when Wall Street takes a joke seriously
technical analysts or chartists are a group of stock market researchers who take trading or investing positions based on past price movements and indicators.
you could often hear them talk about various patterns like ‘cup and handle’, ‘ascending triangle’, ‘descending triangle’, and ‘head and shoulder’. some time back these chartists came across the dreaded ‘vomiting camel pattern’.
touted as a bearish chart pattern, which when carefully drawn upon resembles the shape of a puking camel, became used as an indicator to speculate the movement of assets.
in 2014, CNBC did a segment on the price chart of gold and how it was forming the dreaded vomiting camel pattern. sometime after that, the chart pattern resurfaced and was being used by bitcoin traders to gauge when the price of the cryptocurrency is going to move.
“even though it is hilarious, this is a real chart pattern. it was discovered by Katie Martin. she manages Vomiting Camel Capital Asset Management,” the blog post wrote.
the post goes on to add: “Google "vomiting camel stock pattern", especially look at the Gold chart from 2014 that illustrates this pattern. It is almost identical. the pattern speaks for itself of how the camel is drawn over the lifespan of the stock/coin. the end of this pattern is the actual vomit which shows the three red arrows of the drop that may be impending.”
so, who is this Katie Martin, how did she discover this elusive pattern, and how reliable of an indicator is it?
turns out Martin is not the manager of Vomiting Camel Capital Asset Management, though her Twitter bio did read that back in the day. In fact, she is the market’s editor at Financial Times.
the vomiting camel pattern was an idea she picked from someone on Twitter and then started doodling the pattern on various charts. It seems she took the joke too far when she started posting about it on Twitter. eventually, the pattern got picked up by other market participants who did not know the context and they began implementing it seriously in their trades.
chartists are serious people and technical analysis is a serious art but in the quest to look for patterns in order to see whether the market will go up or down they fell for a joke.