In Working’s experiment, he found that commodity traders could tell the difference between graphs of commodity price changes and graphs of changes in the sequence of random numbers.
According to statistics professor Maurice Kendall,
"Investors can, perhaps, make money on the Stock Exchange, but not, apparently, by watching price movements and coming in on what looks like a good thing…"
In the face of two strong statements supporting randomness over observable patterns, does this make you reconsider your position on Dow Theory and on the value of stock price patterns in general? If so, how? If not, why not? Be sure to state your position.
What is a head and shoulders top? What do traders believe will happen next?
What are “noise traders” and how do they factor into investors’ efforts to beat the market?
Do you believe that stock priced follow observable trends or are random?
Would you trade purely on technical analysis? Why or why not ?