Salient to Investors:
David Goel at Matrix Capital Mgmt said DeMark’s algorithms are much more predictive than any other system.
Tom DeMark’s says fundamentals do matter, and markets are governed by waves that crest and fall based on Fibonacci numbers and the closely related golden mean, or golden ratio 1.618. DeMark can’t explain why his system works.
Jason Perl at UBS says DeMark indicators are crucial in the post-crisis world because so many traders are avoiding making bold moves that might jeopardize their jobs – managing career risk rather than portfolio risk. Cynthia Kase at Kase & Co uses wave analysis to compile a weekly forecast for oil and natural gas prices. Oswald Gruebel says he only uses DeMark’s system because it tells you when everyone else has sold and you should be buying – it’s the best system he has seen in 50 years.
Peter Borish, former director of research at Tudor Investment Corp said DeMark is one of the most brilliant, creative minds in the history of technical analysis.
Tyler Wood at the Market Technicians Association says there has been a 30 percent jump in new members in the past two years. Interest in charts has been boosted by the fact that since 2008, markets have become correlated, where macro events can slam shares of weak and strong companies alike.
Matthew Beddall at Winton Capital Mgmt said comparing technical indicators to fundamental analysis is like comparing bush medicine to drug company research. George Markowsky at the University of Maine says there is a golden ratio mania, most of which isn’t based on any kind of fact. Warren Buffett said he realized that technical analysis didn’t work when he turned the chart upside down and didn’t get a different answer.
Andrew Lo at MIT and AlphaSimplex says one of the strengths of technical analysis is that it captures sentiment, like fear and greed, which quantitative analysis or fundamental analysis doesn’t watch. Lo says technical analysis is often used by currency traders because fundamental data that affect currencies, like inflation, hardly change from day-to-day, so any currency trader will look at technical analysis because so many others do.
Almost all technical analysts agree that Fibonacci numbers can be used to predict a market’s direction.