This past week has given me some new insight into why investors hate Technical Analysis. Existing hatred might come from having it called voodoo or other silly names by people who have no clue what it’s all about or how to use it. Other reasons may come from the fact that it is extremely complex and confusing. The goofy names that have been given to the techniques and indicators certainly don’t add much credibility.

But this week, I felt something I never have before. Technicals were being blamed for the decline - for people losing money. It’s easy to hate something you feel is “stealing” from you. When stocks go up, technicals are rarely given credit. Instead we hear about earnings growth, a strong economy, buyouts, buybacks and other things that are translated into mostly fundamental terms. Buyout premiums have given us PE expansion. Buybacks have improved EPS. Economic expansion has increased revenue growth rates, margins, and higher earnings. On the way up, fundamentalists love to point to these things and deny that technicals have much to do with it.

Of course, when stocks start to decline and everyone wants to point fingers - it’s easy to blame Technical Analysis. Suddenly, even the most ardent fundamentalists on the way up become believers in TA on the way down. We start hearing about resistance levels and broken support levels and throw in a few Fibonaccis or Elliott Waves to scare people and it’s complete. Let’s hate Technical Analysis! Besides, earnings haven’t gotten worse during this period, they’ve gotten better. Listen to the Fundamental-Only crowd - they’ll tell you that stocks are soooooo cheap right now. The economy is great (except that we need a bailout). The romanticizing about the good old days where Fundamentals gave us great stock prices makes it easy to hate the Technicals. And if you really want to mess with people tell them that their fear is irrational. This selling is wrong, wrong, wrong. It is irrational and excessive and bad and most importantly, it’s not Fundamental. Don’t blame Fundamentals. All this selling must be the fault of something else and that something else must be …you guessed it….Technical.

Of course, I don’t believe it. At least not all of it. Some of it is true. But since I do more Technical Analysis than probably any other human, I feel qualified enough to tell you that technicals do matter on the way up. So do fundamentals. On the way down, technicals are a mix of the fear thing and that goofy concept called supply and demand. You may not like it, but supply and demand does matter. It’s easy to hate Technical Analysis or remain ignorant of it. But doing so will cause you to lose money. You cannot be successful in this market without embracing both Fundamental and Technical Analysis - at the same time. Loving fundamentals on the way up and hating technicals on the way down is a recipe for failure.