<<I never buy a company on TA, and in fact don't buy companies I'm not interested in holding long term. I'm an investor, not a trader. But I use TA to identify good entry points & accumulation points >>
I agree with you that "fundamentals" should be the primary reason for buying a stock in a company (So far I have never been able to buy a company yet <g>)
However, I believe TA is a proper tool in trying to evaluate the worth, value or "price" of a stock.
At any given time the "price" is the result of the tug of war between buyers and sellers and TA gives you information on the status of that tug of war.
The monetary value of most everything (gold, silver, diamonds,rare stamps, paintings, real estate, etc., etc., including money itself) can fluctuate widely over time and depends on ultimate instance on the price a buyer is willing to pay a seller.
I try to keep my TA as simple as possible,using mainly three averages.Whenever the price and the short term average gets way ahead of the intermediate term, the stock is (for the near term at least)overbought or "overvalued" and in most instances will regress to the norm or the intermediate average.
On the other hand, when the price gets below the three averages and then bounces back and the nearest term average is able to get above the intermediate, it usually signifies a change of mind in the tug of war and gives you a good entry point.
According to Peter's last paragraph on his opening statement for this thread:
<<This thread grew out of the "Munch-a-Biotech" thread, and is meant to discuss biotech stock VALUATION METHODS OF ALL SORTS>>
IMHO, TA is a tool for evaluating the "price" or actual value of a stock. I am satisfied with the results it has given me over the years, but I know many people think it is just like trying to read tea leaves.
As the commander in chief of the thread feels TA is not a proper "valuation method", I respect his opinion as reasonable men can disagree over issues, and will try to avoid any TA comments on this thread.
Good luck to all.
Bernard |
