I didn't read the entire paper you linked to (that was like 6 months ago), but I did read some of it. I have to be honest, much of it was outside my normal way of thinking, so it is as they say "Greek to me". I may not have fully understood it.
I am not one that gives a lot of credence to technicals on a long term basis, though I do believe that there is some validity to technicals on a short-term basis. There are support and resistance levels that people use to make decisions. I have seen that clearly with currency. Commodities will trade in a small band between support and resistance. Once these levels are breached, then trading patterns change. People buy on dips, and sell on peaks, and there is a pattern to that trading. So I believe there is some benefits to technicals on a short-term basis. As far as Elliot Wave, or Fibonacci I know very little about the specifics to be able to offer an opinion one way or another. I do know from my own experience, for instance, that you cannot predict market changes from a 10, 20, 30, 45, or 60 day moving average (high or low), but if you get a 20, 30, 45, and 60 low or high at the same time, then that will clearly signal a market change, and you buy or sell depending upon your situation.
On a long-term basis I think technicals have much less value. Short-term trading is often driven off of high volume, very low margin, high turnover trading. If you lose in a short-term technical trade, even just a little, you should accept your loss and get out. This minimizes your loss, but if the technical indicators are right 2/3 of the time you will come out ahead. Long-term technicals though I believe are most often a misperception between correlation and causation. Long-term trading should be based upon fundamentals, as you will take a position, and then hold regardless of short-term movement, because you believe there is a fundamental value that is not priced appropriately. You hold until it is priced appropriately, or even overpriced, and then you sell. Fundamental value is not under-priced, accurately-priced, or over-priced in a cyclical and repeating pattern.
This not to say that you cannot use certain technical indicator to predict a future circumstance. For instance
http://blog.mises.org/archives/011516.asptells you a great deal, and you can use that as a clear indicator of a cyclical change, but you cannot use it to predict a specific point where that change will happen. I don't buy much of what Keynes had to say, but one thing I do agree with is "The market can stay irrational longer than you can stay solvent".
I just don't believe long-term "cyclical" changes are of a definable and repeatable term or length. That is what I believe that Armstrong was saying, and that I don't buy. The reason things happen in a cyclical manner is not because of a consistent and repeatable pattern, but because of some clearly defined causal relationship. That causal relationship it not a function of time.
I can't recall all the specifics that Armstrong wrote, it has been a number of months, but as I recall he charts recessionary periods, and measures those as a set of time-defined waves. He sees a number of repeating wave patterns. I read something about this kind of concept a few years back. Much of how the waves were defined and when the periods were considered to begin and end etc, and the definition of the smaller waves in between the larger waves, was adjusted to fit the wave pattern. In other words there was not actually a clearly defined wave pattern, but rather a set of cycles of varying lengths. So what seemed like a high degree of correlation was actually much more random than it first appeared. I am not inferring that regarding Armstrong, because I am nowhere near qualified to pass that kind of a judgment. That is just the bias I have towards or against long-term technical analysis.
I believe that Mises clearly understood and articulated what causes the cycles to happen. They are cycles, but they are of indeterminate length, and are not correlated to time, but rather to some other causation. The two best books I have ever read regarding that are
http://mises.org/store/Causes-of-the-Economic-Crisis-The-P323.aspxand another author (actually a non-Austrian school author) dealing with emerging market economies
http://search.barnesandnoble.com/The-Volatility-Machine/Michael-Pettis/e/9780195143300/?itm=1&usri=the+volatility+machineI also believe that this book describes some of my bias towards technical trading tools.
http://search.barnesandnoble.com/The-Black-Swan/Nassim-Nicholas-Taleb/e/9781400063512/?itm=2&usri=the+black+swan"A black swan is a highly improbable event with three principal characteristics: It is unpredictable; it carries a massive impact; and, after the fact, we concoct an explanation that makes it appear less random, and more predictable, than it was." I think Taleb falls into the trap that he is trying to describe, ie he has created a narrative to explain a specific type random event, but I believe his thesis has merit.
