Your point sounds logical on its face, but it stems from lack of understanding of how Wall Street works. Equity analysts are not traders, strategists, or technical analysts. At least they cannot behave as such in public. They are suppose to keep taps on the corporate fundamentals and kick the tires here and there. In the absence of any material information from the company, its suppliers, or the macro economic trends, the analysts cannot change their ratings. Often times the market is smarter than all of us, including the analysts. The stock starts to anticipate the bad news. But until the news actually surfaces (often after hefty moves in the stock) the analysts cannot change their ratings.
A good example of this is USIX (a look at their 3 and 18 month charts is instructive). A couple of months ago I posted on that thread that though their business plan is very solid, the company's ability to raise enough capital to see its plan through is very much in question. I also pointed out repeatedly that the market is telling us this company will run out of cash before it can blossom. Keep in mind that I said this despite the corporate press release of having secured a hefty credit line.
But listening to the market (and I don't mean just the stock chart), I wasn't going to put money there until I hear the management at the CC and even then perhaps until I see the audited FY results.
A few days ago they had their CC and surprise surprise, the management revealed they had lost their line of credit and that there are now strings attached to any funds they could raise. So the same analysts that had a buy rating on the company all the way through its fall, lowered their ratings.
I don't think the analysts were oblivious to the issues. But without a source for the news, they were not allowed to come out and say anything. It is amazing that the average investor would not dream of fixing his electrical appliances, where I might add following understood procedures will always hold results. But the same person continues to assume the proes are ignorant and are paid for nothing, rather than considering it is he who does not understand the inner workings. [this is a general comment. I do not mean to insult anyone]
In short you should know TA, FA, and above all listen to the drum beats in the jungle to survive in the market.
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