This year, markets seem more baffling than ever, and sentiment has often created volatility that is out of proportion to fundamentals. Clients are turning to technical strategy in an effort to understand these movements.
Most technical strategy sites have a strong educational slant, trying to teach readers how to decipher the often arcane lexicon of resistances, support levels, trends, Elliott waves and Fibonacci sequences. Banks' methods for doing this differ significantly from site to site.
The most obvious method is to use lots of heavily annotated graphs. This clearly makes sense up to a point. Trying to convey complex information visually is at the heart of what technicians try to do. But what the experts find informative and what beginning and intermediate students need can be very different. Many of JPMorgan's clients said they actually wanted fewer graphs and more well-written commentary to help them understand.
JPMorgan technical strategist Craig Ferguson says: "Many technical desks simply put out graphs with a little bit of comment on them. But we think clients prefer fewer charts with more meaningful trade ideas, built into a coherent, verbally described view."
The bank's strategies are indeed clear and well written, making it easy for clients to grasp exactly what a potential trade is and why JPMorgan recommends it.