The best trading indicator- the media
by Grant Noble
Anyone who has studied technical analysis knows that what has been written about it stems from a
limited number of approaches. Most of the books, systems and seminars on the market boil down to 12
basic categoriesóoverboug ht/oversold, number theory, retracements, gaps, trends, chart formations,
trendlines, cycles, spreads, flow of funds, seasonals and reports (see "A map for the trading jungle,"
Stocks & Commodities, March 1986). Only a handful of those depend on something other than volume,
open interest, high, low, open and close. No wonder their results are depressingly alike and are not much
different than using a simple moving average.
A few good publications concentrate on fundamental analysis, but they tend to retail in the
$10,000-a-year range. One publication concentrates on the Commodity Futures Trading Commission's
(CFTC) Commitment of Traders report to find out what the hedgers (the "smart money") are doing, but it
only comes out once a month, so you are bound to miss many profitable moves.
Even "contrary opinion" has its drawbacks:
It's a lagging indicator. Market letters are normally written Thursday afternoon. By the time most
"contrary opinion" services tabulate them, it's a week later.
Markets can stay overbought or oversold for weeks causing large equity strains. One market service
lost most of its gains for the year in an overbought future that continued up.