.
Such a horrid response to good news. Well, the next Monday we opened
down 2/32nds and never looked back, beginning something like a five or
10 point run higher. So, even if u r a technician, a fundamental change
to the landscape is important.
Steve Poser
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