One of the reasons that we are fond of using price as an input to calculate relative strength is not it does not rely on forecasting and is not subject to revision. If you subscribe to the “garbage in, garbage out” school of thought as we do, having reliable data is somewhere near the top of your wish list.
Fundamental analysts often forecast earnings for their valuation models, which creates another set of complication to getting things right. Economists, on the other hand, often have to deal with data that is revised after the fact. The Commerce Department recently revised U.S. GDP data going all the way back to 1929! (Click here for Eddy Elfenbein’s hilarious take on the data revisions.)
This just seems ridiculous to me. Pity the poor economists. It is no wonder that economic forecasting is so difficult with data like this! It brings to mind the old saying that the only function of economists is to make weather forecasters look good.
