The Evolution of Technical Analysis

A comprehensive history of the evolution of technical analysis
from ancient times to the Internet age

Whether driven by mass psychology, fear or greed of investors,
the forces of supply and demand, or a combination, technical
analysis has flourished for thousands of years on the outskirts of
the financial establishment. In The Evolution of Technical
Analysis: Financial Prediction from Babylonian Tablets to Bloomberg
Terminals, MIT's Andrew W. Lo details how the charting of past
stock prices for the purpose of identifying trends, patterns,
strength, and cycles within market data has allowed traders to make
informed investment decisions based in logic, rather than on luck.
The book

• Reveals the origins of technical analysis

• Compares and contrasts the Eastern practices of China and Japan
  to Western methods

• Details the contributions of pioneers such as Charles Dow,
  Munehisa Homma, Humphrey B. Neill, and William D. Gann

The Evolution of Technical Analysis explores the
fascinating history of technical analysis, tracing where technical
analysts failed, how they succeeded, and what it all means for
today's traders and investors.

Auteur

ANDREW W. LO is the Harris & Harris Group Professor of Finance at MIT Sloan School of Management and the director of MIT's Laboratory for Financial Engineering. He has published numerous papers in leading academic and practitioner journals, and his books include The Econometrics of Financial Markets, A Non-Random Walk Down Wall Street, and Hedge Funds: An Analytic Perspective. His awards include the Alfred P. Sloan Foundation Fellowship, the Paul A. Samuelson Award, the Graham and Dodd Award, the James R. Vertin Award, and the American Association of Individual Investors Award. He is also Chairman and Chief Investment Strategist of AlphaSimplex Group, LLC. JASMINA HASANHODZIC is a research scientist at Alpha-Simplex Group, LLC, where she develops quantitative investment strategies and benchmarks. She received her PhD from MIT's Department of Electrical Engineering and Computer Science. Her works on alternative market betas and technical analysis have appeared in leading publications, such as the Journal of Investment Management, and she is the coauthor with Andrew Lo of the book The Heretics of Finance. She also serves on the Board of Directors of the Market Technicians Association Educational Foundation.

Résumé
A comprehensive history of the evolution of technical analysis from ancient times to the Internet age Whether driven by mass psychology, fear or greed of investors, the forces of supply and demand, or a combination, technical analysis has flourished for thousands of years on the outskirts of the financial establishment. In The Evolution of Technical Analysis: Financial Prediction from Babylonian Tablets to Bloomberg Terminals, MIT's Andrew W. Lo details how the charting of past stock prices for the purpose of identifying trends, patterns, strength, and cycles within market data has allowed traders to make informed investment decisions based in logic, rather than on luck. The book

• Reveals the origins of technical analysis
• Compares and contrasts the Eastern practices of China and Japan to Western methods
• Details the contributions of pioneers such as Charles Dow, Munehisa Homma, Humphrey B. Neill, and William D. Gann
  The Evolution of Technical Analysis explores the fascinating history of technical analysis, tracing where technical analysts failed, how they succeeded, and what it all means for today's traders and investors.

Contenu

Introduction vii

Chapter 1: Ancient Roots 1

The Beginnings 2

Ancient Babylon 5

Ancient Greece 11

Ancient Rome 15

Negative Attitudes toward Traders 18

Chapter 2: The Middle Ages and the Renaissance 21

Western Europe 22

Technical Analysis 32

Societal Attitudes 39

Chapter 3: Asia 43

Japan 44

China 49

Chapter 4: The New World 59

Wall Street 60

Societal Attitudes 73

Chapter 5: A New Age for Technical Analysis 81

Dow Theory 82

Relative Strength 91

Market Cycles and Waves 92

Chart Patterns 94

Volume of Trading 96

Market Breadth 99

Nontechnical Analysis 99

Chapter 6: Technical Analysis Today 105

Trends 106

Patterns 109

Strength 111

Cycles 112

Wall Street's Reinterpretation of Technical Analysis 114

Chapter 7: A Brief History of Randomness and Efficient Markets 131

Prices As Objects of Study 134

The Emergence of Efficient Markets 137

What is Random? 141

Chapter 8: Academic Approaches to Technical Analysis 149

Theoretical Underpinnings 150

Empirical Evaluation 151

Adaptive Markets and Technical Analysis 161

Notes 167

Bibliography 191

Acknowledgments 199

About the Authors 203

Index 205