Elliott Wave Courses | by ForexCycle.com | Sunday, 13 September 2015 07:00 UTC
By Elliott Wave International
Editor's note: You'll find the text version of the story below the video.
Technical versus fundamental analysis: Which approach yields better investment results?
A new study by three finance professors offers an answer.
The focus of their study were a thousand pairs of recommendations made between November 2011 and December 2014 on the TV show "Talking Numbers" ... The first half of each pair was a recommendation from a top technician about a stock in the news; the second half was a recommendation about that same stock from a leading fundamental analyst. [Marketwatch, Sept. 4]
This chart shows the results:
In the nine months following each recommendation, the stocks technical analysts identified as strong buys on average outperformed the broad stock market by 7.9%. The stocks they mentioned as strong sells underperformed by 8.9%.
By contrast, the strong buy recommendations from fundamental analysts underperformed the overall market during the same timeframe. More than that, the fundamental analysts' strong sell recommendations performed closely to their strong buys.
Technical analysts were the clear winners.
Elliott wave analysis of financial markets is a specific form of technical analysis.
Our subscribers have recently been well served by the Elliott wave method and other technical indicators. Consider this commentary from the August 19 Financial Forecast Short Term Update:
The S&P 500 gapped lower at the open during the next two trading sessions (August 20-21).
On August 24, the intraday low for the S&P 500 was 1867.01 -- down nearly 13% from its May 20 peak. The Dow's intraday low was 15,370.30 -- down 16.4% from its May 19 peak.
After the Labor Day weekend (Sept. 8), stocks traded well above those lows.
But beware: The Elliott wave model and other technical indicators suggest that more market turmoil is ahead.
Technicians tend to rise in prominence in bear markets, and they appear poised to do so again.
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