Each year countless books are published on the subject of technical analysis. It is easy to
become lost amongst the numerous indicators, chart patterns, and technical trading
methodologies that these books advocate. One such subarea of technical analysis that has
received substantial attention is the notion of trend following and market timing. It can be said
that "trend following trading seeks to capture the majority of the market trend, up or down, for
profit" (Covel 2009). However, this raises several questions. How does an investor define the
current trend of the market? Also is it really possible to time entries and exits in the market such
that one could earn an abnormal return compared to a benchmark2?