The Case for Technical Analysis

Abstract

IT IS HARDLY NECESSARY to comment in this publication on the growth of the analytical profession during the post-war years. The increase in the number of analysts, and the tremendous improvement in analytical techniques, are familiar phenomena to the readers of this journal. With a growing number of professionals seeking to find new ways of improving investment performance, it is, therefore, hardly surprising that, in the past few years, an ever-increasing number of analysts have turned their attention to technical analysis. It was barely a decade ago that the average portfolio manager, if he was aware of technical analysis at all, regarded it as some sort of black magic. Today, almost all professionals have at least a familiarity with the terminology and a good many make such analysis a major part of their decision-making process. Two factors lead to the conclusion that major improvements in the art are just over the horizon. The first factor is the growing number of serious students applying their time and efforts to analysis of stock prices. The second is the advent of the electronic computer or, more properly, the economic availability of price data in a form that can be analyzed by the computer.