The New Science of Technical Analysis

Foreword

When I first received a copy of Tom DeMark's new book on technical analysis, I was a bit puzzled by the title. After all, technical analysis isn't “new.” I've even written a couple of books on the subject myself. After reading through the material, however, I quickly realized that the key word in the title was “science.” Technical analysis has always had more art than science to it. Two chartists could look at the same chart of any given stock, and the same group of technical indicators, only to come up with two completely different conclusions. Much of technical analysis is truly “in the eye of the beholder.”

For many reasons, this book is particularly timely. For one thing, technical analysis has never been more popular. The proliferation of powerful computers, supported by inexpensive software programs, put the arcane world of technical analysis at the fingertips of even the smallest investor and trader. With the growing popularity of futures and options trading—and the expansion of those trading vehicles to include stock indexes. Treasury bonds and foreign currencies—traders have been forced increasingly to fall back on technical methods to cope with such fast moving markets. Intermarket linkages between the four market sectors—commodities, bonds, currencies, and stocks—forced traders to follow a much wider universe of markets. Global linkages between financial markets also forced traders to adopt methods that required lightning-quick responses to rapid market movements—namely ...