11. Putting It All Together

This book began with the statement, “Market timing doesn’t work.” Hopefully, the preceding pages have refuted that statement and indicated that, with the proper tools properly applied, market timing does work.

It is a contention of technical analysis that patterns and laws are fractal in nature. That is, a pattern that applies to the longer term will be equally applicable to the very short term, even on an intraday basis. That contention may give rise to differing opinions, but what does seem apparent is the reliability of these patterns increases in accordance with the period of time being analyzed. In other words, the probabilities of wrong timing is likely greater on a short-term basis when brief periods of market volatility can upset the most thorough analysis than when longer-term periods, such as the formation of major market tops and bottoms, is under examination. Thus, while the laws and analytical tools employed in this book appear effective when examining major events in the market, their application becomes progressively more difficult as the period under examination contracts. For example, small changes in an Advance–Decline Line or in measures of Supply and Demand are likely much less useful in analyzing the day-to-day movements in the stock market than the much more significant changes that accompany major moves in the market.