ABSTRACT
Diversication is important because technical patterns do not always carry out their original promise. If all your capital is tied up in one stock, or in a few stocks of the same group or line of business, you may be hurt by a false move affecting only your holdings, even though the rest of the market may continue to hold rm or even to move farther along the Primary Trend. By diversifying, you are protected by the law of averages against all of your holdings going the wrong way, except in the case of some Reversal that affects the entire market or a large segment of it.
