If there were an annual awards show for financial bloggers (The Finnies?) each year, surely this series by JC Parets (of All Star Charts) would at least be nominated for ‘Best Interview of a Living Legend’.
But there’s not, so it falls to me to make sure that you find the time to read this discussion between my friend JC and Ralph Acampora, a pioneer in the field of technical analysis and one of the most important influences on modern traders – even if they themselves don’t know it (Ralph was hand-charting market data on 16-foot wall graphs while most of them weren’t even born yet).
Technical analysis has dipped in and out of favor on The Street over the years but lately it seems as though it’s here to stay, a permanent part of the mainstream discussion now that we’ve recognized the limits of what fundamental analysis can explain (and foresee). Even financial writers and journalists who’ve never traded professionally in their lives are using terms, charts and jargon from TA in their everyday missives (we’ll forgive them their mistakes, they get points just for trying in my book).
JC talked to the technician about his daily routine, his history and, of course, what he makes of the market’s action of late. Before I send you over for the whole thing, here’s a question I got to ask Acampora as part of their talk:
JC – Downtown Josh Brown @reformedbroker asks, “Has there ever been a time or market environment that has made you question your work in technical analysis and you told yourself that you might need to be watching something else?”
Ralph – Absolutely, that’s a great question. Remember I told you I came into the business in the late 60s. I actually started doing all the plotting and everything in 1967-68. I was just a young guy bumping along, not really understanding what he was doing but was doing it. So I had the whole secular bear market. The first 10-15 years of my business career was a horrible period of time. Fortunately for me I hooked up one of the best of the best, Alan Shaw in 1969-1970, and that man nailed it – all the tops and bottoms, he was phenomenal. Now, maybe 7, 8, years into it, it’s now the late 70’s and I’m kind of strutting around thinking I’m pretty cool and I understand this stuff. Well I almost quit, I almost left Wall Street because in the late 70’s I think were the worst periods in the world. The market would look good, rally a little bit, and then just get crushed. In fact, Oct ‘77 and ‘78 are essentially known as the October Massacres. The Dow dropped, I think, 10% to 15% twice. And it just tore me apart. My longs didn’t work out, my shorts didn’t work out. I think we’re in a similar period now. That’s one of the reasons why I’m bullish. Because so many people actually missed this whole move coming out of the June lows. A lot of people weren’t as bullish as they should have been.
JC – You’re right.
Ralph – The crash of ‘87 was my worst call. There was a Barron’s article; Marty Zweig was in it, of course Bob Prechter was in it, and they were both calling for crashes. I was in it and I was looking for a pullback (laughs). I wish I wasn’t in that article.
JC – Well granted it was a big pull back, but that day was the bottom. Was it not? And then we went on to new all-time highs?
Ralph – Yeah but I gotta tell you, going through that process, I now know what it feels like being on the deck of the titanic. It was horrible
This is amazing stuff, please get over to read it all this weekend.