If Technical Analysis doesn’t work, how do you define a bull market?

[Blitzjoker]

I’m not a great proponent of TA, but when I see posts deriding it, and then in the next sentence see talk of bull markets and bear markets I am puzzled.

At its simplest, surely TA seeks to find indications that price is a shade more likely to move up or down based on some previous price movements. Isn’t declaring a market to be a bull or bear market implicitly assuming that this is possible and therefore that TA can work? That is, that if the market is moving up it is more likely to continue to do so than not? I suppose you could wriggle out of it by saying it is a bull market right up to now, but might go anywhere from now on, but this doesn’t seem to be the way it is used in practice, where bull markets may be deemed to go on for months or years.

 

[2rosy]

bull/bear market is defining the past price change as up or down. That definition has nothing to do with the future or trying to predict the future.

 

[maxinger]

I trade simply.
When the market is going up, it might

- continue to go up
- change direction, and go down
- decide not to move anymore

Your trade plan should factor in all these possibilities.

 

[countryBoy641]

Having been first Registered Series 7 in April 1982, may I offer a few observations.
Back in those days (40 years ago) simple TA (Mansfield Charts) would pretty much do the trick.
But now we have something different.
James Grant tells that originally the FED was established to moderate the swings in rates for farmers.
In the Spring they needed cash to plant the crops, in the Fall they were flush with cash.

Fast forward to now.
Sovereigns around the world have shifted their role.
The FED wants to tweak everything that moves, including the impossible promises that politicians have made.
That makes the FED like the proverbial "butcher with his thumb on the scale".

In that regard, simple TA doesn't work very well anymore.
Nuances are required to successfully trade almost anything.

 

[smallfil]

The reality is traders use some form to technical analysis. They might not deem it technical analysis but, it is. You have to have a methodology to determine trends, to figure out where to enter and exit trades. So, if you are not using technical analysis, what basis do you use for entering and exiting trades? If you are scalping stocks for quick profits, you do not need to analyze stockcharts but, just the stock prices. That is the only exception. If you are daytrading, swing trading, trend following, etc. You are using a form of technical analysis or you are a perpetual losing trader without a clue to what he is doing. Good luck with that. You are going to need more and more monies to feed your expensive habit.

 

[Scataphagos]

I’m not a great proponent of TA, but when I see posts deriding it, and then in the next sentence see talk of bull markets and bear markets I am puzzled.

At its simplest, surely TA seeks to find indications that price is a shade more likely to move up or down based on some previous price movements. Isn’t declaring a market to be a bull or bear market implicitly assuming that this is possible and therefore that TA can work? That is, that if the market is moving up it is more likely to continue to do so than not? I suppose you could wriggle out of it by saying it is a bull market right up to now, but might go anywhere from now on, but this doesn’t seem to be the way it is used in practice, where bull markets may be deemed to go on for months or years.

Don't let anyone try to convince you "TA doesn't work". It ALWAYS works... all markets, all time frames.... once you learn and apply it correctly. (Not suggesting it "works every time, 100% of trades"... rather properly applied TA significantly increases your probabilities. Sort of like they saying, "The Race Is Not Always to the Swift, Nor the Battle to the Strong; But That Is the Best Way to Bet")


If it seems "TA aint' working for you", it's because you're not doing it right.

 

[ZBZB]

I’m not a great proponent of TA, but when I see posts deriding it, and then in the next sentence see talk of bull markets and bear markets I am puzzled.

At its simplest, surely TA seeks to find indications that price is a shade more likely to move up or down based on some previous price movements. Isn’t declaring a market to be a bull or bear market implicitly assuming that this is possible and therefore that TA can work? That is, that if the market is moving up it is more likely to continue to do so than not? I suppose you could wriggle out of it by saying it is a bull market right up to now, but might go anywhere from now on, but this doesn’t seem to be the way it is used in practice, where bull markets may be deemed to go on for months or years.

Trend following is the part of TA that has billions of dollars under management. Look at the donchian channel and donchian moving average cross.

 

[deaddog]

TA doesn't work. In what way doesn't it work? How are you using it? It's like saying a hammer doesn't work.

Fundamental analysis doesn't work for me.
It gives me a bias that keeps me in losing trades and ties up my capital.
Accountants use GAAP (legal fraud) to publish numbers that the public has access to.
Everyone interprets the numbers differently.

 

[Blitzjoker]

I think TA works well enough. My query was why anyone who thought it didn't could talk about a bull market, which to me pre-supposes some implicit TA.

 

[Scataphagos]

TA doesn't work. In what way doesn't it work? How are you using it? It's like saying a hammer doesn't work.

Fundamental analysis doesn't work for me.
It gives me a bias that keeps me in losing trades and ties up my capital.
Accountants use GAAP (legal fraud) to publish numbers that the public has access to.
Everyone interprets the numbers differently.

Good one... like say saying, "hammer doesn't work". No tool is going to work when not used correctly.

Fundamental Analysis is MUCH more difficult and allows one to justify taking majorly larger risks. That's a bummer when the FA conclusion ends up being wrong.