>Technical analysis works (little-known secret)

>The TV said yesterday’s rally was due to “good economic news”, as if it was an unpredictable, random event. But of course we know better. The real reason for the rally was the technical set-up which developed over the past few days, manifesting itself as a couple waves of our proprietary buy signals.

The chart below shows the Nasdaq Composite Index as of yesterday’s close. Buy signals are shown in blue, and there’s also a sell signal shown in red. The thing to note about the other day’s buy signal is that it remains in-effect until and unless the market breaches the low. In this case it was a nail-biter, as the market successfully tested the low before rebounding.