At any given time, markets will have divergent views – if it was not so, trades will not take place. If somebody is selling (Seller), trade takes place only if somebody buys (Buyer) – unless both exist, trade doesn't take place and if the trade doesn't take place, there is no price to talk about.
Technical analysis is just an indicator of where the 'herd' is moving. If there was no herd, there would be no chart existing since plotting will not take place. Whether the herd is right or wrong, nobody knows today. Of course, 'observations' have been converted into patterns to try and peek into the future but there is no certainty.
Sample this:-
• A technical analyst tracking FII trading has written early this morning: FII Index short position now exceeds its COVID record. FII Index shorts at 2,15,000 contracts Vs COVID peak of 209000 contracts. Long-to-short ratio also at multi year lows. Dry leaves awaiting a spark!
• Samir Arora of Helios Capital has said on BQ yesterday: "I would think that, broadly speaking, if you look at our market, it has not done anything for one and a-half years. Therefore, we have not become more or less expensive, unlike the rest of the world that has become more or less expensive."
• Goldman Sachs goes back big time on its just one-month-old prediction of Oil at $100+. Morgan Stanley follows suit.
• Bitcoin, the ultimate risk-on asset class, is rallying like there's no tomorrow.
• Read the analysis of top-notch analysts in US: Fed will either raise rates or not raise rates; if fed will raise rates, they will raise by 25 or 50 bps. What a forward looking analysis!
You see, nobody has a clue of what will happen. Anybody who gets it right, starts tom-tomming his/her prediction capability without realising that analysis is done just to create probabilities and not predictions.
Ultimately, my 39 years of stock and debt investing (long term, short term, F&O, intense charting, commodities, forex etc) has taught me that patient investing through the thick-and-thin of the markets is the only way to succeed. Try and time the markets, you get yourself into an unknown territory whose result will be almost always be different from what you expect – in fact, they would, most of the times, be vastly divergent from what you intended.
Remember this quote which is right now my favourite:
Things which have never happened before, happen all the time – Scott Sagan, a Stanford professor
