John Kaiser Exclusive – Tue 7 Nov, 2017

So Sprott thinks that fundamentals and investor sentiment are bullshit? He must since that’s what gives us the investors’ actions/herd behavior that give us our charts. His stance also implies that “it is often different this time” but I doubt that he realizes it.

Or, could it be that he’s being disingenuous and actually employs some of the best chartists around?

It’s been in vogue to tear down chartists and TA for a long time. Like anything in life, people that are the most against something, usually understand it the least, and have wildly inaccurate perceptions or opinions.

There are people in each industry that think pricing in sectors like Oil, or Biotech, or Pot Stocks, or Cryptos etc…. are only controlled by fundamentals which is ridiculous. It is no different in the metals. When moves happen that make sense technically, then the bobble heads on financial outlets scramble to figure out what narrative fits the move up/down (that was going to happen anyway).

For example, over at ceo.ca most of the geos, engineers, finance guys, and company representatives that don’t understand how technical analysis works think it is all just squiggly lines on a page. They love to scoff at it, but I find it so humorous that their fundament pronouncements aren’t often worth a hill of beans, and stocks that they trash fundamentally often trounce the returns of their pet projects, and stocks that they feel so confident in often pull back to normal support levels or turn down at resistance, so they scream manipulation or just sit around scratching their heads and hind ends. 🙂

It is hilarious to me that quite often those same people, that haven’t invested even 5 minutes into understanding even the basic tenants of price action and volume, will say things repeatedly like “Well, the news was good today but the stock sold off – why? …. or or why is that stock going up without any news – makes no sense?”

I want to scream “It’s called price action Einstein, and if you had bothered to look at even basic TA on a chart then you’d wouldn’t be surprised at all”.

It’s not worth the time though, because “A man convinced against his will, remains an unbeliever still.”
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Some people have limiting belief systems, and in their mind the only thing that can move Gold or Oil or a stock is fundamental news. They are of course dead wrong, but if that is how they want to view things then they can stay in the dark.

Personally I feel fundamental news (like drill results, or today with Tinka and their resource doubling) CAN absolutely move a sector or stock, but ultimately price action and support/resistance levels are what guides the reaction, volume, and sentiment around said news.

* Tinka is a good example of how both technical and fundamental data are both important: Last week, I noted on ceo that technically Tinka was getting ready for a breakout, and then when the pricing moved higher above recent peaks, I agreed with other technicians there that Tinka was breaking out. This was before they halted their stock or put out today’s news. So the breakout was ALREADY set to happen Technically, and the Fundamental news just gave investors the courage to buy more, when that was going to happen anyway based on the charts.

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Goldfinger went on in that article to make a few points that I resonated with:

“I will also add that I’m perfectly happy to hear that other investors think that TA is bullshit because it means that fewer of us are doing similar things, which creates a better opportunity for an edge. If everyone is looking at the exact same information, and the same charts with the same interpretations then you can be sure than none of us are going to make money. ”

“I have said it before and i’ll say it again; I use any information that I find to be useful in making investment decisions (both fundamental and technical), however, I am completely comfortable making a decision solely on technical (chart based) factors while I would never make an investment decision solely on fundamental factors (without looking at the chart). That’s the best way I can explain how I integrate both fundamental and technical analysis.”

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As for Sprott, I think he is more a fundamentals guy, and buys into a thesis on a company if it makes sense to him logically. I believe David Erfle is the same way, and there are investors here that are the same way, and that is fine.

The problem arises from the fact the markets are inefficient by nature, and most often the moves in Gold or Oil or Pot Stocks or Cryptos or Biotech or whatever are NOT logical. As the saying goes:

“The markets stay irrational longer than you can stay solvent.”

Using Technical Analysis as another tool to project where price may extend to before turning back down, or where support may come in for a bounce is just as valuable a tool for placing buy or sell orders, as the news-flow (often much better)

For people getting in on Private Placements with obscene amounts of warrants like Sprott, or Rick Rule, or Frank Holmes, then they don’t really need to be right technically as they get sweetheart deals and have inside info in their network long before retail investors get clued in on opportunities or challenges.

TA just helps retail investors have a fighting chance of making good returns (and quite often help them make better returns for those that have the eyes to see it).