When markets sell off sharply and severely and the prevailing trend changes it appears that a basing period is needed before prices move higher again. This period maybe in someway proportional to the sell-off. Note the 2000 equity sell off took roughly 1 year march 2002-march 2003 before the market than rose again solidly.

It doesn't appear there needs to be any quick decisions made (however seeing where prices are now to where they were 4 months ago almost drives you to act) to get long equity or crude at these levels or a lot of other markets for that matter as work needs to be done in price and this will effectively take place as excesses are unwound.



I have read both of your books, and I loved the first one but am a bit disturbed by the second one, which goes into some length at proving the uselessness of technical analysis. After all, is not the study of price, any price, in all its shapes, forms, and expressions (whether it be patterns involving the prices themselves, trend lines, or other functions derived from, or based on, price) all part of the definition of "technical analysis"?

If that is the case, and I think you might agree, then could you not also dismiss "price patterns" found in earnings figures, regressions, correlations, and all that stuff covered in your second book as just different expressions of "technical analysis"?

If that is the case then pretty much all of what you covered in Practical Speculation can be disregarded if you consider my broader definition above and agreeing with you that all forms of technical analysis are essentially unreliable. In which case, (and assuming you also feel that fundamental analysis is useless and/or already reflected in the price), on what basis should one trade?


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