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A Bottom in Apple? Kiss My . . .

Tickers in this article: AAPL
NEW YORK (TheStreet) -- People who use stock charts to make investing decisions deserve what they get.

That's one reason why I lost it a few weeks back. Everybody was calling a bottom in Apple .

Few people had any meat behind their prediction. Many merely had hunches. How could things get much worse? (They always can). The self-proclaimed "technicians" justified their bottom calls with asinine names for chart patterns that mean very little in the real world to retail investors.

Chart patterns do two things: 1.) They tell AAPL permabulls what they want to hear. Like an academic researcher manipulating data to support, as opposed to try to disprove, his or her hypothesis. And 2.), the charts help day/swing traders make a fast buck. Easier said than done. Few humans are very good at this. Most of us should just leave that style of trading to the ones with the God-given talent and/or the years of study to hone the craft.


We apparently saw a bottom in AAPL a few weeks back. The stock popped. The smart money -- the savvy traders -- got paid and sold into the false rally. That's reality. But reality doesn't get in the way of emotion.

So, beware, as AAPL crashes toward new lows -- and it absolutely is crashing -- the cats who claim to know technicals will refer to what we're seeing as a "classic double bottom." They're using what they think they know to support the outcome they so desperately want. Not all of them, but many of the "chartists."

That type of "advice" will put the hurt on more than a few people. It will even wipe a couple out.

Charts lie. They do it all of the time. Often because the people reading them have no idea what they're doing. But, more frequently, because they cannot account for sentiment and real events in the unpredictable life of a living, breathing company. Don't let anybody tell you otherwise.

If you have a long-term time horizon throw charts out the window. You'll drive yourself nuts. Most of us have no idea what they're trying to tell us anyway. Studying charts to make investing decisions or turn yourself into the trader you're not -- that's a "classic" money suck.