Charts, page-4331

There are a few differences. It's a bit like the weather forecasting. Climatologists have very good models of how the weather behaves. But all models are difficult to make utterly accurate and consistent. It's a problem of how much data you can use to model all the interactions and feedbacks. The weather is usually pretty close to what is forecast, but not always at exactly the right time or precise locality. So every one is cynical about their accuracy because what they see is not exactly what they expected and planned for based on the forecast for their region.

Stock charting is similar, but also fundamentally different. The stock market is a social entity massively cognisant of the charting of the shifts in share prices, and the markets then respond to what the charts predict. Yes of course they are often right, or nearly right, just like the weather forecasts. That makes them extremely useful. But the fallibility of them is that the only objective datapoints they can use are the prices paid for shares and the volumes offered and bid for. In other words the charts only measure the end product data, while being unable to consider the very factors that determine the data itself. What they measure are objective prices at a particular point in time. What they are used to infer are the sentiments of those that do the trading that creates the price + volume data. So it is the sentiments on any given day that determines the prices on that day, but they in turn are dependent on what sentiments their observers see and presume are behind what others are doing.
So imagine if the weather forecasts were largely based on watching how everyone is dressed when they come out of their houses in the morning. That could actually work OK for weather, because the weather itself does not take any notice of the forecasts. But traders do. So their feedback is the most dominant factor in the predictions. Does this make charting useless? Absolutely not! But it can reinforce and amplify the slightest suggestion of a trend so as to produce that very trend. And the faster and more automated it becomes the more unstable it becomes. In the end one has to take charting with a degree of caution and scepticism. This is why, in my opinion at least, one has to have a better grasp on the fundamentals of the companies one is trading in than the rearward-facing forward-predicting sentiment-assessors that set the day's prices. The fundamentals, to the extent that they don't change so much, are better predictors of a company's ultimate long term value. But if you are a trader with an appetite for the gamble and the quick smash and grab way of making a profit on the actual day or week, charting is a great tool, so long as you keep a weather eye on it.

I think this is particularly true for WBT right at the moment!