Noted technical analyst Andrew Cardwell is fond of saying that technical analysis writes tomorrow’s headlines. In his experience, and the experience of many others, price trends tend to start long before the news which explains the underlying fundamentals is understood. Unfortunately, the media needs to fit the news to the price action. The headlines on a web site or CNBC need to explain today’s market action in terms of the latest news story. So we see that healthcare stocks rally after Congress passes the final legislation. This clearly conflicts with one of the premises of technical analysis which is that market action discounts everything. John Murphy, CMT, cited that as one the three principles that technical analysis relies on as fundamental truths. The other premises are that prices move in trends and history repeats itself. As Murphy writes in his classic book, Technical Analysis of the Futures Markets, “The technician believes that

Technical tools work on any freely traded market and more and more we are seeing the techniques of technical analysis applied to economic data. While most technicians have a ready source of market data for stock market and futures prices, not all have embraced the use of economic data or identified sources for that data. One of the best, and fairly comprehensive data source is the Federal Reserve. In particular, the St. Louis Fed maintains FRED® (Federal Reserve Economic Data), a database of 20,478 U.S. economic time series. At their web site (http://research.stlouisfed.org/fred2/), you can download data into Microsoft Excel and view charts of the data series. A recent enhancement allows you to easily compare multiple data series on a single graph. Using this site offers a quick tool to examine different data series. For example, we can look at the widely understood relationship between interest rates and inflation. The textbooks

In addition to the Federal Reserve, several other government web sites offer useful economic data. Bureau of Labor Statistics offers details on unemployment, productivity, earnings, and inflation among other topics. http://www.bls.gov/ Bureau of Economic Analysis compiles GDP and its components. http://www.bea.gov/ Census Bureau provides diverse economic data series including durable goods and new home sales. http://www.census.gov/cgi-bin/briefroom/BriefRm USDA Economic Research Service has information that will be useful to commodities traders and those researching the agricultural sector of the economy. http://www.ers.usda.gov/ US Energy Information Administration has detailed statistics on oil, gas, electricity, and other energy sources that could help researchers spot economic trends and assist traders in these areas. http://www.eia.doe.gov/ Internal Revenue Service files show the tax rate changes over time. http://www.irs.gov/taxstats/article/0,,id=188060,00.html Editor’s note: Because the MTA is growing in many countries around the world, we realize that there are a large number of non-US based technicians reading Technically Speaking. We would like to provide sources for this type

Editor’s Note: Is this technical analysis? In this article, the author uses the past to develop an opinion on the future. The data is based on market action (price in the P/E ratio is derived from market movement). We would like your opinions on whether or not this fits into the field of technical analysis. Please email us editor@mta.org and we will print as many responses as possible in an upcoming issue of Technically Speaking. Surging stock markets since the lows of March 2009 have caught most investors by surprise, especially as new pieces of the economics puzzle are not always rosy and do not quite seem to support an overly bullish case. In short, investors are increasingly struggling to make sense of the most likely direction of stock prices. Are we perhaps nearing the end of a cyclical bull phase in a structural bull market? Or will strong earnings growth ensure