I’m frequently annoyed by all the stupidities which are thrown at you when reading the financial news. I understand that journalists have to fill their web pages with something, but why all this nonsense? Especially predictions are an attack to the few working braincells left in my head. Sometimes I just copy a link and then check the prediction afterwards. Here is an example. I did not make a selection of articles to prove they are wrong, this one was selected because it offered an easy one-week prediction.

Here we go…

3 Strong Stocks Poised to Break Resistance This Week

The article is still available, here is the link.

It was posted on monday April 22 of this year 2019. It predicted that three stocks (American Express, Ali Baba, Costco) would ‘break resistance’, a strong buy signal.

3 Strong Stocks Poised to Break Resistance This Week

It is easy to check isn’t it? I took the prices of the three stocks at the closing of the friday before and compared them with the closing prices at the end of the week of the article, hoping to see a fabulous return of these “Three Strong Stocks Poised to Break Resistance”.

Here are the results:

So the average return of our “three winners breaking resistance” is lower than the simple gain of the stock market index that week. Apparently these Three Stocks were not so much Poised To Break Resistance, but were rather Poised To Stay Behind In The Market.

The article obviously explains how to read the charts and why a break of the resistance levels is nearby. As an example, this is the chart they give for Costco:

All this hocus pocus with candlesticks, three types of moving averages, trading volumes and trending lines only to reach the wrong outcome!

As a conclusion on Costco, the author says

” When COST rises above $247.25, consider buying the June $250/$260 bull call spread. “

Apparently, that rising didn’t happen. It went down by 1 % that week.

The conditional terms of technical analysis is also disturbing me.

They rarely say ‘This Will Happen’. Period.

They say ‘if it breaks the resistance it goes up and if it drops through the bottom it will go down. And if it doesn’t do that then it will do something else. ‘

OK, so what am I as an investor supposed to do with that message? If you cannot state anything definitely, why don’t you just shut up? There is no use to a weather forecast telling you ‘if there are clouds it could be raining, but if there are no clouds there could be sunshine’.

Anyway I will stop ranting now. Have a nice day!